Fuel Tax Credit Fraud: Old Fuel, New Claims

A whistleblower can expose fuel tax credit fraud by connecting false production claims to the fuel a business actually made and moved. If you work at a plant, arrange shipments or handle the accounts, you may know that the biodiesel described as new production was already finished fuel. You may instead see false corporate identities behind fuel-credit returns, or refund checks whose payees have changed. Those are different schemes, and the records that expose them are different too.

This page follows the fuel, the invoices and the refund recipient. Our broader page on connecting business records to a false tax return covers the evidence questions that run across tax fraud cases.

Washakie Claimed New Production From Already-Produced Biodiesel

Washakie Renewable Energy’s criminal case shows how recirculated biodiesel supported false production tax credits. In its account of the criminal trial and guilty pleas, the Justice Department described already-produced biodiesel passed off as feedstock and fuel circulated to simulate new production and sale. False invoices helped carry that production story into the credit claims.

The scheme sought more than $1 billion in refundable tax credits, and the IRS paid more than $511 million during 2010 through 2018. Money from selling EPA renewable identification numbers was a separate stream from the IRS credit payments. For someone inside the business, the question is where the fuel’s actual history parted company with the history used to obtain that money.

Washakie’s chief executive and chief financial officer also admitted concealing or destroying records, according to the Justice Department’s account of the criminal case. In that account, finished biodiesel acquired a new production history by acquiring a different label. The paperwork made it new again.

What Plant, Transport and Accounting Staff Can Connect

Plant Knowledge Tests the Claimed Production

Plant employees know what the business received and what it actually produced. If the incoming material was finished biodiesel, that knowledge tests the description used to support the claimed new production. Your account can identify the particular delivery or production activity behind a number in the accounts.

We connect your knowledge of the plant to the transaction the IRS paid for. That means understanding which records explain the difference and who knew about it.

Fuel Shipped as Feedstock and False Transport Records

Fuel shipped as feedstock can support a false transport and tax credit story when the shipment actually contains finished biodiesel. A transport insider can connect the fuel’s origin, its destination and the description used for each movement.

If your work put you in a position to recognize returning fuel, we would examine the instructions, descriptions and invoices associated with those movements. We would ask which business sent the fuel, which received it and where the claim of new production entered the story.

Accounting Knowledge Tests What the IRS Was Told

Accounting staff can trace the underlying fuel transaction through the invoice to the credit claim. You may know how the transaction reached the return and who supplied the description used there.

An invoice can agree with a return because the return repeats it. Our inquiry goes back to the transaction behind both documents: the fuel’s origin, what was produced, what moved and what was represented as a sale. If you know why the invoice differs from that history, your explanation can connect records that otherwise appear to agree.

False Corporations and Altered Treasury Check Payees

A separate fuel-credit scheme used corporations established through stolen identities, false returns and altered refund-check payees. The Justice Department’s account of a guilty plea in the Northern District of Georgia describes that sequence. Treasury issued more than 100 checks totaling over $3.5 million.

Here, the evidence question begins with the claimant’s identity and follows the refund. We would connect the corporation named on the return, the people who actually controlled the claim and the payee changes on the checks.

This case gives an accounting insider a different starting point from Washakie’s production records. You may know who supplied the corporate details, handled the returns or changed the payee information. The connection we pursue is between that activity and the refund obtained from Treasury.

What Evidence Do I Need for an IRS Whistleblower?

Useful evidence identifies the taxpayer, the transactions and tax years, and how you learned the facts. For fuel tax credit fraud, we would connect that account to the production, shipping, invoice, corporate-identity or refund records you know. We also work through which supporting records exist elsewhere and where they can be found.

The value of an insider’s explanation goes beyond supplying another document. A 2014 Villanova Law Review article on tax whistleblowers argues that even an audit may miss a transaction or misunderstand what lies behind the taxpayer’s description of it.

Applied to fuel-credit evidence, that means explaining the connection you recognize. A return says production occurred; you know the incoming material was already biodiesel. A corporation appears as the claimant; you know who supplied its identity details and handled its refund. We build the account around those specific connections.

Fuel Tax Credit Fraud and the IRS Whistleblower Program

Federal fuel-credit fraud is a case for the IRS whistleblower award program, not the federal False Claims Act. A qualifying IRS whistleblower reward can pay 15% to 30% of the proceeds collected through action based on your information. We assess the fuel-credit evidence with you and connect it to the particular tax issue and collections behind a potential award.

A whistleblower case under a state False Claims Act can pay 15% to 30% of what the government recovers. Qualifying state tax cases are a separate route, illustrated by New York’s tax whistleblower law. For the federal fuel-credit schemes discussed here, the opportunity we assess with you is an IRS award claim.

You Know What the Fuel Records Leave Out

If you know why the production claim, shipping description or refund payee differs from what happened, speak with our whistleblower experts about the fuel-credit scheme. We work beside you throughout the case, connecting that knowledge to the government money and bringing in tax fraud whistleblower lawyers who understand false credit claims.