The Internal Revenue Service (IRS) and the Department of the Treasury have issued Notice 2024-20 to provide guidance on eligible census tracts for the tax credit for qualified alternative fuel vehicle refueling property and to announce the intent to propose regulations for the credit.
Changes Related to the Inflation Reduction Act
The Inflation Reduction Act amended the credit for qualified alternative fuel vehicle refueling property, with the changes applying to qualified properties placed in service after December 31, 2022, and before January 1, 2033.
For non-depreciable properties, the credit amount is 30% of the cost of the qualified property placed in service during the fiscal year. For depreciable properties, the credit is 6% of the cost of the qualified property placed in service during the fiscal year but can be increased to 30% if wage and apprenticeship requirements are met. The credit is limited to $100,000 for depreciable property and $1,000 for non-depreciable property.
Requirements for Credit Eligibility
To qualify for the credit, the property must be placed in service in an eligible census tract. An eligible census tract is any population census tract that constitutes a low-income community or any population census tract that is not an urban area.
The main purpose of the notice is to provide taxpayers with a list of eligible census tracts in advance of the 2023 filing season and to explain how taxpayers can identify the 11-digit census tract identifier for the location where the property is placed in service. The IRS intends to propose regulations including this information in the future, but taxpayers may rely on the notice until proposed regulations are published.
Technical Details and FAQs Released by the IRS
The notice also provides background and definitions, describes relevant census concepts, provides definitions for low-income communities and non-urban census tracts, and explains which delineation of census tract boundaries is applicable for each type of census tract determination. Additionally, the notice describes how updates to low-income community census tract determinations are considered for credit eligibility.
Finally, the IRS has released a series of frequently asked questions (FAQs) related to the tax credit for qualified alternative fuel vehicle refueling property.
For more information about the tax credit for qualified alternative fuel vehicle refueling property, you can visit the Inflation Reduction Act of 2022 page on IRS.gov.
Glossary:
- IRS: Internal Revenue Service - The U.S. government agency responsible for the collection of federal taxes.
- Treasury: Department of the Treasury of the United States - The government agency responsible for managing public finances and fiscal policies.
- Inflation Reduction Act: Legislation that has impacted the credit for the installation of qualified alternative fuel vehicle refueling property.
- Tax Credit: A tax benefit that allows taxpayers to reduce the amount of taxes owed.
- Depreciation: The reduction in the value of an asset over time, used to calculate the credit for depreciable property.
- Low-Income Community: Geographical area characterized by a lower-than-average economic level.
- Census: Systematic collection of data on the population and housing.
- Green Vehicles: Vehicles with low environmental impact or powered by sustainable energy sources.
- Tax Regulations: Rules and criteria established in the field of taxation.
- Sustainable Energy: An approach to energy that seeks to minimize environmental impact, often promoting renewable sources and eco-friendly practices.
