GOLF CARTS AND QUALIFIED ELECTRIC VEHICLE TAX CREDIT
A question I received recently was whether a Club Car Carryall Villager LSV Crown CR-225, which looks like a fancy golf cart, qualifies for the electric vehicle tax credit if it has a windshield and roof. The taxpayers who asked me this question use the cart to drive around in their retirement community as well as on the golf course. The ubiquitous ‘golf cart tax credit’ question.
GOLF CAR TAX CREDIT
The simple answer is, it depends on whether the vehicle in question meets the definition of ‘motor vehicle’ as defined and subsequently updated by IRS Notice. Bottom line it appears that if the vehicle can exceed 40 MPH (aka NOT a Low Speed Vehicle or LSV) and is ‘street legal’ (aka requires a license to operate) – it might qualify, assuming of course you can find a manufacturer.
IRS Notice 09-54 published in IRB 09-26 (page 1124) initially implied that a vehicle is a qualified plug-in electric drive motor vehicle as per IRC §30D and provides a credit for low-speed vehicles (LSV) acquired prior to January 1, 2010. To qualify 4 criteria were required. The vehicle:
Has at least four wheels;
Is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails);
Is not manufactured primarily for off-road use, such as primarily for use on a golf course; Speed attainable in one mile is more than 20 miles per hour and not more than 25 miles per hour on a paved level surface; and
Gross vehicle weight rating is less than 3,000 pounds.
This is where it gets interesting and why the US Tax Code is a wasteland for tax nerds to kill copious hours of valuable time. IRS Notice 09-89 published in IRB 09-48 (page 714) clarified the definition of motor vehicle as follows:
“The term “motor vehicle” means any vehicle that is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels. For purposes of this notice, the term “motor vehicle” does not include a low-speed vehicle within the meaning of section 571.3 of Title 49 of the Code of Federal Regulations, or a vehicle that is manufactured primarily for off-road use, such as primarily for use on a golf course.”
IN ORDER TO QUALIFY FOR THE CREDIT
As reported on IRS Form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit & Instructions the vehicle in question MUST ALSO MEET this above definition of motor vehicle. Low speed vehicles (under 40 MHP) do not qualify. Regrettably the Club Car Carryall Villager LSV Crown CR-225 does not meet this standard for max speed and subsequently does not qualify for the credit.
HOW MUCH IS THE TAX CREDIT?
Determining the amount of the credit for 2021 is complicated and, luckily, is calculated by the manufacturer. The §30D credit is equal to the sum of $ 2,500 plus $417 for each kilowatt-hour of traction battery capacity in excess of four kilowatt-hours up to $7,500.
APPROVED MANUFACTURERS
For more on this credit and a list of approved manufacturers check out this link.