Tax Insights

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Charge me up – Fuel cell motor vehicle tax credit is back

Environmentalists and makers of fuel cell vehicles are once again charged up over the return of the Fuel Cell Motor Vehicle Tax Credit. This tax credit had originally expired on December 31, 2017 but was retroactively extended through December 31, 2020 by the SECURE Act that became law on December 20, 2019.

Alternative Fuel Vehicle Refueling Property Tax Credit

A qualified fuel cell vehicle is a “new” vehicle on at least four wheels propelled by power derived from one or more cells that convert chemical energy directly into electricity by combining oxygen with hydrogen fuel and meets certain additional requirements.

A tax credit of up to $8,000 is available for the purchase of qualified light-duty fuel cell vehicles, depending on the vehicle’s fuel economy. Tax credits are also available for the medium-and heavy-duty fuel cell vehicles. Credit amounts are based on vehicle weight.

Vehicle manufacturers must follow the procedures as published in Notice 2008-33 to certify that the vehicle meets certain requirements to claim the fuel cell vehicle credit. The notice also provides guidance to taxpayers about claiming the credit which is done on IRS Form 8910. Generally, you can rely on the manufacturer’s (or, in the case of a foreign manufacturer, its domestic distributor’s) certification to the IRS that a specific make, model, and model year qualifies for the credit and the amount of the credit for which it qualifies. The manufacturer or domestic distributor should be able to provide you with a copy of the IRS letter acknowledging the certification of the vehicle.

For any questions regarding vehicle tax credits, or other tax and accounting issues, please don’t hesitate to contact your Henry+Horne tax professional.

Dale F. Jensen, CPA