Oil Refinery Tax Breaks

WASHINGTON (CN) - To encourage construction of new U.S. oil refineries and the expansion of existing refineries, the Internal Revenue Service is allowing owners of certain U.S. oil refineries tax breaks if the owner was the first to put the facility into operation.

A taxpayer may deduct 50 percent of the cost of certain refineries placed into service between Aug. 8, 2005 and Jan. 1, 2012. The regulations apply to refineries whose purpose is to process liquid fuel from crude oil or certain other fuels, and which sufficiently increased output or throughput as of the date it was placed into service.

The tax break also applies to parts of refineries put into service between those dates, whose purpose is correct, and which has met all environmental laws in effect on the date that that part of the refinery was placed into service. Other parts of a refinery in service before Aug. 8, 2008 may fail to meet applicable environmental laws without disqualifying the taxpayer from electing to deduct expenses for the parts of the property that meet the laws.

The refinery must comply with the Clean Air Act, regardless of waivers received by taxpayers under that Act.

Click the document icon on the front page for details and other new regulations.

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