Could a registered low-speed vehicle originally powered by alternative fuel qualify for Louisiana's clean-burning motor-vehicle fuel property credit?

Plain-English summary

A qualifying low-speed vehicle originally powered by alternative fuel could be eligible for Louisiana's clean-burning fuel property credit once state law classified and registered it as a motor vehicle.

For an originally equipped vehicle, the ruling described two calculations:

1. Twenty percent of the cost attributable to fuel storage, delivery to the motor, and removal of combustion exhaust.
2. If the taxpayer did not determine that component basis, two percent of total vehicle cost, capped at $1,500.

Vehicle covered

The facts involved a four-wheeled electric vehicle with a maximum speed from 20 through 25 miles per hour, required safety equipment, and eligibility to operate on specified roadways. Registration with the Louisiana Department of Public Safety and Corrections was required.

Solar-vehicle example

The ruling's example treated batteries, solar-panel mounting, solar panels, charge controller, electronic speed controller, and related wiring and energy meter as qualifying propulsion-system components. On the stated costs, the component method produced a $707 credit, while the alternative two-percent method produced $173.30.

Common questions

Q: Did every low-speed vehicle automatically qualify?

A: No. The ruling said it may qualify and required alternative-fuel property and state registration.

Q: What was the component-cost percentage?

A: Twenty percent.

Q: What was the simplified calculation?

A: Two percent of vehicle cost, not exceeding $1,500.

Q: Is this a current credit calculator?

A: No. It describes the 2003 statutes applied in the ruling.

Citations and references

• La. R.S. 47:38 and 47:287.757 — qualified clean-burning motor-vehicle fuel property credits
• La. R.S. 32:1(40), 32:300.1, 32:408(C), 32:1301, and 32:1304(A)
• Act 986 of the 2003 Regular Session
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 03-004

Original ruling text

Revenue Ruling
No. 03-004
August 22, 2003
Fiduciary Income Tax, Individual Income Tax, and Corporation Income Tax
Alternative Fuel Usage Credit for Low-Speed Vehicles

Purpose:
This Revenue Ruling addresses the credit allowed a purchaser of a low-speed vehicle that is
originally equipped to be propelled by an alternative fuel.
Facts
A taxpayer purchases a low-speed vehicle. It is a four-wheeled, electric-powered vehicle with a
maximum speed of not less than twenty miles per hour but not more than twenty-five miles per hour
and is equipped with the minimum motor vehicle equipment appropriate for vehicle safety. It can be
operated on roadways where the posted speed limit is thirty-five miles per hour. It may cross
roadways with a posted speed limit in excess of thirty miles per hour at an intersection.
Analysis/Discussion:
Louisiana Revised Statutes sections 47:38 and 47:287.757 provide a credit against income tax for
investing in qualified clean-burning motor vehicle fuel property. These statutes define alternative
fuels to include any fuel that meets or exceeds federal clean air standards. In order to qualify for the
credit, the motor vehicle must be registered with the Louisiana Department of Public Safety and
Corrections. Act 986 of the 2003 Regular Session of the Louisiana Legislature amended and
reenacted La. Rev. Stat. Ann. §§ 32:1(40), 408(C), 1301, and 1304(A)(1) and (2), and enacted La.
Rev. Stat. Ann. § 32:300.1 relative to motor vehicles. With the passage of Act 986 a “low-speed
vehicle” is included in the definition of “motor vehicle” and is required to be registered with the
Louisiana Department of Public Safety and Corrections.
Because a “low-speed” vehicle is now included in the definition of a “motor vehicle” and is required
to be registered with the Louisiana Department of Public Safety and Corrections, it may be eligible
for the credit for converting vehicles to alternative fuel usage.
The credit is equal to twenty percent of one of the following four categories of cost that are eligible:

1. Cost related to the converting of a motor vehicle propelled by gasoline to be propelled by an
   alternative fuel, provided that such vehicle is registered with the Louisiana Department of
   Public Safety and Corrections,
   A Revenue Ruling is written to provide guidance to the public and to Department of Revenue
   employees. It is issued under Section 61:III.101(C) of the Louisiana Administrative Code to apply
   principles of law to a specific set of facts. A Revenue Ruling does not have the force and effect of
   law and is not binding on the public. It is a statement of the department's position and is binding on
   the department until superseded or modified by a subsequent change in statute, regulation,
   declaratory ruling, or court decision.

Revenue Ruling No. 03-004
Page 2 of 3

2. Certain costs related to the purchase of a motor vehicle originally equipped to be propelled by
   an alternative fuel, provided such vehicle is registered with the Louisiana Department of
   Public Safety and Corrections,
3. Cost of property that is directly and exclusively related to the delivery of an alternative fuel
   into the fuel tank of a vehicle, and
4. 10% of the cost of a motor vehicle that is originally equipped with qualified clean-burning
   motor vehicle fuel property, provided that such vehicle is registered with the Louisiana
   Department of Public Safety and Corrections.
   Because this revenue ruling only addresses the purchase of a vehicle that is originally equipped to be
   propelled by an alternative fuel, computing the credit using the cost in categories two and four are
   addressed.
   Category two allows a credit of 20% of the cost of certain portions of a motor vehicle originally
   equipped to be propelled by an alternative fuel. Only the costs that are attributable to the storage of
   such fuel, the delivery to the engine of such fuel, and the exhaust of gases from combustion of such
   fuel are available for the credit.
   In category four, if the taxpayer purchases a motor vehicle originally equipped to be propelled by an
   alternative fuel, and is unable or elects not to determine the cost necessary to use category two, the
   taxpayer may claim a credit in an amount not exceeding the lesser of 20% of 10% (in other words
   2%) of the cost of the motor vehicle or $1500.
   Conclusion:
   Because a “low-speed” vehicle is now included in the definition of a “motor vehicle” and is required
   to be registered with the Louisiana Department of Public Safety and Corrections, it may be eligible
   for the credit for converting vehicles to alternative fuel usage.
   The amount eligible for the credit for vehicles originally equipped to be propelled by an alternative
   fuel is the cost of the equipment associated with storing the fuel, delivering the fuel to the motor, and
   removing exhaust from combustion of the fuel. The credit will be 20% of this amount.
   If this information is not provided or the taxpayer elects not to determine the exact basis of such
   equipment, the credit is 2% of the cost of the vehicle, not to exceed $1500.
   Example:
   The following example is provided to illustrate the application of this revenue ruling. It is not the
   only situation to which this revenue ruling applies.
   A taxpayer purchases a solar powered vehicle that carries four people at a speed of up to 25mph. It is
   intended for local, urban, and community use. It is quiet, uses no nonrenewable energy and creates
   no pollution. It is properly registered with the Louisiana Department of Public Safety and
   Corrections. The U. S. Department of Energy classifies solar energy as an alternative fuel. The
   component cost analysis is provided.

Revenue Ruling No. 03-004
Page 3 of 3

In determining what is a qualifying component associated with storing fuel, delivering fuel to the
motor and removing exhaust in an originally equipped vehicle, the standard is to allow those
components that would be required to convert to alternative fuels usage. Therefore, items five
through ten would qualify.
The credit under category two is 20% of $3,535 or $707. The credit under category four is 2% of
$8,665 or $173.30.
1.

Basic Chassis
$3,000
(includes the frame, steering, brakes, etc.)

2. Passenger Accommodations
   725
   (includes the body, seats, windshield, etc.)
3. Road-going Equipment
   810
   (includes tires, wheels, lights)
4. High Efficiency Electric Motor
   595
   (48 volt, permanent magnet motor custom-built)
5. Deep Cycle Lead-acid Batteries
   520
   (8 Trojan deep cycle T105 batteries)
6. Custom Molded Top
   370
   (115” X 48” for solar panel mounting)
7. Solar Panels
   1,600
   (400 watts flex-panels)
8. Charge Controller
   80
   (Controls solar charging energy to the batteries)
   625
9. Electronic Speed Controller
   (Applies power from the solar panels and batteries to the motor, like a carburetor to a
   gas engine)
10. Special Solar Panel Wiring, Energy Meter
    340
    (Monitors energy coming in from the panels and going to the motor)
    Total Retail Price
    $8,665
    Total Retail Value of Solar Components. Items 5 through 10.
    $3,535
    (Per the manufacturer these items are part of the solar propulsion system)
    Cynthia Bridges
    Secretary
    By:

Bettye Winham
Tax Research Analyst
Policy Services Division