Notice 2009-89

Part III. Administrative, Procedural, and Miscellaneous
New Qualified Plug-in Electric
Drive Motor Vehicle Credit
Notice 2009–89
Section 1. PURPOSE
This notice sets forth interim guidance, pending the issuance of regulations,
relating to the new qualified plug-in
electric drive motor vehicle credit under § 30D of the Internal Revenue Code,
as in effect for vehicles acquired after December 31, 2009. 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 motor vehicle of a particular make, model, and model year meets
certain requirements that must be satisfied
to claim the new qualified plug-in electric
drive motor vehicle credit under § 30D;
and
(2) The amount of the credit allowable
with respect to that motor vehicle.
This notice also provides guidance to
taxpayers who purchase motor vehicles 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 30D originally was enacted in
the Energy Improvement and Extension
Act of 2008, Pub. L. 110–343, 122 Stat.
3765. The American Recovery and Reinvestment Act of 2009, Pub. L. 111–5, 123
Stat. 115 (“the Act”), amended § 30D in
certain material respects, effective for vehicles acquired after December 31, 2009.
This notice provides guidance regarding
the credit under § 30D for qualified plug-in
electric drive motor vehicles acquired after December 31, 2009. All references to
§ 30D in subsequent sections of this notice are to the provision as amended by
the Act. Guidance regarding the credit
under § 30D for qualified plug-in electric drive motor vehicles acquired before

November 30, 2009

January 1, 2010, is provided in Notice
2009–54, 2009–26 I.R.B. 1124. This notice also amplifies Notice 2009–54 and
Notice 2009–58, 2009–30 I.R.B. 163 (relating to the plug-in electric vehicle credit
under § 30) to provide that a vehicle is considered “acquired” when title to that vehicle passes under state law.
Section 2. BACKGROUND
Section 30D provides for a credit for
certain new qualified plug-in electric drive
motor vehicles. The credit is equal to the
sum of: (1) $2,500, plus (2) for a vehicle which draws propulsion energy from
a battery with at least 5 kilowatt hours
of capacity, $417, plus an additional $417
for each kilowatt hour of battery capacity in excess of 5 kilowatt hours. Under
§ 30D(b)(3), that portion of the credit determined by battery capacity cannot exceed $5,000. Therefore, the total amount
of the credit allowed for a vehicle is limited to $7,500. The new qualified plug-in
electric drive motor vehicle credit phases
out for a manufacturer’s vehicles over the
one-year period beginning with the second
calendar quarter after the calendar quarter
in which at least 200,000 qualifying vehicles manufactured by that manufacturer
have been sold for use in the United States
(determined on a cumulative basis for sales
after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured
by that manufacturer are eligible for 50
percent of the credit if acquired in the first
two quarters of the phase-out period and
25 percent of the credit if acquired in the
third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period. After
December 31, 2009, a vehicle that qualifies for a credit under § 30 does not qualify
for the credit under § 30D.
Section 3. SCOPE OF NOTICE
The new qualified plug-in electric drive
motor vehicle credit determined under this
notice applies to plug-in electric drive motor vehicles that—
(1) Are placed in service by the taxpayer in a taxable year beginning after December 31, 2009;

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(2) Are acquired by the taxpayer after
December 31, 2009; and
(3) Otherwise meet the requirements of
§ 30D.
Section 4. MEANING OF TERMS
The following definitions apply for purposes of this notice:
.01 In General. Terms used in this notice and not defined in this section 4 have
the same meaning as when used in § 30D.
.02 Clean Air Act Regulations. The
Clean Air Act regulations are the 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.).
.03 Battery Capacity. Battery capacity
is the quantity of electricity that a battery
is capable of storing, expressed in kilowatt hours, as measured from a 100 percent state of charge to a zero percent state
of charge.
.04 Motor Vehicle. The term “motor vehicle” means any vehicle that is manufactured primarily for use on public streets,
roads, and highways (not including a vehicle operated exclusively on a rail or rails)
and which has at least 4 wheels. For purposes of this notice, the term “motor vehicle” does not include a low-speed vehicle
within the meaning of section 571.3 of Title 49 of the Code of Federal Regulations,
or a vehicle that is manufactured primarily
for off-road use, such as primarily for use
on a golf course.
.05 Manufacturer. The term “manufacturer” has the meaning given that term in
the Clean Air Act regulations.
.06 Model Year. The term “model year”
means the model year determined under
the Clean Air Act regulations (see 40 CFR
§ 86–082–2).
.07 Acquired. A vehicle is not “acquired” before the date on which title to
that vehicle passes under state law.
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 domes-

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tic distributor) may certify to purchasers
that a motor vehicle 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 qualified plug-in electric
drive motor vehicle credit allowable under
§ 30D 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 this section 5, a
certification with respect to the vehicle and
the certification satisfies the requirements
of section 5.03 of this notice; and
(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 and the acknowledgment states that
purchasers may rely on the certification.
.02 Purchaser’s Reliance. Except as
provided in section 5.07 of this notice, a
purchaser of a motor vehicle 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 amount of the credit allowable with respect to the vehicle (including
in 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 in a taxable year beginning
after December 31, 2009, and is acquired
by the taxpayer after December 31, 2009;
(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;
and
(4) The vehicle is used predominantly
in the United States.
.03 Content of Certification. The certification must contain the following:
(1) The name, address, and taxpayer
identification number of the certifying entity.
(2) The make, model, model year, and
any other appropriate identifiers of the motor vehicle.
(3) A statement that the vehicle is made
by a manufacturer.

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(4) A statement that the vehicle is
treated as a motor vehicle for purposes of
Title II of the Clean Air Act.
(5) The amount of the credit for the vehicle (showing computations).
(6) The gross vehicle weight rating of
the vehicle.
(7) A statement that the motor vehicle
is propelled to a significant extent by an
electric motor that draws electricity from a
battery that has a capacity of not less than
4 kilowatt hours.
(8) The number of kilowatt hours if any,
in excess of 4 kilowatt hours.
(9) A statement that the battery is capable of being recharged from an external
source of electricity.
(10) A statement that the vehicle has at
least four wheels.
(11) A statement that the vehicle is not
a low-speed vehicle within the meaning of
section 571.3 of Title 49 of the Code of
Federal Regulations.
(12) A statement that the vehicle is
manufactured primarily for use on public
streets, roads and highways.
(13) A statement that the vehicle is not
manufactured primarily for off-road use,
such as primarily for use on a golf course.
(14) A statement that the vehicle complies with the applicable provisions of the
Clean Air Act.
(15) 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.
(16) A description of the motor vehicle
safety provisions of 49 U.S.C. §§ 30101
through 30169 applicable to the vehicle
and a statement that the vehicle complies
with those provisions.
(17) A declaration, applicable to the
certification, statements, 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 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.”

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.04 Acknowledgement 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
plug-in electric drive motor vehicles sold
by the manufacturer (or, in the case of a
foreign vehicle manufacturer, its domestic
distributor) to consumers or retail dealers
during the calendar quarter. The quarterly
report must contain the following:
(1) The name, address, and taxpayer
identification number of the reporting entity.
(2) The number of qualified vehicles
sold by the reporting entity to consumers
or retail dealers during the calendar quarter.
(3) The make, model, model year, and
any other appropriate identifiers of the
qualified vehicles sold during the calendar
quarter.
(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
report. This acknowledgment letter will
state whether purchasers may continue to
rely on the certification.

November 30, 2009

.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 qualified plug-in electric
drive 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 new
qualified plug-in electric drive 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
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, including, but not
limited to, the 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

November 30, 2009

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 qualified plug-in electric drive motor vehicles
placed in service during a calendar year,
the certification must be received by the
Service not later than December 31 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
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, LMSB, Heavy Manufacturing & 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 1545–2137.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the

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collection of information displays a valid
OMB control number.
The collections of information in this
notice are in sections 5 and 6. This information is collected and retained in order
to ensure that vehicles meet the requirements for the new qualified plug-in electric drive motor vehicle credit under § 30D.
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 voluntary 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 20 hours to 35 hours,
depending on individual circumstances,
with an estimated average burden of 24
hours to complete the certification required under this notice. The estimated
number of respondents is 12.
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. DATE OF APPLICABILITY
This notice is applicable to plug-in electric drive motor vehicles acquired (within
the meaning of section 4.07 of this notice)
after December 31, 2009.
Section 9. EFFECT ON OTHER
DOCUMENTS
Notice 2009–54, 2009–26 I.R.B. 1124,
is amplified by adding the following sentence to section 4:
.09 Acquired. A vehicle is not “acquired” before the date on which title to
that vehicle passes under state law.
Notice 2009–58, 2009–30 I.R.B. 163,
is amplified by adding the following sentence to section 4:
.06 Acquired. A vehicle is not “acquired” before the date on which title to
that vehicle passes under state law.
Notice 2009–54 is superseded, effective for plug-in electric drive motor vehicles acquired after December 31, 2009.

2009–48 I.R.B.

Section 10. DRAFTING INFORMATION
The principal author of this notice is
Patrick S. Kirwan of the Office of Associate Chief Counsel (Passthroughs & Special Industries). For further information
regarding this notice, contact Mr. Kirwan
at (202) 622–3110 (not a toll-free call).

Withholding on Wages of
Nonresident Alien Employees
Performing Services Within
the United States
Notice 2009–91
I. PURPOSE
This notice modifies the rules in Notice
2005–76, 2005–2 C.B. 947, for determining the amount of income tax employers
must withhold under section 3402 of the
Internal Revenue Code (Code) from wages
paid for services performed by nonresident
alien employees within the United States.
The modification is effective with respect
to wages paid on or after January 1, 2010.
Notice 2005–76 provides rules for determining the amount of withholding on
wages paid to nonresident alien employees. These rules need to be modified to reflect changes made in the withholding tables as a result of the enactment of section 36A of the Code (the “Making Work
Pay Tax Credit”) in the American Recovery and Reinvestment Act of 2009 (Public Law No. 111–5) (ARRA). Nonresident
alien individuals are not eligible for the
Making Work Pay Tax Credit under section 36A. The modified rules provide for
withholding on the wages of nonresident
alien employees that more closely approximates their income tax liability.
II. BACKGROUND
A. Income Tax Withholding on Wages of
Nonresident Alien Employees
Generally, employers are liable for the
withholding of income tax on remuneration for services performed within the
United States by a nonresident alien employee. Section 3402(a)(1) of the Code
provides that, except as otherwise provided in section 3402, every employer

2009–48 I.R.B.

making a payment of wages shall deduct
and withhold from such wages a tax determined in accordance with tables or
computational procedures prescribed by
the Secretary. Section 3402(a)(1) further
provides that any tables or procedures
prescribed under section 3402(a)(1) shall
be in such form, and provide for such
amounts to be deducted and withheld, as
the Secretary determines to be appropriate to carry out the purposes of chapter 1
(imposition of individual income tax).
Income tax withholding tables in Publication 15, (Circular E) Employer’s Tax
Guide, for use with the percentage and
wage bracket methods of withholding, are
based on the assumption that the employee
receiving the wages is entitled to a standard deduction in determining his or her
income tax liability. However, in the case
of a nonresident alien individual, section
63(c)(6)(B) provides that the standard deduction shall be zero. Notice 2005–76 addresses this difference in treatment by directing an employer to add an amount to
the wages of a nonresident alien employee
solely for purposes of calculating the income tax withholding for each payroll period.
B. Making Work Pay Tax Credit
Section 36A, which was added to the
Code by the ARRA, provides a credit
against income tax to an eligible individual in an amount equal to the lesser
of (1) 6.2 percent of earned income, or
(2) $400 ($800 in the case of a joint return). The credit is reduced or completely
eliminated for individuals with modified
adjusted gross income exceeding threshold amounts. Section 36A(d)(1)(A)(i)
provides that an eligible individual for
purposes of section 36A does not include a
nonresident alien individual. As currently
enacted, the Making Work Pay Tax Credit
does not apply to taxable years beginning
after December 31, 2010. See section
36A(e). Under the ARRA, taxpayers’
reduced tax liability under the provision
is expeditiously implemented through revised income tax withholding. See H.R.
Conf. Rep. 111–16, 111th Cong., 1st Sess.
(2009) at 517. Accordingly, the income
tax withholding tables have been revised
to take the Making Work Pay Tax Credit

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into account in determining the amount of
income tax to be withheld.
C. Reason for Change to Withholding
Procedures for Nonresident Alien
Employees
The income tax withholding tables reflect two tax benefits for which nonresident alien employees are not eligible: (1)
the standard deduction; and (2) the Making Work Pay Tax Credit. If adjustments
from the generally applicable procedures
for using the income tax withholding tables are not made in determining income
tax withholding for nonresident alien employees, the withholding on the wages of
such employees will generally be less than
their tax liability. This notice modifies the
rules for employers to use in calculating income tax withholding on nonresident alien
employees to offset the effects of both the
standard deduction and Making Work Pay
Tax Credit as assumed under the withholding tables.
The modification applies only to the
procedure used by employers in calculating income tax withholding on wages paid
to nonresident alien employees as set forth
in part III.B. of Notice 2005–76. The requirements in Notice 2005–76 (part III.A.)
relating to the completion of Form W–4,
Employee’s Withholding Allowance Certificate, by nonresident alien employees,
continue in effect.
III. WITHHOLDING RULES
THAT WILL BE IN EFFECT FOR
NONRESIDENT ALIEN EMPLOYEES
ON OR AFTER JANUARY 1, 2010
Beginning with wages paid on or after
January 1, 2010, employers are required
to calculate income tax withholding under section 3402 of the Code on wages
of nonresident alien employees by making two modifications rather than the one
modification described in Notice 2005–76
(part III.B). First, employers need to add an
amount to wages before determining withholding under the wage bracket or percentage method in order to offset the standard
deduction built into the withholding tables.
Second, employers need to determine an
additional amount of withholding from a
separate table applicable only to nonresident alien employees to offset the effect of

November 30, 2009