Notice 2006-9

Part III. Administrative, Procedural, and Miscellaneous
Credit for New Qualified
Alternative Motor Vehicles
(Advanced Lean Burn
Technology Motor Vehicles
and Qualified Hybrid Motor
Vehicles)
Notice 2006–9
SECTION 1. PURPOSE
This notice sets forth interim guidance,
pending the issuance of regulations, relating to the new advanced lean burn technology motor vehicle credit under § 30B(a)(2)
and (c) of the Internal Revenue Code and
the new qualified hybrid motor vehicle
credit under § 30B(a)(3) and (d). Specifically, this notice 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 passenger automobile or light
truck of a particular make, model, and
model year meets certain requirements that
must be satisfied to claim the new advanced lean burn technology motor vehicle credit under § 30B(a)(2) and (c) or the
new qualified hybrid motor vehicle credit
under § 30B(a)(3) and (d); and
(2) the amount of the credit allowable
with respect to that vehicle.
This notice also provides guidance to
taxpayers who purchase passenger automobiles and light trucks regarding the conditions under which they may rely on the
vehicle manufacturer’s (or, in the case of a
foreign vehicle manufacturer, its domestic
distributor’s) certification in determining
whether a credit is allowable with respect
to the vehicle and the amount of the credit.
The Service and the Treasury Department
expect that the regulations will incorporate
the rules set forth in this notice.
SECTION 2. BACKGROUND
Section 30B(a)(2) 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.
The new advanced lean burn technology

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motor vehicle credit is the sum of: (1) a
fuel economy amount that varies with the
rated fuel economy of a qualifying vehicle
compared to the 2002 model year city fuel
economy for a vehicle in its weight class;
and (2) a conservation credit based on the
estimated lifetime fuel savings of the vehicle compared to fuel used by a vehicle in its
weight class and with fuel economy equal
to the 2002 model year city fuel economy.
The new qualified hybrid motor vehicle
credit for passenger automobiles and light
trucks is computed under the same formula
as the new advanced lean burn technology
motor vehicle credit. 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
in the United States (determined on a cumulative basis for sales after December 31,
2005).
SECTION 3. SCOPE OF NOTICE
.01 Vehicles Covered. Both the new advanced lean burn technology motor vehicle credit and the new qualified hybrid motor vehicle credit apply to passenger automobiles and light trucks. The new qualified hybrid motor vehicle credit also applies to other vehicles, but the credit for vehicles that are not passenger automobiles
and light trucks is computed under a different formula than that applicable to passenger automobiles and light trucks. This notice applies only to passenger automobiles
and light trucks. Guidance regarding the
credit for new qualified hybrid motor vehicles that are not passenger automobiles or
light trucks will be provided in a separate
notice. Guidance regarding the credits for
other vehicles that are eligible for credits
under § 30B (new qualified fuel cell motor
vehicles and new qualified alternative fuel
motor vehicles) will be provided in separate notices.
.02 Rules Common to All Qualifying Vehicles. This notice does not address a number of rules that are common to all motor vehicles that qualify for credits under

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§ 30B. These rules include: (1) rules under
which lessors may claim the credits allowable under § 30B; (2) the rule preventing
the credits from being used to reduce alternative minimum tax liability; and (3) rules
relating to recapture of the credit. The Service and Treasury Department expect to
issue separate guidance relating to these
rules.
SECTION 4. MEANING OF TERMS
The following definitions apply for purposes of this notice:
(1) In General. Terms used in this notice and not defined in this section have the
same meaning as when used in § 30B.
(2) Passenger Automobile and Light
Truck. Section 30B provides that the
terms “passenger automobile” and “light
truck” have the meaning given in regulations prescribed by the Administrator
of the Environmental Protection Agency
for purposes of the administration of Title
II of the Clean Air Act (42 U.S.C. 7521
et seq.). Those regulations currently do
not include a definition of these terms, but
§ 30B(b)(2)(B) provides the 2002 model
year city fuel economy tables that must
be used to determine the amount of the
credit for passenger automobiles and light
trucks. Those tables do not prescribe the
fuel economy for vehicles having a gross
vehicle weight of more than 8,500 pounds.
Accordingly, until either the Environmental Protection Agency issues regulations or
future guidance issued by the Service provides otherwise (whichever occurs first),
any vehicle having a gross vehicle weight
of more than 8,500 pounds will not be
treated as a passenger automobile or light
truck for purposes of this notice.
(3) City Fuel Economy. The term “city
fuel economy” has the meaning prescribed
in 40 CFR § 600.002–85(11).
(4) Gasoline-Gallon-Equivalent. In the
case of a motor vehicle that does not use
gasoline, the 2002 model year city fuel
economy is determined on a gasoline-gallon-equivalent basis. The gasoline-gallon-equivalents for the 2002 model year
city fuel economy may be obtained from
the Environmental Protection Agency, Office of Transportation and Air Quality at
the following address:

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Mailing Address
USEPA Headquarters
Ariel Rios Building
1200 Pennsylvania Avenue, N.W.
Mail Code: 6401A
Washington, DC 20460
(5) Vehicle Inertia Weight Class. The
term “vehicle inertia weight class” means,
with respect to a motor vehicle, its inertia weight class determined under 40 CFR
§ 86.129–94. Under 40 CFR § 86.082–2,
the inertia weight class is the class (a group
of test weights) into which a vehicle is
grouped based on its loaded vehicle weight
in accordance with the provisions of 40
CFR part 86.
SECTION 5. MANUFACTURER’S
CERTIFICATION AND QUARTERLY
REPORTS
.01 When Certification Permitted. A
vehicle manufacturer (or, in the case of a
foreign vehicle manufacturer, its domestic
distributor) may certify to purchasers that
a passenger automobile or light truck of
a particular make, model, and model year
meets all requirements (other than those
listed in section 5.02 of this notice) that
must be satisfied to claim the new advanced lean burn technology motor vehicle credit or the new qualified hybrid motor vehicle credit, and the amount of the
credit allowable under § 30B(a)(2) and (c)
or § 30B(a)(3) and (d) with respect to the
vehicle, if the following requirements are
met:
(1) The manufacturer (or, in the case of
a foreign vehicle manufacturer, its domestic distributor) has submitted to the Service, in accordance with section 6 of this
notice, a certification with respect to the
vehicle and the certification satisfies the
requirements of section 5.03 of this notice;
(2) The manufacturer (or, in the case of
a foreign vehicle manufacturer, its domestic distributor) has received an acknowledgment of the certification from the Service.
.02 Purchaser’s Reliance. Except as
provided in section 5.07 of this notice, a
purchaser of a passenger automobile or
light truck may rely on the manufacturer’s
(or, in the case of a foreign vehicle manufacturer, its domestic distributor’s) certification concerning the vehicle and the

2006–6 I.R.B.

Courier Address
USEPA Headquarters
Ariel Rios Building
1200 Pennsylvania Avenue, N.W.
Room 6502A
Washington, DC 20004
amount of the credit allowable with respect
to the vehicle (including cases in which the
certification is received after the purchase
of the vehicle). The purchaser may claim a
credit in the certified amount with respect
to the vehicle if the following requirements
are satisfied:
(1) The vehicle is placed in service by
the taxpayer after December 31, 2005, and
is purchased on or before December 31,
2010.
(2) The original use of the vehicle commences with the taxpayer.
(3) The vehicle is acquired for use or
lease by the taxpayer, and not for resale.
(4) The vehicle is used predominantly
in the United States.
.03 Content of Certification. The certification must contain the information required in section 5.03(1) of this notice and
the additional information required in section 5.03(2) or section 5.03(3), whichever
applies.
(1) All Vehicles. For all vehicles, the
certification must contain—
(a) The name, address, and taxpayer
identification number of the certifying entity;
(b) The make, model, model year, and
any other appropriate identifiers of the motor vehicle;
(c) A statement that the vehicle is made
by a manufacturer;
(d) The type of credit for which the vehicle qualifies (that is, either the new advanced lean burn technology motor vehicle credit, or the new qualified hybrid motor vehicle credit for passenger automobiles and light trucks);
(e) The amount of the credit for the vehicle (showing computations);
(f) The gross vehicle weight rating of
the vehicle;
(g) The vehicle inertia weight class of
the vehicle;
(h) The city fuel economy of the vehicle;
(i) A statement that the vehicle complies with the applicable provisions of the
Clean Air Act;

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(j) A copy of the certificate that the vehicle meets or exceeds the applicable Bin
5 Tier II emission standard (if the vehicle has a gross vehicle weight rating of
6,000 pounds or less), or the applicable
Bin 8 Tier II emission standard (if the
vehicle has a gross vehicle weight rating
of more than 6,000 pounds, but not more
than 8,500 pounds) established in regulations prescribed by the Administrator of
the Environmental Protection Agency under § 202(i) of the Clean Air Act for that
make and model year vehicle;
(k) A statement that the vehicle complies with the applicable air quality provisions of state law of each state that has
adopted the provisions under a waiver under § 209(b) of the Clean Air Act or a list
identifying each state that has adopted applicable air quality provisions with which
the vehicle does not comply;
(l) A statement that the vehicle complies with the motor vehicle safety provisions of 49 U.S.C. §§ 30101 through
30169;
(m) A declaration, applicable to the
certification and any accompanying documents, signed by a person currently
authorized to bind the manufacturer (or, in
the case of a foreign vehicle manufacturer,
it domestic distributor) in these matters, in
the following form:
“Under penalties of perjury, I declare
that I have examined this certification, including accompanying documents, and to
the best of my knowledge and belief, the
facts presented in support of this certification are true, correct, and complete.”
(2) New Advanced Lean Burn Technology Motor Vehicles. A certification relating to a new advanced lean burn technology motor vehicle must also contain a
statement that the vehicle has an internal
combustion engine that—
(a) Is designed to operate primarily using more air than is necessary for complete
combustion of the fuel;
(b) Incorporates direct injection; and
(c) Achieves at least 125 percent of the
2002 model year city fuel economy.

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(3) New Qualified Hybrid Motor Vehicles. A certification relating to a new qualified hybrid motor vehicle must also contain—
(a) A statement that the motor vehicle draws propulsion energy from onboard
sources of stored energy that are both an
internal combustion or heat engine using
consumable fuel, and a rechargeable energy storage system;
(b) A copy of the certificate that the motor vehicle meets or exceeds the equivalent
qualifying California low emission vehicle
standard under § 243(e)(2) of the Clean Air
Act for that make and model year; and
(c) Evidence that the maximum power
available from the rechargeable energy
storage system during a standard 10 second pulse power or equivalent test is at
least 4 percent of the sum of the power
and the SAE net power of the internal
combustion or heat engine;
.04 Acknowledgment of Certification.
The Service will review the original signed
certification and issue an acknowledgment
letter to the vehicle manufacturer (or, in the
case of a foreign vehicle manufacturer, its
domestic distributor) within 30 days of receipt of the request for certification. This
acknowledgment letter will state whether
purchasers may rely on the certification.
.05 Quarterly Reporting of Sales of
Qualified Vehicles. A manufacturer (or,
in the case of a foreign vehicle manufacturer, its domestic distributor) that has
received an acknowledgment of its certification from the Service must submit to
the Service, in accordance with section 6
of this notice, 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
a retail dealer during the calendar quarter.
For this purpose, a qualified vehicle is any
passenger automobile or light truck that
is a new advanced lean burn technology
motor vehicle or a new qualified hybrid
motor vehicle. The quarterly report must
contain the following information:
(1) The name, address, and taxpayer
identification number of the reporting entity;
(2) The number of qualified vehicles
sold by the reporting entity to a retail
dealer during the calendar quarter;
(3) The make, model, model year, and
any other appropriate identifiers of the

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qualified vehicles sold during the calendar
quarter; and
(4) A declaration, applicable to the
quarterly report and any accompanying
documents, signed by a person currently
authorized to bind the manufacturer (or, in
the case of a foreign vehicle manufacturer,
its domestic distributor) in these matters,
in the following form:
“Under penalties of perjury, I declare
that I have examined this report, including accompanying documents, and to the
best of my knowledge and belief, the facts
presented in support of this report are true,
correct, and complete.”
.06 Acknowledgment of Quarterly Report. The Service will review the original signed quarterly report and issue an acknowledgment letter to the vehicle manufacturer (or, in the case of a foreign vehicle manufacturer, its domestic distributor) within 30 days of receipt of the request for certification. This acknowledgment letter will state whether purchasers
may continue to rely on the certification.
.07 Effect of Erroneous Certification,
Erroneous Quarterly Reports, or Failure
to Make Timely Quarterly Reports.
(1) Erroneous Certification or Quarterly Report. The acknowledgment that
the Service provides for a certification is
not a determination that a vehicle qualifies for the credit, or that the amount of
the credit is correct. The Service may,
upon examination (and after any appropriate consultation with the Department of
Transportation or the Environmental Protection Agency), determine that the vehicle is not a new advanced lean burn technology motor vehicle or new qualified hybrid motor vehicle or that the amount of
the credit determined by the manufacturer
(or, in the case of a foreign vehicle manufacturer, its domestic distributor) to be allowable with respect to the vehicle is incorrect. In either event, or in the event that the
manufacturer (or, in the case of a foreign
vehicle manufacturer, its domestic distributor) makes an erroneous quarterly report,
the manufacturer’s (or, in the case of a
foreign vehicle manufacturer, its domestic
distributor’s) right to provide a certification to future purchasers of the advanced
lean burn technology or hybrid motor vehicles will be withdrawn, and purchasers
who acquire a vehicle after the date on
which the Service publishes an announcement of the withdrawal may not rely on the

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certification. Purchasers may continue to
rely on the certification for vehicles they
acquired on or before the date on which the
announcement of the withdrawal is published (including in cases in which the vehicle is not placed in service and the credit
is not claimed until after that date), and
the Service will not attempt to collect any
understatement of tax liability attributable
to such reliance. Manufacturers (or, in
the case of foreign vehicle manufacturers,
their domestic distributors) are reminded
that an erroneous certification or an erroneous quarterly report may result in the imposition of penalties:
(a) under § 7206 for fraud and making
false statements; and
(b) under § 6701 for aiding and abetting
an understatement of tax liability in the
amount of $1,000 ($10,000 in the case of
understatements by corporations) per return on which a credit is claimed in reliance on the certification).
(2) Failure to Make Timely Quarterly
Report. If a manufacturer (or, in the case
of a foreign vehicle manufacturer, its domestic distributor) fails to make a quarterly report in accordance with section 5.05
of this notice and at the time specified in
section 6.02 of this notice, the acknowledgment letter issued under section 5.04
of this notice may be withdrawn, and purchasers will not be entitled to rely on the
related certification for quarters beginning
after the date on which the Service publishes an announcement of the withdrawal
(generally, quarters beginning after the due
date of the report). If the quarterly report
is filed subsequently, the Service may reissue the acknowledgment letter and retract
the withdrawal announcement.
SECTION 6. TIME AND ADDRESS
FOR FILING CERTIFICATION AND
QUARTERLY REPORTS
.01 Time for Filing Certification. In
order for a certification under section 5
of this notice to be effective for new advanced lean burn technology motor vehicles and new qualified hybrid motor vehicles placed in service during a calendar
year, the certification must be received by
the Service not later than December 31st of
that calendar year.
.02 Time for Filing Quarterly Reports.
A report of sales of qualified vehicles during a quarter must be filed with the Service

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at the address specified in section 6.03 of
this notice not later than the last day of the
first calendar month following the quarter
to which the report relates.
.03 Address for Filing. Certifications
and quarterly reports under section 5 of
this notice must be sent to:
Internal Revenue Service
Industry Director, Large and Mid-Size
Business, Heavy Manufacturing and
Transportation
Metro Park Office Complex — LMSB
111 Wood Avenue, South
Iselin, New Jersey 08830
SECTION 7. PAPERWORK
REDUCTION ACT
The collection of information contained
in this notice has been reviewed and approved by the Office of Management and
Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–1988.

2006–6 I.R.B.

An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collections of information in this
notice are in section 5. This information
is required to be collected and retained
in order to ensure that vehicles meet the
requirements for the new advanced lean
burn technology motor vehicle credit
under § 30B(a)(2) and (c) or the new qualified hybrid motor vehicle credit under
§ 30B(a)(3) and (d). This information will
be used to determine whether the vehicle for which the credit is claimed by a
taxpayer is property that qualifies for the
credit. The collection of information is
required to obtain a benefit. The likely
respondents are corporations and partnerships.
The estimated total annual reporting
burden is 280 hours.
The estimated annual burden per respondent varies from 35 hours to 45 hours,

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depending on individual circumstances,
with an estimated average burden of 40
hours to complete the certification required under this notice. The estimated
number of respondents is 7.
The estimated annual frequency of responses is on occasion.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
SECTION 8. DRAFTING
INFORMATION
The principal author of this notice
is Nicole R. Cimino of the Office of
Associate Chief Counsel (Passthroughs
and Special Industries). For further information regarding this notice, contact
Ms. Cimino at (202) 622–3120 (not a
toll-free call).

February 6, 2006