GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2015

H D

HOUSE DRH10317-MH-140 (03/27)

 

 

 

Short Title: Encourage LNG-Fueled Vehicles.

(Public)

Sponsors:

Representatives Wray and Saine (Primary Sponsors).

Referred to:

 

 

A BILL TO BE ENTITLED

AN ACT to provide incentives and regulatory relief for the conversion of vehicles to use of certain alternative fuels and for the construction of alternative fueling stations.

The General Assembly of North Carolina enacts:

SECTION 1. This act shall be known as, and may be cited as, the "North Carolina Energy Market Expansion Act."

SECTION 2.(a) G.S. 105‑129.16D is reenacted as it existed immediately before its repeal and reads as rewritten:

" 105‑129.16D. Credit for constructing renewable alternative fuel facilities.

(a) Dispensing Credit. A taxpayer that constructs and installs (i) purchases or constructs, (ii) installs, and (iii) places in service in this State a qualified commercial facility for dispensing renewable distributing, dispensing, or storing alternative fuel at a new or existing facility for distributing or dispensing fuel is allowed a credit against the income tax levied in Article 4 of this Chapter equal to fifteen percent (15%)twenty‑five percent (25%) of the cost to the taxpayer of purchasing or constructing and installing the part of the dispensing facility, including pumps, compressors, storage tanks, and related equipment, that is directly and exclusively used for dispensing distributing, dispensing, or storing renewable fuel.alternative fuel, as well as any improvements to an existing building required because of the presence or utilization of alternative fuels. A facility is qualified if the equipment used to store or distribute or dispense renewable alternative fuel is labeled for this purpose and clearly identified as associated with renewable alternative fuel.

The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in three equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the portion of the facility directly and exclusively used for dispensing distributing, dispensing, or storing renewable alternative fuel is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105‑129.17.

(b) Production Credit. A taxpayer that constructs and places in service in this State a commercial facility for processing renewable fuel is allowed a credit equal to twenty‑five percent (25%) of the cost to the taxpayer of constructing and equipping the facility. The entire credit may not be taken for the taxable year in which the facility is placed in service but must be taken in seven equal annual installments beginning with the taxable year in which the facility is placed in service. If, in one of the years in which the installment of a credit accrues, the facility with respect to which the credit was claimed is disposed of or taken out of service, the credit expires and the taxpayer may not take any remaining installment of the credit. The taxpayer may, however, take the portion of an installment that accrued in a previous year and was carried forward to the extent permitted under G.S. 105‑129.17.

Notwithstanding subsection (d) of this section, this section is repealed effective for facilities placed in service on or after January 1, 2017, in the case of a taxpayer that meets both of the following conditions:

(1) Signs a letter of commitment with the Department of Commerce on or before September 1, 2013, stating the taxpayer's intent to construct and place into service in this State a commercial facility for processing renewable fuel.

(2) Begins construction of the facility on or before December 31, 2013.

(b1) Alternative Production Credit. In lieu of the credit allowed under subsection (b) of this section, a taxpayer that constructs and places in service in this State three or more commercial facilities for processing renewable fuel and that invests a total amount of at least four hundred million dollars ($400,000,000) in the facilities is allowed a credit equal to thirty‑five percent (35%) of the cost to the taxpayer of constructing and equipping the facilities. In order to claim the credit, the taxpayer must obtain a written determination from the Secretary of Commerce that the taxpayer is expected to invest within a five‑year period a total amount of at least four hundred million dollars ($400,000,000) in three or more facilities. The credit must be taken in seven equal annual installments beginning with the taxable year in which the first facility is placed in service. If, in one of the years in which the installment of credit accrues, a facility with respect to which the credit was claimed is disposed of or taken out of service and the investment requirements of this subsection are no longer satisfied, the credit expires and the taxpayer may take any remaining installment of the credit only to the extent allowed under subsection (b) of this section. The taxpayer may, however, take the portion of an installment under this subsection that accrued in a previous year and was carried forward to the extent permitted under G.S. 105‑129.17. Notwithstanding the provisions of G.S. 105‑129.17, a taxpayer may carry forward unused portions of the credit allowed under this subsection for the succeeding 10 years.

If a taxpayer that claimed a credit under this subsection fails to meet the requirements of this subsection but meets the requirements of subsection (b) of this section, the taxpayer forfeits the difference between the alternative credit claimed under this subsection and the credit allowed under subsection (b) of this section. A taxpayer that forfeits part of the alternative credit under this subsection is liable for the additional taxes avoided plus interest at the rate established under G.S. 105‑241.21, computed from the date the additional taxes would have been due if the credit had not been allowed. The additional taxes and interest are due 30 days after the date the credit is forfeited. A taxpayer that fails to pay the additional taxes and interest by the due date is subject to penalties provided in G.S. 105‑236.

(c) No Double Credit. A taxpayer may not claim the credits allowed under subsections (b) and (b1) of this section with respect to the same facility. A taxpayer that claims any other credit allowed under this Chapter with respect to the costs of constructing and installing a facility may not take the credit allowed in this section with respect to the same costs.

(d) Sunset. This section is repealed effective for facilities placed in service on or after January 1, 2014.2025."

SECTION 2.(b) G.S. 105‑129.15 reads as rewritten:

" 105‑129.15. Definitions.

The following definitions apply in this Article:

(1) Alternative fuel. Any of the following dispensed for use in a motor vehicle by a qualified commercial facility, as defined in G.S. 105‑129.16D:

a. Compressed natural gas.

b. Liquified natural gas.

c. Liquified petroleum gas.

(1a) Business property. Tangible personal property that is used by the taxpayer in connection with a business or for the production of income and is capitalized by the taxpayer for tax purposes under the Code. The term does not include, however, a luxury passenger automobile taxable under section 4001 of the Code or a watercraft used principally for entertainment and pleasure outings for which no admission is charged.

(8) Renewable fuel. Either of the following:

a. Biodiesel, as defined in G.S. 105‑449.60.

b. Ethanol either unmixed or in mixtures with gasoline that are seventy percent (70%) or more ethanol by volume."

SECTION 2.(c) Article 3B of Subchapter I of Chapter 105 of the General Statutes is amended by adding a new section to read:

" 105‑129.16K. Credit for vehicles propelled by alternative fuel.

(a) A taxpayer that places in service in this State a qualifying vehicle is allowed a credit as provided in this section. A taxpayer places in service a qualifying vehicle if the taxpayer purchases a qualifying vehicle or converts a currently owned vehicle into a qualifying vehicle. For a taxpayer that purchases a qualifying vehicle, the credit is fifty percent (50%) of the incremental cost. For a taxpayer that converts a currently owned vehicle, the credit is fifty percent (50%) of the conversion cost.

(b) Definitions. The following definitions apply in this section:

(1) Alternative fuel heavy‑duty vehicle. A vehicle with a gross vehicle weight rating equal to or greater than 26,001 pounds that is propelled at least ninety percent (90%) by alternative fuel.

(2) Alternative fuel vehicle. A vehicle with a gross vehicle weight rating less than 26,001 pounds that is propelled solely by alternative fuel.

(3) Bi‑fuel vehicle. A vehicle with a gross vehicle weight rating less than 26,001 pounds that can be propelled by two separate fuel systems, one of which is alternative fuel.

(4) Conversion cost. The cost to modify a vehicle propelled by gasoline or diesel to change the fuel it uses for propulsion to an alternative fuel. In the case of a bi‑fuel vehicle, the cost to modify the vehicle to change the fuel it uses for partial propulsion to an alternative fuel.

(5) Incremental cost. The cost determined by subtracting from the purchase price of a qualifying vehicle the manufacturer's list price of the same model motor vehicle designed to operate on gasoline or diesel, whichever is greater/less.

(6) Qualifying vehicle. A vehicle that is used for commercial or business purposes and is an alternative fuel vehicle, an alternative fuel heavy‑duty vehicle, or a bi‑fuel vehicle.

(c) Ceilings. The credit allowed by this section may not exceed the following:

(1) For an alternative fuel vehicle, eight thousand dollars ($8,000).

(2) For a bi‑fuel vehicle, six thousand dollars ($6,000).

(3) For an alternative fuel heavy‑duty vehicle, twelve thousand dollars ($12,000).

(d) Sunset. This section is repealed effective for qualifying vehicles placed in service on or after January 1, 2025."

SECTION 3. G.S. 105‑130.5B reads as rewritten:

" 105‑130.5B. Adjustments when State decouples from federal accelerated depreciation and expensing.

(a) Special Accelerated Depreciation. A Except as provided in subsection (h) of this section, a taxpayer who takes a special accelerated depreciation deduction for property under section 168(k) or 168(n) of the Code must add to the taxpayer's federal taxable income eighty‑five percent (85%) of the amount taken for that year under those Code provisions. A taxpayer is allowed to deduct twenty percent (20%) of the add‑back in each of the first five taxable years following the year the taxpayer is required to include the add‑back in income.

(h) Special Rule for Alternative Fuel Vehicles. A taxpayer who takes a special accelerated depreciation deduction under section 168(k) of the Code in any year with respect to an alternative fuel vehicle is not required to add to the taxpayer's federal taxable income any portion of the amount taken for that year under such Code provision with respect to such property. For this purpose, an alternative fuel vehicle shall mean a motor vehicle intended for highway use that is fueled by alternative fuel, as defined by G.S. 105‑129.15."

SECTION 4. G.S. 20‑118(c) is amended by adding a new subdivision (18) to read:

"(18) A motor vehicle that is fueled, wholly or partially, by natural gas may operate on the highways of the State with a weight no more than 2,000 pounds higher than the otherwise applicable weight limit under subsection (b) of this section. To be eligible for this exception, the operator of the vehicle must be able to demonstrate that the vehicle is an alternative fuel heavy‑duty vehicle, a bi‑fuel vehicle using natural gas, or a vehicle that has been converted to an alternative fuel heavy‑duty vehicle. The allowance may not authorize any extension of the limitations provided on federal interstate highways in this State, unless the limitations or exceptions are authorized by the federal government. For purposes of this subdivision, alternative fuel heavy‑duty vehicle and bi‑fuel vehicle shall have the meaning set forth in G.S. 105‑129.16K."

SECTION 5. Section 2 is effective for taxable years beginning on or after January 1, 2015. The remainder of this act is effective when it becomes law.