Tuesday, March 6, 2012

Colorado Alternative Fuel Tax Credit


The Colorado Department of Revenue has updated its guidance for the treatment of alternative fuel income tax credits, which expired December 31, 2011 and created a new publication, FYI Income 67, Innovative Motor Vehicle Credit, which essentially supersedes the alternative fuel credit for periods after 2011 and before 2016. For purposes of computing the alternative fuel credit for 2010 and 2011, vehicles must be purchased on or after January 1, 2010 and before January 1, 2012, the credit is only available in the year during which the vehicle was purchased or converted. The cost used in computing the credit must be reduced by any credits, grants, or rebates, including federal credits, grants, or rebates for which the purchaser is eligible. Credits generated in 2010 or 2011 that exceed the tax due for that year are not carried forward but are refundable. For purposes of the innovative motor vehicle credit, vehicles purchased or converted on or after January 1, 2012 and before January 1, 2016 may be eligible for the credit if the vehicle is an alternative fuel vehicle, converted a motor vehicle to use alternative fuel, have replaced a vehicle's power source with an alternative fuel power source, or is modified to include idling reduction technology. The vehicle must be titled and registered in Colorado to qualify. The innovative motor vehicle credit is calculated according to percentage of the difference in the actual cost incurred by the taxpayer in purchasing, replacing, or converting to an alternative fuel/hybrid/plug-in electric vehicle or a vehicle has been modified with idling reduction technology. The credit percentage depends on the vehicle category and the year for which the credit is sought (ranging from 75% to 10% for the income tax year beginning January 1, 2012 and before January 1, 2013 to 75% to 0% for the income tax year beginning January 1, 2015 and before January 1, 2016). There is a $6,000 cap on credits per vehicle, $7,500 if the credit involves the conversion of a vehicle into a plug-in electric hybrid. Also, the list of vehicles eligible under the existing alternative fuel income credit has been updated.

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