Income 69: Innovative Motor Vehicle and Innovative Truck Credits for Tax Years

Transcription

1 Incme 69: Innvative Mtr Vehicle and Innvative Truck Credits fr Tax Years This publicatin cvers the innvative mtr vehicle credit and innvative truck credit available fr tax years beginning n r after January 1, 2017, but prir t January 1, Bth tax credits were available in prir tax years, but were subject t different rules fr thse years. Please see FYI Incme 67 and FYI Incme 68 fr infrmatin regarding the innvative mtr vehicle credit and innvative truck credit, respectively, fr tax years prir t The credits are generally available fr the purchase, lease, r cnversin f mtr vehicles and trucks that are electric (EV), are plug-in hybrid electric (PHEV), r run n cmpressed natural gas (CNG), liquefied natural gas (LNG), liquefied petrleum gas (LPG), r hydrgen. The innvative truck credit is als available fr idling reductin and aerdynamic technlgies, clean fuel refrigerated trailers, and hydraulic hybrid cnversins. Clrad titling and registratin is a requirement fr bth the innvative mtr vehicle and innvative truck credits. WHO CAN CLAIM INNOVATIVE MOTOR VEHICLE OR INNOVATIVE TRUCK CREDITS? A credit can be claimed by a taxpayer that purchases r leases a qualifying vehicle r qualifying trailer, cnverts a vehicle r trailer they wn int a qualifying vehicle r qualifying trailer, r mdifies a vehicle they wn by installing idling reductin r aerdynamic technlgies. In the case f a lease f a qualifying vehicle, the credit is allwed t the lessee and nt t the lessr. State r lcal gvernments cannt claim the credit. QUALIFYING VEHICLES, TRAILERS, CONVERSIONS, AND DEVICES There are bth general and specific requirements fr a vehicle, trailer, cnversin, r mdificatin t qualify fr the credit. Credits may be claimed nly with respect t vehicles r trailers that meet the fllwing criteria. Fr purchases r leases, the vehicle must be new and nt previusly titled r registered in any jurisdictin. In the case f cnversin, the cnversin must be EPA certified. The vehicle r trailer must be titled and registered in Clrad r base plated in Clrad if registered via IRP. The vehicle must have a maximum speed f at least 55 miles per hur. The vehicle, trailer, cnversin, r device must qualify under ne f the categries listed in the table belw. Clrad titling and registratin The vehicle r trailer purchased, leased, cnverted, r mdified must be titled and registered in Clrad r, in the case f a truck r trailer registered under the Internatinal Registratin Plan (IRP), base plated in Clrad. The purchase, lease, r cnversin f a new vehicle r trailer qualifies fr the credit nly if the vehicle r trailer is titled and registered in Clrad in the time and manner prescribed by law. The purchase r lease f a vehicle previusly registered in Clrad r any ther state r jurisdictin des nt qualify fr the credit. Fr cnversins f r the installatin f aerdynamic r idling reductin technlgies n used vehicles, the vehicle must be titled and registered in Clrad at the time f cnversin r installatin. Qualifying Categries Qualifying Categry Categry Descriptin Electric and plug-in hybrid electric vehicles and trucks CNG, LNG, LPG, r hydrgen vehicles Hydraulic hybrid truck cnversins Clean fuel refrigerated trailers Idling reductin technlgies Aerdynamic technlgies Manufactured and cnverted electric and plug-in hybrid electric mtr vehicles and trucks that are prpelled t a significant extent by an electric mtr that has a battery capacity f at least 4 kwh and is capable f being recharged frm an external pwer surce Mtr vehicles and trucks either manufactured r cnverted t perate n CNG, LNG, LPG, r hydrgen, including bi-fuel and dual fuel vehicles that perate n CNG, LNG, LPG, r hydrgen either alternately r in cmbinatin with gasline r diesel fuel Cnversins that increase fuel ecnmy f trucks that are greater than 14,000 GVWR t hybrid prpulsin systems that perate n bth pressurized fluid and either CNG, LNG, LPG, hydrgen, electricity r traditinal fuel (gasline r diesel) Trailers designed t carry carg lads and equipped with climate cntrl systems pwered by CNG, LNG, LPG, hydrgen, r electricity, that are pulled by trucks with GVWR greater than 14,000 lbs. Idling reductin devices r systems recgnized by the EPA and affixed t a tractr and advanced insulatin that has an R value f at least R35 per inch Devices n the EPA Smartway Verified Technlgy list that minimize drag and imprve air flw ver a truck and trailer, nt including tires

2 Vehicles that d nt qualify Certain vehicles and trucks that run n electricity, CNG, LNG, LPG, r hydrgen d nt qualify fr the credit. N credit is allwed if any f the fllwing cnditins apply. The vehicle has a maximum speed f less than 55 miles per hur. The vehicle is a mtrcycle r is designed t travel with three r fewer wheels in cntact with the grund. The vehicle r trailer is nt titled and registered in Clrad r, if the vehicle is registered under the Internatinal Registratin Plan (IRP), base-plated in Clrad. The vehicle r trailer is nt licensed r subject t licensing fr peratin n Clrad highways. N credit is allwed fr the purchase r lease f a used vehicle. DETERMINING THE AMOUNT OF THE CREDIT The amunt f the credit varies depending upn the qualifying categry and the tax year during which the vehicle, truck, r trailer is purchased, leased, cnverted, r mdified. In the case f purchases, leases, and cnversins f qualifying vehicles, the credit is a flat amunt determined generally by the weight classificatin f the vehicle. Fr the purchase r cnversin f a qualifying trailer and fr a mdificatin that installs aerdynamic r idling reductin technlgies n the vehicle r truck, the credit is a percentage f the actual cst incurred fr the purchase, cnversin, r mdificatin. Date f purchase, lease, cnversin, r mdificatin The credit is determined, in part, based upn the tax year that includes the date f purchase, lease, cnversin, r mdificatin. Fr the purchase r lease f a qualifying vehicle r fr the purchase f a qualifying trailer, the date f purchase r lease is the date the purchaser r lessr enters int a legally binding purchase r lease agreement, s lng as the purchaser r lessr takes pssessin f the vehicle r trailer within 10 days f that date. If the purchaser r lessr des nt take pssessin f the vehicle r trailer within 10 days f the executin f the purchase r lease agreement, the date f purchase r lease is the date the purchaser r lessr takes pssessin f the vehicle r trailer. In the case f either a qualifying cnversin r the installatin f aerdynamic r idling reductin technlgies, the date f cnversin r mdificatin is the date the wner enters int a legally binding agreement fr the cnversin r mdificatin, s lng as wner retakes pssessin f the cnverted r mdified vehicle r trailer within 10 days f that date. If the wner des nt retake pssessin f the cnverted r mdified vehicle r trailer within 10 days f the executin f the agreement, the date f cnversin r mdificatin is the date the wner retakes pssessin f the cnverted r mdified vehicle r trailer. Credits fr the purchase r qualifying vehicles and fr qualifying cnversin Except fr hydraulic hybrid cnversins (discussed separately in a subsequent sectin f this FYI), the credit fr the purchase f a qualifying vehicle r fr a qualifying cnversin is a fixed amunt based upn the weight classificatin fr the vehicle and the tax year that includes the date f purchase r cnversin. Fr trucks, the weight classificatin is based upn grss vehicle weight rating (GVWR). The fllwing table details the credit amunts allwed based upn tax year and weight classificatin. Please nte that light and medium duty electric trucks are classified separately frm ther light and medium duty trucks and the weight ranges applicable t each differs. Credit Amunts fr Purchases f Qualifying Vehicles and fr Qualifying Cnversins (nt including hydraulic hybrid cnversins) Tax year beginning n r after: 1/1/2017 1/1/2020 1/1/2021 but prir t: 1/1/2020 1/1/2021 1/1/2022 Classificatin GVWR range Light duty passenger vehicle N/A $5,000 $4,000 $2,500 Light duty electric truck less than r equal t 10,000 lbs. $7,000 $5,500 $3,500 Light duty truck less than r equal t 14,000 lbs. $7,000 $5,500 $3,500 Medium duty electric truck greater than 10,000, but nt mre than 26,000 lbs. $10,000 $8,000 $5,000 Medium duty truck greater than 14,000, but nt mre than 26,000 lbs. $10,000 $8,000 $5,000 Heavy duty truck greater than 26,000 punds GVWR $20,000 $16,000 $10,000 Page 2 f 5 (1/18)

3 The amunt f credit that can be claimed fr the purchase f any qualifying truck is limited t the difference in manufacturer s suggested retail price (MSRP) between the qualifying truck and a cmparable truck that runs n either gasline r diesel fuel. The credit claimed fr cnverting a truck t a qualifying truck is limited t the cst f cnversin. Credits fr the lease f qualifying vehicles Fr each weight classificatin and tax year, the credit amunt allwed fr the lease f a qualifying vehicle is ne half f the credit amunt listed in the abve table, except that, fr tax years beginning n r after January 1, 2021 and prir t January 1, 2022, the credit fr the lease f a qualifying light duty passenger vehicle is $1,500. The applicable tax year fr determining the amunt f the credit is the tax year during which the taxpayer enters int a lease agreement fr the qualifying vehicle (see als the sectin entitled Date f purchase, lease, cnversin, r mdificatin, abve). N additinal credit may be claimed fr the same leased vehicle fr any subsequent tax year during which the lease cntinues. In the case f a lease, the credit is allwed t the lessee and nt t the lessr. In rder t be cnsidered a lease that qualifies fr the credit, the lease agreement must be fr an initial term f at least tw years. Early terminatin f a bna fide lease agreement fr a term f at least tw years will nt abrgate the lessr s right t the credit r require any recapture f the credit previusly claimed fr the lease, except in the case f a leased trailer. See Credits fr qualifying trailers belw fr infrmatin abut the recapture f credits fr the early terminatin f the lease fr a qualifying trailer. Credits fr hydraulic hybrid cnversins The credit allwed fr a hydraulic hybrid cnversin is a flat amunt based n tax year in which the cnversin is perfrmed (see the sectin entitled Date f purchase, lease, cnversin, r mdificatin, abve). The fllwing table lists the credit amunt allwed. Credit Amunts fr Hydraulic Hybrid Cnversins Tax year cmmencing n r after: 1/1/2017 1/1/2020 1/1/2021 but prir t: 1/1/2020 1/1/2021 1/1/2022 Hydraulic Hybrid Cnversin $5,000 $4,000 $2,500 Credits fr qualifying trailers The credit allwed fr the purchase r lease f a clean fuel refrigerated trailer r the cnversin f a trailer t a clean fuel refrigerated trailer is a percentage f the cst f the trailer r cnversin, but the amunt f credit a taxpayer claims in a tax year is limited as shwn in the table belw. The percentage depends upn whether the trailer is purchased, leased, r cnverted and the tax year in which the purchase, lease, r cnversin ccurs (see the sectin entitled Date f purchase, lease, cnversin, r mdificatin, abve). When calculating the credit, the taxpayer must first deduct frm their cst any ther grants, credits, r rebates, such as federal credits and manufacturer rebates, fr which the trailer r cnversin is eligible. The taxpayer must als exclude frm their cst used t calculate the credit any tax, titling and registratin fees, and any ther charges extraneus t the cst f the trailer. See (1)(a)(II), C.R.S. fr guidance in calculating the cst f a leased trailer. Credit Percentages fr Purchases, Leases, r Cnversins f Clean Fuel Refrigerated Trailers Tax year cmmencing n r after: 1/1/2017 1/1/2019 1/1/2020 1/1/2021 Limit per but prir t: 1/1/2019 1/1/2020 1/1/2021 1/1/2022 trailer Purchase r lease 15% 11.75% 7.5% 3.75% $7,500 Cnversin 45% 33.75% 22.5% 11.25% $7,500 In the case f the early terminatin f a lease fr a qualifying trailer, the lessr may be required t repay a part f the previusly claimed credit (the credit recapture amunt ). The credit recapture amunt is equal t the difference between the amunt f the riginal credit claimed and the amunt f the credit recalculated based upn the actual cst incurred fr the lease prir t its terminatin. The lessr must reprt and repay the credit recapture amunt with the lessr s incme tax return fr the tax year in which the lease is terminated. Credits fr aerdynamic and idling reductin technlgies The credit allwed fr the purchase and installatin f aerdynamic r idling reductin technlgy devices is 25% f the cst fr the purchase and installatin f the devices, subject t certain limitatins. When calculating the credit, the taxpayer must first deduct frm their cst any ther grants, credits, r rebates, such as federal credits and Page 3 f 5 (1/18)

4 manufacturer rebate, fr which the device is eligible. The taxpayer must als exclude frm their cst used t calculate the credit any tax, titling and registratin fees, and any ther charges extraneus t the cst f the device and its installatin. The maximum credit allwed fr any single device is $6,000. Additinally, the ttal credit amunt a taxpayer can claim fr all aerdynamic devices they purchase during a given tax year is $50,000. The ttal credit amunt a taxpayer can claim fr all idling reductin devices they purchase during a given tax year is $6,000. CLAIMING THE CREDIT A taxpayer must file a Clrad incme tax return, including all required frms and dcumentatin, t claim the credit. Hwever, the purchaser r lessr wh btains financing fr the purchase, lease, r cnversin f a qualifying vehicle may assign the credit t the financing entity that finances the purchase, lease, r cnversin. In the case f assignment, the financing entity must file a Clrad incme tax return with all required frms and dcuments t claim the credit. A taxpayer, whether they are a purchaser, lessr, wner f a cnverted r mdified vehicle, r a financing entity, must claim the credit n their incme tax return fr the tax year that includes the date f purchase, lease, cnversin, r mdificatin. See the sectin entitled Date f purchase, lease, cnversin, r mdificatin, abve. Dcumentatin required t claim the credit The incme tax return n which the credit is claimed must include the fllwing attachments: A cmpleted Frm DR 0617; A cpy f the invice, purchase agreement, r lease agreement fr the qualifying mtr vehicle; Fr financing entities that accept assignment f the credit, a cmpleted Frm DR A taxpayer claiming credits fr multiple qualifying vehicles, trailers, cnversins, and/r mdificatins must attach t their return the abve listed dcuments fr each qualifying vehicle, trailer, cnversin, r mdificatin. Multiple wners f qualifying vehicles In the case f a vehicle wned, purchased, r leased jintly by multiple taxpayers r by a partnership, S crpratin, r ther similar pass-thrugh entity, the credit may be allcated t the respective wners, partners, r sharehlders in any manner the wners, partnership, r S crpratin elect. Hwever, the aggregate amunt f the credit allcated t such wners, partners, members, r sharehlders cannt exceed the ttal credit allwed fr a single purchase, lease, cnversin, r mdificatin. In claiming the credit, a taxpayer must enter in Part 2 f the Innvative Mtr Vehicle and Truck Credits Schedule (DR 0617) nly the share f the credit that has been allcated t them. Assignment f the credit A purchaser, lessr, r wner wh btains financing fr the purchase, lease, r cnversin f a qualifying vehicle may, by mutual agreement with the financing entity, assign the credit t the financing entity. In the case f assignment, the financing entity must cmpensate the vehicle purchaser, lessr, r wner fr the full amunt f the assigned credit. Cmpensatin must be made in the frm f a cash payment, a reductin in cash price, a capitalized cst reductin, r sme similar cnsideratin and the amunt f the cmpensatin must be separately stated in the purchase, lease, r lan agreement. The financing entity may charge an administrative fee fr the assignment f the credit, but such fee cannt exceed $150. In rder t assign the credit, the vehicle purchaser, lessr, r wner and the financing entity must cmplete and sign an electin statement (Frm DR 0618). A separate electin statement must be cmpleted fr each assigned credit. The electin statement must be cmpleted n the date f purchase, lease, r cnversin (see the sectin entitled Date f purchase, lease, cnversin, r mdificatin, abve). By cmpleting the electin statement, the purchaser, lessr, r wner f the qualifying vehicle frfeits the right t claim the credit. The financing entity may authrize an agent r designee t sign the electin statement n its behalf t facilitate the assignment f the credit. A financing entity that accepts assignment f a credit must file a Clrad incme tax return, as discussed abve, t claim the credit. N credit will be granted r refunded t a financing entity prir t the filing f their incme tax return claiming the credit. The financing entity must claim the credit n the tax return fr the tax year that includes the date f purchase, lease, r cnversin (see the sectin entitled Date f purchase, lease, cnversin, r mdificatin, abve). Hwever, the amunt f the credit will be determined by reference t the wner, purchaser, r lessr s tax year, nt the financing entity s tax year. If a financing entity accepts assignment f a credit, the financing entity must, within 30 days f the date f assignment, electrnically submit t the Department the infrmatin cntained in the electin statement. The electrnic submissin must be made thrugh the Department s website at Clrad.gv/RevenueOnline under the financing entity s accunt. If the financing entity is an affiliated crpratin included in a cmbined r cnslidated return, the electrnic submissin shuld be made under the accunt fr the parent crpratin. If the financing entity r parent crpratin Page 4 f 5 (1/18)

5 des nt have a Revenue Online accunt, it must first create an accunt. A financing entity r parent crpratin with an active Revenue Online accunt shuld see an ptin t Register t Submit an Innvative Mtr Vehicle Credit within their incme tax accunt. One r tw days after selecting this ptin and cmpleting the required steps, the financing entity shuld see an ptin t Submit an Innvative Mtr Vehicle Credit File n their Revenue Online accunt. This ptin can be used t either manually enter the infrmatin frm an electin statement r t uplad an electrnic file with infrmatin frm ne r mre electin statements. Click the link Apprved File Frmat fr Electrnic Submissins next t the link fr this FYI Incme 69 at Clrad.gv/tax/fyi-publicatins-incme-tax fr infrmatin abut frmatting electrnic files fr uplad. ADDITIONAL RESOURCES Clrad statutes and regulatins , C.R.S. Tax credit fr innvative mtr vehicles , C.R.S. Tax credit fr innvative trucks. Department Rule Innvative mtr vehicle and innvative truck credits. Clrad frms, publicatins, and guidance Innvative Mtr Vehicle and Truck Credit Schedule (DR 0617) Innvative Mtr Vehicle Tax Credit Electin Statement (DR 0618) Federal cde and regulatins 26 U.S.C. 30D. New qualified plug-in electric drive mtr vehicles 26 USC Exemptins 40 C.F.R. Part 85. Cntrl f air pllutin frm mbile surces 40 C.F.R. Part 86. Cntrl f emissins frm new and in-use highway vehicles and engines Other resurces fuelecnmy.gv/feg/evsplash.shtml (fr infrmatin abut electric and plug-in hybrid electric vehicles) epa.gv/verified-diesel-tech/aerdynamic-devices (fr infrmatin abut aerdynamic technlgies) epa.gv/verified-diesel-tech/idling-reductin-technlgies-irts-trucks-and-schl-buses (fr infrmatin abut idling reductin technlgies) FYIs prvide general infrmatin cncerning a variety f Clrad tax tpics in simple and straightfrward language. Althugh the FYIs represent a gd faith effrt t prvide accurate and cmplete tax infrmatin, the infrmatin is nt binding n the Clrad Department f Revenue, nr des it replace, alter, r supersede Clrad law and regulatins. The Executive Directr, wh by statute is the nly persn having the authrity t bind the Department, has nt frmally reviewed and/r apprved these FYIs. Page 5 f 5 (1/18)