Monday, January 24, 2011

Clean Cities TRS Question of the Month: Federal Tax Incentive Updates

Question of the Month: Which federal tax incentives were extended as a result of the recently enacted Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010?

Answer: On December 17, 2010, President Obama signed H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Public Law No: 111-312). This Act extends and reinstates several alternative fuel tax credits through December 31, 2011. See the Federal Incentives & Laws Web page for additional information.

Extended tax credits include:

The Act also reinstates several tax credits that expired after December 31, 2009:

Special Rule for 2010 Excise Tax Credit Claims:

The Alternative Fuel, Alternative Fuel Mixture, and Biodiesel Mixture Excise Tax Credits were reinstated retroactively, meaning taxpayers may submit a one-time claim for qualified fuel sold or used during the 2010 tax year. The U.S. Internal Revenue Service (IRS) has issued special guidance to allow a 180-day period for the submission of these claims. Please refer to the IRS Notice 2011-10 for additional information (http://www.irs.gov/pub/irs-drop/n-11-10.pdf).

Expired Incentives:

Two vehicle purchase incentives expired after December 31, 2010, and were not extended:

  • Qualified Alternative Fuel Motor Vehicle Tax Credit
  • Light-Duty Hybrid Electric Vehicle and Advanced Lean Burn Vehicle Tax Credit

The descriptions of these expired tax credits, including the expiration dates, will remain on the Federal Incentives & Laws Web site until the federal tax filing deadline.

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