For its part, International Paper is still weighing the costs and benefits of converting its $2.1 billion alternative fuel mixture credits into cellulosic credits. Furthermore, companies can “carry forward” the 2009 cellulosic credit to offset future tax bills well into this decade.Īs The Post’s Steven Mufson reported, several firms have claimed a total of hundreds of millions of dollars worth of extra tax benefits in this manner. But for some companies, that may be profitable, since the cellulosic credit is $1.01 per gallon - twice as much as the alternative fuel mixture credit. To be sure, companies choosing to switch to the cellulosic credit would have to give back the money they got from the alternative fuel mixture credit (with interest). The convoluted story begins on June 28, 2010, when IRS lawyers issued an opinion permitting paper manufacturers to retroactively claim a different benefit for the black liquor they burned in 2009: the cellulosic biofuels credit. ![]() Now it turns out that paper companies are still exploiting the tax code to make money from black liquor. 31, 2009, using the projected savings to pay for health-care reform. Congress closed the loophole effective Dec. International Paper alone received about $2.1 billion. Result: Since the credit was “refundable,” paper companies reaped billions of dollars from the federal government in 2009. And the paper mills saw a chance for easy money: They asked the Internal Revenue Service if black liquor, mixed with diesel, qualified the IRS said yes. But in 2007, Congress enacted a 50-cents-per-gallon “alternative fuel mixture” tax credit to encourage new industrial liquid fuels from biomass. ![]() IT WOULD BE hard to imagine a purer case of corporate welfare than the tax credit that paper manufacturers reaped in 2009 for powering their plants with a liquid industrial byproduct known as “black liquor.” There was no need for any subsidy: Paper mills had been recycling the substance for decades.
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