Illinois Administrative Code › Title 86 - REVENUE › Part 130 - RETAILERS' OCCUPATION TAX › Subpart C - CERTAIN STATUTORY EXEMPTIONS › Section 130.333 - Sustainable Aviation Fuel Purchase Credit

Current through Register Vol. 48, No. 28, July 12, 2024
a) Earning Sustainable Aviation Fuel Purchase
				Credit
1)
From July 1, 2023 through
				December 31, 2032, sustainable aviation fuel
("SAF")
sold to
				or used by an air common carrier, certified by the carrier to be used in
				Illinois, earns a credit in the amount of $1.50 per
				gallon of
SAF
purchased. The credit earned shall be referred
				to as the Sustainable Aviation Fuel Purchase Credit
or SAFPC
.
				Only that portion of each gallon of aviation fuel that consists of SAF, as
				defined in this Section, is eligible to earn the credit.
2)
The credit is earned at the
				time
SAF
is purchased for use in Illinois. The amount of
				credit that is earned is based on the number of whole gallons of
SAF
purchased for use in Illinois. Partial gallons will not earn a credit.
				Credits may be used at the same time as they are earned.
[35 ILCS
				105/3-87;
				35 ILCS
				110/3-72 ] A qualifying purchase is considered to take
				place as of the date of invoice of the SAF. The credit is considered to be
				earned on SAF that is purchased under an installment contract or progress
				payment contract at the time that each installment or progress payment is
				invoiced and based on the number of whole gallons purchased by the installment
				or progress payment.
3)
For
				a sale or use of aviation fuel to qualify to earn
SAFPC
,
				taxpayers must retain in their books and records a certification from the
				producer of the aviation fuel that the aviation fuel sold or used and for
				which
SAFPC
was earned meets the definition of
SAF
under this Section. The documentation must include detail sufficient
				for the Department to determine the number of gallons of
SAF
sold or used.
[35 ILCS 105/3-87;
				35 ILCS
				110/3-72;
				35 ILCS
				115/9;
				35 ILCS
				120/3 ]
4)
				SAFPC
earned by an air common carrier expires on December 31,
				2032.
SAFPC
is non-transferable and non-refundable. Taxpayers
				shall account for the earning and usage of
SAFPC
on each
				monthly return filed with the Department, as deemed necessary by the
				Department.
In addition, to monitor the number of gallons of soybean
				oil feedstock included in the SAF purchased and to monitor the earning and
				usage of SAFPC, air common carriers must periodically report this information
				in the form and manner required by the Department.
5)
Until January 1, 2033, on an
				annual basis, running from January through December each year, no credit may be
				earned by an air common carrier for soybean oil-derived
SAF
once air common carriers in this State have collectively
				purchased
SAF
containing 10,000,000 gallons of soybean oil
				feedstock.
[35 ILCS 105/3-87;
				35 ILCS
				110/3-72 ] If the amount of credit earned during any
				calendar year reported to the Department by air common carriers includes credit
				earned on soybean oil-derived SAF that exceeds 10,000,000 gallons of soybean
				oil feedstock, then the credit earned on soybean oil-derived SAF shall be
				reduced proportionately to meet this cap.
6) SAF is "used in Illinois" and therefore
				eligible to earn the credit if it is subject to tax under the Use Tax Act or
				the Service Use Tax Act, including uses subject to Use Tax or Service Use Tax
				but for which an exemption is allowed under the Act. SAF that is not subject to
				Use Tax or Service Use Tax in Illinois is not "used in Illinois" for purposes
				of the credit. No credit is earned for a purchase of SAF that is purchased for
				resale. See Section 130.210(a) and
				86 Ill. Adm. Code 150.301.
EXAMPLE: Purchase 1: air common carrier purchases 10,000
				  gallons of aviation fuel it certifies is for use in Illinois. Producer provides
				  purchaser-air common carrier with a certification that 5,000 gallons of the
				  fuel is SAF. Purchaser-air common carrier earns $7,500 in SAFPC (5,000 *
				  $1.50 = $7,500) on the purchase.
				  The fuel will be loaded into the fuel supply tanks of aircraft at O'Hare
				  Airport, and is therefore subject to Illinois Use Tax. All of the fuel,
				  however, will be used in flights that are engaged in foreign trade and eligible
				  for the exemption under Section 3-5(12) of the Use Tax Act [35 ILCS
				  105/3-5(12) ] and Section 2-5(22) of
				  the Retailers' Occupation Tax Act [35 ILCS
				  120/2-5(22) ]. Therefore, the
				  transaction is exempt from retailers' occupation and use tax.
Purchase 2: air common carrier purchases 20,000 gallons of
				  non-SAF aviation fuel for use in Illinois at a price of $4 per gallon. No
				  exemption applies to the purchase. The tax rate is
				  8.5 %. The taxable selling price
				  is $80,000. Total tax owed is $6,800 ($80,000 * 8.5% = $6,800). Purchaser-air
				  common carrier may use $5,000 ($80,000 *
				  6.25 % = $5,000) of SAFPC earned
				  in Purchase 1 to satisfy the 6.25% portion of the tax. Purchaser-air common
				  carrier must pay supplier the remaining $1,800 in tax (local portion), for
				  which SAFPC may not be used. Purchaser-air common carrier will have $2,500
				  SAFPC remaining for use in future purchases.