Common Sense Automobile Efficiency Act of 2005 - H.R. 1744

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Sponsored by Congressman Ruppersberger Introduced April 21, 2005
Section by Section

Summary:

This legislation provides a credit for the purchase of new qualified fuel cell, hybrid, or other alternative fuel motor vehicle. The buyer claims the credit, except in the case of a tax-exempt entity, in which case the seller may claim the credit.

It also makes several modifications to the rules regarding the small producer ethanol credit and provides a new credit for qualified biodiesel fuel mixtures.

Section 1: Common Sense Automobile Efficiency Act of 2004

To amend the Internal Revenue code of 1986 to provide incentives for alternative fuels and alternative fuel vehicle.

Section 2: Repeal the Phaseouts for Qualified Electric Vehicles Credit and Deduction for Clean fuel-Vehicles

This provision repeals the phase-out of the existing tax credit so that 100% of the credit can be claimed through 2006. No additional incentives are provided.

Section 3: Alternative Motor Vehicle Credit

Regarding new hybrid vehicles, under this bill, the tax credit for cars and light trucks ranges from $650-$2,600 depending on improvements in fuel economy. For heavy duty trucks the credit would range from 20%-40% of the incremental costs, subject to certain limits. The credit is also limited by the total number of hybrid cars sold by the industry.

Regarding new fuel cell vehicles, this bill provides a new base tax credit ranging from $4,000 to $40,000 per vehicle depending on the vehicles weight; provides additional tax credits depending on fuel efficiency guidelines. An additional credit for cars and light trucks powered by fuel cells is provided, ranging from $1,000- $4,000 depending on percentage improvements in fuel efficiency relative to a reference conventional vehicle. The credits for fuel cell vehicles may be carried forward for up to 20 years.

Regarding alternative-fuel vehicles, this bill is generally the same as the House bill with respect to the $2,000 deduction, and the tax credit for lean-burn vehicles, and the Senate bill with respect to the alternative fuel vehicle tax credit. The tax credit may also be claimed against the alternative minimum tax. The advanced lean-burn vehicle credit is also limited by the total number of cars sold by the industry (combined with the tax credit for hybrids).

Section 4: Small Ethanol Producer Credit

This bill 1) allows patrons of farmers' cooperatives to qualify for the 10 cent small producer credit; 2) defines a small producer as one with less than 60 mil. Gal. capacity; 3) exempts the credit from the passive activity rules; 4) allows the credit to be claimed against the alternative minimum tax; and 5) exempts the credit from the regular income tax under IRC87. This provision would continue to be taxable as income, and no exemption would be provided from the passive activity tax rules.

Section 5: Incentives for Biodiesel

This bill provides a refundable tax credit of 50 cents per gallon for biodiesel and $1.00 per gallon of agri-biodiesel. They would be structured similarly to the proposed alcohol fuels tax credit and would be coordinated with the biodiesel mixtures tax credit, which is available in lieu of the tax exemption. Biodiesel is made from recycled vegetable oils and blended with petroleum diesel. Agri-biodiesel in defined as being made from virgin vegetable oils.

Section 6: Alcohol fuel and Biodiesel Mixtures Excise Tax Credit

Regarding ETBE used to produce gasohol, this bill would treat ETBE (ethyl tertiary butyl ether) the same as ethanol.

Regarding the blender's tax credit for fuel ethanol, instead of the excise tax exemption, ethanol blenders would claim an equivalent refundable tax credit of 5.2¢/gal. (on 90/10 blends), payable immediately by the Treasury. The new credit is coordinated with the existing blender's tax credits, which are extended through 2010. In addition, Gasohol blends would be taxed in full (18.4¢) thus allocating more money to the Highway Trust Fund.

Section 7: Nonapplication of Export Exemption to Delivery of Fuel to motor Vehicles Removed from United States