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Revenue dept. issues proposed rule for tax break

Associated Press Modified: September 26, 2012 at 10:15 pm •  Published: September 26, 2012

BATON ROUGE, La. (AP) — The Department of Revenue is proposing new regulations governing Louisiana's alternative fuel tax credit to limit estimated program costs to $10 million a year, far higher than initial projections of the tax break's price tag.

But the move to eliminate "flex-fuel vehicles" — which had been swept into eligibility with a rule later rescinded by Gov. Bobby Jindal — will keep the tax break from costing the state up to $250 million a year, according to a financial estimate included with the proposed regulations.

"The proposed rule will result in fewer alternative fuel credits," says the financial impact review statement signed by interim Revenue Secretary Jane Smith and Greg Albrecht, chief economist for the Legislative Fiscal Office.

However, since the regulations wouldn't take effect until Dec. 20, the state could still be hit with tax credit claims for hundreds of thousands of flex-fuel vehicle sales, leaving the state exposed to as much as $400 million in possible back tax credits that could be filed, Albrecht's analysis says.

The financial review says claims have been filed by about 8 to 10 percent of those eligible to get the credit, so it is unlikely alternative fuel tax break requests would hit that maximum exposure mark.

Though her name was attached to the financial analysis, Smith issued a statement late Wednesday suggesting she disagreed with the premise that flex-fuel cars and trucks could be eligible for the tax credit until the new regulations are put in place.

"There is no liability for tax credits for vehicles purchased that are not within the scope of the legislation," she said.

Smith didn't respond to repeated requests to be interviewed about the proposed rule.

The credit can be 10 percent of the cost of vehicle or $3,000, whichever is less.

The regulations governing the tax credit, passed in 2009 to encourage the purchase of alternative fuel vehicles, have been mired in controversy since April.

The tax break 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.

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