Questions and Answers
K.S.A. 1995 sup 79-32,201 (1995 HB 2161)
Corporate Income Tax; Individual Income Tax
Alternative Fuel Tax Credit
What is the Department's interpretation of K.S.A. 1995 sup 79-32,201, specifically the uncertainty regarding New Section 6 and the income tax credits that it allows.
As we interpret that section of the law, it is intended to provide a tax credit for certain taxpayers who make expenditures for qualified alternative-fueled motor vehicle property. However, it is not intended to allow an unlimited amount of expenditures to qualify for the fifty percent (50%) tax credit. It is our interpretation that New Section 6 provides for a tax credit of 50% of the total amount expended for each qualified alternative-fueled motor vehicle property, and that it provides for a cap or limit on that credit of $2500.00 for each qualified alternative-fueled motor vehicle property.
Our position is based upon a careful reading of the statute. New Section 6(a) consistently refers to "alternative-fueled motor vehicle property" throughout, except at the very end of New Section 6(a)(1) and New Section 6(a)(2), which refer to "each such motor vehicle." It is our opinion that the word "property" was inadvertently omitted from the end of those two sections, and that inserting the word "property" makes the statute consistent. Further, New Section 6(d) provides a definition for "qualified alternative-fueled motor vehicle property." That definition includes three categories that qualify for the tax credit. "Motor vehicle" is included as one of those categories. It is not delineated separately in the definition to show that the drafters intended for it to qualify for a different amount of tax credit.
Beyond the support that can be found within the statute, there is other evidence as well that supports this interpretation. As a practical matter, there must be a cap or limit on the amount of expenditures that would qualify for such a substantial tax credit. Obviously there is a large difference between a credit of 50% of $5000.00 and a credit of 50% of a much larger amount. We do not believe that the Legislature would purposely allow such a discrepancy.
Finally, the Brief of HB 2161 that Secretary LaFaver forwarded to Governor Graves in May, 1995, reflects our Department's understanding that the purpose of the then-proposed bill was to provide an income tax credit of 50% of the cost of each qualified alternative-fueled motor vehicle property, with the credit not to exceed $2500.00. Again there is no indication that any of the three categories of alternative-fueled motor vehicle property was to be treated differently in terms of the tax credit.
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