Tax Credits Now Available for Taxpayers Who Purchase Qualified Plug-In Electric Vehicles

In late April, 2009, the IRS issued a press release (see below) announcing tax breaks for purchasing qualified plug-in electric vehicles. The tax credit afforded by two different laws is significant. The Electric Cart Company, LLC, (ECC) has compiled the attached information to assist in clarifying just what impact these tax credits may have on the “ultimate” cost of a qualifying electric vehicle purchased this year.

The full version of the press release from the Internal Revenue Service follows:

Tax Breaks Available for Taxpayers Who Purchase Qualified Plug-In Electric Vehicles

IR-2009-45, April 24, 2009
WASHINGTON — Plug-in electric vehicles using certain types of batteries may qualify for a new tax credit if purchased this year, the Internal Revenue Service said today.

The Emergency Economic Stabilization Act of 2008 (EESA) and the American Recovery and Reinvestment Act of 2009 (ARRA) created two new tax credits for various types of electric vehicles, which may include what are commonly referred to as neighborhood electric vehicles.

ARRA creates a tax credit for low-speed or two- or three-wheel electric vehicles, such as motor scooters, purchased after Feb. 17, 2009, and before Jan. 1, 2012. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500. To qualify, a vehicle must be either a low-speed vehicle that is propelled to a significant extent by a rechargeable battery with a capacity of at least 4 kilowatt hours or be a two- or three-wheeled vehicle that is propelled to a significant extent by a rechargeable battery with a capacity of at least 2.5 kilowatt hours.

EESA created a tax credit for vehicles that have at least four wheels and draw propulsion using a rechargeable traction battery with at least four kilowatt hours of capacity. For 2009, the minimum credit is $2,500 and the credit tops out at $7,500 to $15,000, depending on the weight of the vehicle and the capacity of the battery.

During 2009, low-speed, four-wheeled vehicles manufactured primarily for use on public streets, roads and highways (neighborhood electric vehicles) may qualify both for the EESA credit and, if purchased after February 17, 2009, for the ARRA credit for low-speed electric vehicles. A taxpayer may not claim both credits for the same vehicle. Vehicles manufactured primarily for off-road use, such as for use on a golf course, do not qualify for either credit.

The Internal Revenue Service is working on guidance regarding certification procedures for both of these credits.

The above release was found at: http://www.irs.gov/newsroom/article/0,,id=207051,00.html

At the time of the press release, the IRS was still working on guidance regarding certification procedures for both of these credits. However, IRS certification procedures have now been finalized.

The Electric Cart Company is quick to caution in this and any tax matter, that each individual taxpayer should consult their tax advisor to determine qualification for any tax credit and to clarify the benefit that may be available given their individual circumstances.

In summary, on April 24, 2009, the IRS announced tax credits that could benefit taxpayers who purchase Star Car’s Low Speed Vehicles. According to the IRS, taxpayers may qualify for one of the following credits:

The ARRA Credit. A credit equal to 10% of the cost of the vehicle, up to $2,500 for a Low Speed Vehicle purchased after February 17, 2009 and before January 1, 2012. Or,

The EESA Credit. A credit of $2,500 to $7,500 for a four wheeled vehicle that draws propulsion using a rechargeable battery with at least four kilowatt hours of capacity purchased during 2009. The actual credit, within the above limitations, is determined by the capacity of the battery.

The following information may be used to understand how each of the tax credits may apply to purchases of Star Car and Columbia ParCar Low Speed Vehicles (LSVs) or Neighborhood Electric Vehicles (NEVs):

All Low Speed Vehicle models (also referred to as NEV’s or Neighborhood Electric Vehicles) manufactured and sold by Star Car and ParCar meet the NHTSA requirements as defined by Title 49 CFR, Chapter V, Part 571.500, Standard No. 500; Low-speed vehicles.

The referenced NHTSA classification applies to this category of Motor Vehicles used by consumers and commerce.

All Star Car LSV and ParCar LSV/NEV models are manufactured primarily for use on public streets, roads and highways.

The primary source of energy for all of the LSVs/NEVs is the electric power grid. Batteries are recharged by “plugging in” to the grid. By definition, this makes each of Star Car’s LSV models and ParCar’s NEV models a “Plug-In Electric Vehicle.”

All of Star Car LSVs are propelled by a rechargeable battery with a capacity of at least 4 kilowatt hours. Star Car has certified 12 models. The battery capacity for ten of these models is based on the 6 volt Trojan T-105 used in a 48-Volt battery pack is 10.80 kWh *. Two Star Car LSV models use the 8 volt Trojan T-875 48-Volt and their battery capacity is 8.16 kWh *.

All Columbia ParCar LSV/NEVs are propelled by a rechargeable battery with a capacity of at least 4 kilowatt hours. ParCar has certified 12 models that utilize the US Battery US2200 6 volt battery in the 48-volt battery pack. The battery capacity is 11.10 kWh *.

Based on the above capacities, ten Star Car LSVs have been certified by the IRS for a tax credit of $5,335.60. Two Star Car 2-passenger “bubble cars” that use the 8-volt battery has been certified for a tax credit of $4,234.72. Columbia ParGo NEVs has been certified for a tax credit of $5,460.70.

* The above capacities are based on published ratings found in the Trojan and US Battery product specification guides.