The new rules governing the state’s alternative-fuel vehicle tax credit, which go into effect today and eliminate “flex-fuel” vehicles from eligibility, accurately reflect legislative intent and the wording of the statute, says Tim Barfield, head of the Louisiana Department of Revenue.
Rules issued by former Revenue Secretary Cynthia Bridges on April 30 said owners of flex-fuel vehicles, which can burn both alternative fuels and petroleum-based gasoline from the same tank, are eligible for the credit, an interpretation that could have cost the state hundreds of millions of dollars per year, by some estimates. Only owners of vehicles with a standalone alternative fuel tank or battery are eligible under the new rules.
Officials say about $7.6 million in tax credits—worth up to $3,000 each—have been paid out under the original rules. Claims for flex-fuel vehicles received by June 14 are being honored. About $11.2 million in claims submitted after June 14, when Gov. Bobby Jindal rescinded Bridges’ ruling, are pending. Revenue says about $9 million are tied to flex-fuel vehicles and will be disallowed.
Going forward, the department expects the credit will cost the state no more than $10 million per year. Barfield says the confusion over the tax credit shows the need for better tracking of tax credits and better coordination among divisions within the department. The credit also has been cited as a reason for a comprehensive review of the state’s hundreds of rebates, credits and exemptions.
“The real opportunity here, to avoid another ugly surprise, is comprehensive reform and simplification of our tax system,” Barfield says.
You can see a fact sheet on the tax credit the department has posted on its website here.
