Golf Cars Do NOT Qualify for Tax Credit, NEVs Do!

By Bill Moore

Posted: 29 Oct 2009

I hate to disappoint John Stossel, but golf carts do not qualify for IRS tax credits as he bemoans in his Fox News blog. Just because some enterprising salesman in Florida named Tony Colangelo appears to be skating on thin ice with the IRS by advertising free golf cars, doesn't mean the Obama Administration has suddenly sanctioned yet another taxpayer giveaway.

A reader wrote me today admonishing me to let everyone know about the tax credit on golf carts/cars, something I had totally missed; so thanks for the heads up. Apparently few in the media understand the difference between a Neighborhood Electric Vehicle and a golf cart, so allow me to illuminate my colleagues.

Back in 1998, the National Highway Traffic Safety Administration or NHTSA authorized the institution of FMVSS 500, a special vehicle category designed to allow the use of low-speed electric vehicles on public roads as long as they met the following criteria. They could only have a top speed of 25 mph. They had to have conventional turn signals, headlights, windshield wipers and motor vehicle-grade safety glass windshields. While they didn't have to pass NHTSA crash safety standards, they did have to include seat belts for all passengers. They also were only permitted on city streets with speed limits of 35 mph or less. NHTSA left it to the states of decide if they would allow the vehicles to legally operate on public thoroughfares.

The first two vehicles to meet this standard were the Bombardier NV (discontinued two years later due to disappointing sales) and GEM neighborhood electric vehicle, which continues in production today; some 38,000 have been sold worldwide. Both vehicles were promoted to gated communities and offered two speed modes: 12-15 mph for use on golf courses, and 25 mph for use on streets. Subsequent manufacturers like e-Ride, ZENN, Dynasty, Zap offered versions of FMVSS 500 vehicles intended only for use on streets. Golf course wardens would have called the cops had these vehicles tried to cruise the greens.

Many gated communities and even small towns allow golf carts, as well as NEVs on their public streets. It is legal to do so in some 40+ states in America. However, despite the outward similarity between a conventional gas or electric golf car and something like the GEM or the now-defunct Think neighbor, the two vehicle types are miles apart in safety and engineering. GEM is a division of Chrysler and as such, has, over the years, upgraded its components to automotive grade equipment. Where the typical golf cart is 36-48 volts, the GEM is 72 volts.

And herein lies the reason why golf cars do NOT qualify for federal tax credits. The IRS ruling usually referred to is § 30D of the Internal Revenue Code. Here is what it states:

The new qualified plug-in electric drive motor vehicle credit applies to plug-in electric drive motor vehicles, including low speed vehicles as defined in section 4(6) of this notice, that --

(1) Are placed in service by the taxpayer in a taxable year beginning after December 31, 2008;

(2) Are acquired by the taxpayer on or before December 31, 2009; and

(3) Otherwise meet the requirements of § 30D.
Further, in defining what a Low Speed Vehicle is, the IRS specifically states in Section 4, sub-point 07:
.07 Low Speed Vehicle. The term “low speed vehicle” means a vehicle:
(1) That has at least four wheels;
(2) That is manufactured primarily for use on public streets, roads and highways (not including a vehicle operated exclusively on a rail or rails);
(3) That is not manufactured primarily for off-road use, such as primarily for use on a golf course;
(4) Whose 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
(5) Whose gross vehicle weight rating is less than 3,000 pounds.
You'll note that vehicles designed specifically for use on a golf course do NOT meet the IRS definite of a Low Speed Vehicle.

Further, the IRS -- in compliance with the American Recovery and Reinvestment Act on 2009 -- stipulates that a qualifying plug-in vehicle has to have a minimum battery capacity of 4kWh before it can qualify for a $2,500 base credit. Every kilowatt hour above this qualifies for an additional $417 in credits. The kWh regulation immediately eliminates 50% or more of the golf cars out there because they are powered by gasoline or other fossil fuels. The credit is equal to the sum of: (1) $2,500, plus (2) $417 for each kilowatt hour of traction battery capacity in excess of 4 kilowatt hours. While a common electric golf car can have a kilowatt hour capacity in excess of 4 kWh, they still do not qualify for the credit as is pointed out on Golf Car News. The tax credit is clearly designed for NEVs that meet FMVSS 500 standards, not your run-of-the-mill golf car, customized or not.

So, how much of a tax credit does a FMVSS-compliant NEV merit? Golf Car News calculates a bit over $4,000, and the vehicle must be purchased and placed in service on or before December 31, 2009.

Now I suspect that Mr. Stossel really doesn't care about such nuances of IRS tax code and what distinguishes a common garden variety golf car from a truly street legal NEV, but as a few folks have learned, they can meet a lot of their personal mobility needs with a NEV and leave the gas-hog in the garage, saving money, employing American workers in Georgia, North Dakota and Minnesota, while reducing the nation's dependence on imported oil; and I would have thought a conservative, dollars 'n cents, national security kind-a-guy like John would appreciate that fact.

Guess not.

If you want to read more about what's allowable in terms of IRS plug-in vehicle deductions visit this page on the IRS website . Another good web resource on this topic is the Cleveland State University Law Library Blog.

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