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La. accountants seek information on tax credit

BATON ROUGE, La. -- Louisiana accountants have asked the Department of Revenue for more guidance on who is eligible for the state's alternative fuel vehicle tax credit, as Gov. Bobby Jindal's administration proposes to spell out limits on the pricey program.

At issue is whether "flex-fuel" vehicles should be authorized for a tax credit until new regulations proposed by the administration take effect Dec. 20, a decision that could change the price tag for the program by hundreds of millions of dollars.

Ronald Gitz, executive director of the Society of Louisiana Certified Public Accountants, said those flex-fuel cars and trucks _ which have the ability to burn ethanol but also use gasoline _ should qualify for the tax break until the new regulations take effect.

Gitz's written comments to the revenue department this week came as the public comment period closed Thursday on the proposed regulations.

His position is at odds with the Jindal administration, which has stopped allowing the credits for those vehicles.

The alternative fuel vehicle tax break's cost has grown much larger than estimated and has become a headache for the Republican governor because of differing interpretations about eligibility.

Proposed new regulations would definitively eliminate flex-fuel vehicles from qualifying.

If the flex-fuel vehicles are included until the new regulations take effect, estimates are that the state could be liable for as much as $400 million in possible back tax credits through the program, which gives a credit of 10 percent of the cost of vehicle or $3,000, whichever is less.

Flex-fuel cars and trucks had been specifically described as eligible in a rule issued earlier this year by the revenue department's then-secretary, Cynthia Bridges. The rule was rescinded by Jindal amid complaints it could devastate the state budget. Bridges abruptly resigned from her job a day later.

Revenue officials haven't allowed the tax credit for flex-fuel vehicles since Jindal's June 14 scrapping of the rule. Gitz disagreed with that decision, though he acknowledged the "enormous fiscal burden on the state."

"Careful consideration should be given to applying the proposed regulation prospectively only, from Dec. 20, 2012, forward. The new proposed regulation imposes a new requirement that is not in the original statute, and it appears unfair to hold taxpayers to the arbitrary June 14, 2012, cutoff date," he wrote.

Interim Revenue Secretary Jane Smith has said in a statement that flex-fuel cars and trucks don't qualify for the tax credit currently, suggesting that's "not within the scope of the legislation," which she sponsored when she was a state lawmaker.

However, an analysis of the law and the proposed new regulations by Greg Albrecht, chief economist for the Legislative Fiscal Office, disagrees with Smith's stance on the issue.

Albrecht's analysis says that the proposed regulations would limit the tax credit program costs to an estimated $10 million. Without the regulations, the analysis says, the program could cost up to $250 million a year because of the inclusion of flex-fuel vehicles.

The tax credit was passed in 2009, with supporters saying it was designed as an incentive for buying "clean-burning" vehicles or converting cars and trucks to lessen the reliance on gasoline and diesel and encourage alternative fuels, like compressed natural gas and ethanol.

The department's proposed regulations will be sent to lawmakers Nov. 1 for review.