n-10-42.pdf

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Part III - Administrative, Procedural, and Miscellaneous

Phase-out of Credit for New Qualified Hybrid Motor Vehicles and New Advanced Lean
Burn Technology Motor Vehicles

Notice 2010-42

SECTION 1. PURPOSE
This notice announces the credit phase-out schedule for new advanced lean
burn technology motor vehicles and new qualified hybrid passenger automobiles and
light trucks sold by Volkswagen Group of America.
SECTION 2. BACKGROUND
Section 30B(a)(2) of the Internal Revenue Code provides for a credit determined
under § 30B(c) for certain new advanced lean burn technology motor vehicles. Section
30B(a)(3) provides for a credit determined under § 30B(d) for certain new qualified
hybrid motor vehicles. Both the new advanced lean burn technology motor vehicle
credit and the new qualified hybrid motor vehicle credit begin to phase out for a
manufacturer’s passenger automobiles and light trucks in the second calendar quarter
after the calendar quarter in which at least 60,000 of the manufacturer’s passenger
automobiles and light trucks that qualify for either credit have been sold for use or lease
in the United States (determined on a cumulative basis for sales after December 31,
2005). Taxpayers purchasing the manufacturer’s vehicles during the first two calendar

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quarters of the phase-out period may claim only 50 percent of the otherwise allowable
credit. Taxpayers purchasing the manufacturer’s vehicles during the third and fourth
calendar quarters of the phase-out period may claim only 25 percent of the otherwise
allowable credit. No credit is available for vehicles purchased after the last day of the
fourth calendar quarter of the phase-out period. Section 30B(k)(2) provides that the
credit provided by § 30B(a) shall not apply to any property purchased after December
31, 2010.
Notice 2006-9, 2006-1 C.B. 413, provides procedures for a vehicle manufacturer
(or in the case of a foreign vehicle manufacturer, its domestic distributor) to certify to the
Internal Revenue Service (Service) both (1) that a particular make, model and model
year of vehicle qualifies for either the new advanced lean burn technology motor vehicle
credit or the new qualified hybrid motor vehicle credit and (2) the amount of the credit
allowable with respect to that vehicle.
Section 5.05 of Notice 2006-9 requires a manufacturer (or, in the case of a
foreign vehicle manufacturer, its domestic distributor) that has received from the Service
an acknowledgement of its certification for a particular make, model, and model year of
vehicle to submit to the Service a report of the number of qualified vehicles sold by the
manufacturer (or, in the case of a foreign vehicle manufacturer, its domestic distributor)
to retail dealers during the calendar quarter. A qualified vehicle is defined for this
purpose as any passenger automobile or light truck that is a new advanced lean burn
technology motor vehicle or a new qualified hybrid motor vehicle.
In accordance with section 5.05 of Notice 2006-9, Volkswagen Group of America

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has submitted quarterly reports that indicate that its cumulative sales of qualified
vehicles to retail dealers reached the 60,000-vehicle limit during the calendar quarter
ending March 31, 2010. Accordingly, the credit for all new advanced lean burn
technology motor vehicles or new qualified hybrid passenger automobiles or light trucks
sold by Volkswagen Group of America will begin to phase out on July 1, 2010.
SECTION 3. SCOPE OF NOTICE
This notice applies to any make, model, or model year of new advanced lean
burn technology motor vehicle or new qualified hybrid passenger automobile or light
truck that is –
(1) sold by Volkswagen Group of America; and
(2) purchased for use or lease in the United States on or after July 1, 2010.
SECTION 4. CREDIT AMOUNT
.01 In general. If a new advanced lean burn technology motor vehicle or a new
qualified hybrid passenger automobile or light truck sold by Volkswagen Group of
America is purchased for use or lease after July 1, 2010, the allowable credit is as
follows:
(1) For vehicles purchased for use or lease on or after July 1, 2010, and on or
before December 31, 2010, the credit is 50 percent of the otherwise allowable amount
determined under § 30B(c) or (d) (whichever is applicable);
(2) For vehicles purchased for use or lease on or after January 1, 2011, no credit
is allowable, not because of the phase-out provisions of § 30B(f) but because the
credits under § 30B(c) and § 30B(d) expire for vehicles purchased after that date.

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.02 Certified Vehicles. The following tables set forth the credit available on or
after July 1, 2010, for advanced lean burn motor vehicles for which Volkswagen Group
of America received an acknowledgement of its certification from the Service.
Table 1
July 1, 2010 – December 31, 2010
Model Years Model Credit Amount
2009 Audi Q7 3.0L TDI

$575
2010

Audi Q7 3.0L TDI

$575
2010

Audi A3 2.0L TDI

$650
2010 Volkswagen Golf 2.0L TDI
(automatic)

$850
2010 Volkswagen Golf 2.0L TDI
(manual)

$650
2009 Volkswagen Jetta 2.0L TDI
Sedan

$650
2010 Volkswagen Jetta 2.0L TDI
Sedan

$650
2009 Volkswagen Jetta 2.0L TDI
SportWagon

$650
2010 Volkswagen Jetta 2.0L TDI
SportWagon

$650
2009 Volkswagen Touareg 3.0L
TDI

$575
2010 Volkswagen Touareg 3.0L
TDI

$575

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Table 2

The principal author of this notice is Patrick S. Kirwan of the Office of Associate
Chief Counsel (Passthroughs & Special Industries). For further information regarding
On or after January 1, 2011
Model Years Model Credit Amount
2009 Audi Q7 3.0L TDI

$0.00
2010

Audi Q7 3.0L TDI

$0.00
2010

Audi A3 2.0L TDI

$0.00
2010 Volkswagen Golf 2.0L TDI
(automatic)

$0.00
2010 Volkswagen Golf 2.0L TDI
(manual)

$0.00
2009 Volkswagen Jetta 2.0L TDI
Sedan

$0.00
2010 Volkswagen Jetta 2.0L TDI
Sedan

$0.00
2009 Volkswagen Jetta 2.0L TDI
SportWagon

$0.00
2010 Volkswagen Jetta 2.0L TDI
SportWagon

$0.00
2009 Volkswagen Touareg 3.0L
TDI

$0.00
2010 Volkswagen Touareg 3.0L
TDI

$0.00

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this notice contact Mr. Kirwan on (202) 622-3110 (not a toll-free call).