SECTION 2. BACKGROUND

.01 Section 45W, Qualified Commer- cial Clean Vehicles Credit

Section 13403(a) of the IRA added new § 45W to the Code, which is effective for vehicles acquired after December

31, 2022, and before January 1, 2033. A taxpayer can claim a § 45W credit for purchasing and placing in service a qualified commercial clean vehicle, as defined in § 45W(c), during the taxable year. The amount of the § 45W credit is the lesser of (1) 15 percent of the taxpayer’s basis in the vehicle (30 percent in the case of a vehicle not powered by a gasoline or diesel internal combustion engine), or (2) the incremental cost of the vehicle. ¹ Under § 45W(b) (4), the credit is limited to $7,500 in the case of a vehicle that has a gross vehicle weight rating of less than 14,000 pounds, and $40,000 for all other vehicles.

Section 45W(c) defines “qualified commercial clean vehicle” for purposes of the § 45W credit. ² Section 45W(d) establishes special rules for purposes of the § 45W credit, including the application of basis reduction, domestic usage, and recapture rules similar to those under § 30D(f) of the Code and a rule disallowing a double benefit under § 45W for a taxpayer claiming a new clean vehicle credit under § 30D. Section 45W(e) provides that no § 45W credit is allowed with respect to any vehicle unless the taxpayer includes the vehicle identification number (VIN) of such vehicle on the tax return for the taxable year. Section 45W(f) grants the Secretary of the Treasury or her delegate (Secretary) authority to issue regulations or other guidance to carry out the purposes of § 45W, including regulations or other guidance relating to determination of the incremental cost of any qualified commercial clean vehicle.

.02 Section 30C, Alternative Fuel Vehi- cle Refueling Property Credit

Section 30C was originally enacted by § 1342(a) of the Energy Policy Act of 2005, Public Law 109-58, 119 Stat. 1049 (Aug. 8, 2005), to provide a credit for the cost of qualified alternative fuel vehicle refueling property. Section 30C has been amended several times since its enactment, most recently by § 13404 of the IRA effective with respect to qualified alternative fuel vehicle refueling property placed in service after December 31, 2022, and on or before December 31, 2032.

With respect to such qualified alternative fuel vehicle refueling property, the amount of the § 30C credit is equal to 30 percent (6 percent in the case of property of a character subject to depreciation) of the cost of such property. The § 30C credit with respect to any single item of qualified alternative fuel vehicle refueling property is limited to $100,000 in the case of any such item of property of a character subject to an allowance for depreciation, and $1,000 in any other case. For purposes of the § 30C credit, § 30C(c) defines the term “qualified alternative fuel vehicle refueling property” (1) by making certain modifications to the term “qualified clean-fuel vehicle refueling property” as defined in former § 179A of the Code (providing a deduction for clean-fuel vehicles and certain refueling property) as in effect prior to its repeal, (2) adding bidirectional charging equipment to that modified definition, and (3) requiring such property to be located in an eligible census tract, as defined in § 30C(c)(3), which is either a low-income community as described in § 45D(e) or not an urban area. ³

1 Section 45W(b)(2) provides that the incremental cost of any qualified commercial clean vehicle is an amount equal to the excess of the purchase price for such vehicle over the purchase price of a comparable vehicle. Section 45W(b)(3) defines “comparable vehicle” to mean any vehicle that is powered solely by a gasoline or diesel internal combustion engine and is comparable in size and use to such vehicle.

2 Under § 45W(c), a “qualified commercial clean vehicle” is defined as any vehicle of a character subject to the allowance for depreciation that: (1) meets the requirement under § 30D(d)(1)(C) of being made by a qualified manufacturer and is acquired for use or lease by the taxpayer and not for resale, (2) either-- (A) meets the requirement under § 30D(d)(1)(D) of being treated as a motor vehicle for purposes of title II of the Clean Air Act and is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails), or (B) is mobile machinery, as defined in § 4053(8) (including vehicles that are not designed to perform a function of transporting a load over the public highways), and (3) either-(A) is propelled to a significant extent by an electric motor which draws electricity from a battery that has a capacity of not less than 15 kilowatt hours (or, in the case of a vehicle that has a gross vehicle weight rating of less than 14,000 pounds, 7 kilowatt hours) and is capable of being recharged from an external source of electricity, or (B) is a motor vehicle that satisfies the requirements under § 30B(b)(3)(A) and (B) for being a new qualified fuel cell motor vehicle.

3 Section 30(e)(6) provides that references in § 30C to § 179A are references to former § 179A as in effect immediately before its repeal by Public Law 113-295, div. A, title II, §221(a)(34) (A), 128 Stat. 4042 (December 19, 2014). Section 30C(c)(1) generally defines the term “qualified alternative fuel vehicle refueling property” to have the same meaning as the term “qualified clean-fuel vehicle refueling property” would have under former § 179A, if: (A) former § 179A(d)(1) (limiting deduction to property of a character subject to the allowance for depreciation) did not apply to property installed on property which is used as the principal residence (within the meaning of § 121 of the Code) of the taxpayer, and (B) only the following were treated as clean-burning fuels for purposes of former § 179A(d): (i) Any fuel at least 85 percent of the volume of which consists of one or more of the following: ethanol, natural gas, compressed natural gas, liquified natural gas, liquefied petroleum gas, or hydrogen; (ii) Any mixture-- (I) which consists of two or more of the following: biodiesel (as defined in § 40A(d)(1) of the Code), diesel fuel (as defined in § 4083(a)(3) of the Code), or kerosene, and (II) at least 20 percent of the volume of which consists of biodiesel (as so defined) determined without regard to any kerosene in such mixture; (iii) Electricity; (iv) Any transportation fuel (as defined in § 45Z(d)(5) of the Code).

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Section 30C(d) addresses the application of § 30C with other credits. Section 30C(e) provides special rules for purposes of § 30C. Section 30C(f) provides a special rule for electric charging sta- tions for certain vehicles with two or three wheels for purposes of the § 30C credit . Section 30C(g)(1) provides that the amount of § 30C credit for any qualified alternative fuel vehicle refueling property of a character subject to an allowance for depreciation that is part of a qualified alternative fuel vehicle refueling project is multiplied by 5 if certain prevailing wage and apprenticeship requirements are met. ⁴ Section 30C(g)(4) grants the Secretary authority to issue regulations or other guidance to administer the wage and apprenticeship requirements of § 30C(g), and § 30C(h) authorizes the Secretary to prescribe such regulations as necessary to carry out the provisions of § 30C.