I 

111TH CONGRESS 

2D SESSION H. R. 4897 

To amend the Internal Revenue Code of 1986 to allow a deduction for 

interest paid on indebtedness incurred in connection with the purchase 

of a new automobile or light truck. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 21, 2010 

Ms. RICHARDSON introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow a 

deduction for interest paid on indebtedness incurred in 

connection with the purchase of a new automobile or 

light truck. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Drivers Accelerated 

5 Interest Deductibility Act of 2010’’ or the ‘‘Drivers AID 

6 Act’’. 

7 SEC. 2. FINDINGS. 

8 Congress finds the following: 


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1 (1) The economic health and well-being of the 

2 United States depends on a strong and resurgent 

3 automotive industry. Until 2008, automotive sales 

4 historically accounted for approximately 20 percent 

5 of all retail spending in the United States, and pro6 vided the income and financial security for millions 

7 of Americans. 

8 (2) From June 2006 through May 2008, the 

9 seasonally adjusted annual rate of automotive sales 

10 ranged from a high of approximately 17,500,000 

11 units in June 2006 to a low of 14,200,000 units in 

12 May 2008, substantially above the 13,000,000 unit 

13 seasonally adjusted annual rate generally regarded 

14 to be the indicator of a robust automotive industry. 

15 (3) Beginning in June 2008 and continuing 

16 through the present, the seasonally adjusted annual 

17 rate of automotive sales has averaged less than 

18 10,000,000 units and has exceeded that number in 

19 only three months and has not in any matched or 

20 exceeded the 13,000,000 unit seasonally adjusted 

21 annual rate threshold. 

22 (4) The annual contributions of the automotive 

23 new vehicle dealers industry to the national economy 

24 are substantial. In 2008, the average sales revenue 

25 for the approximately 20,000 new automobile dealers 


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1 in the United States was $28,800,000 and the total 

2 sales of all new-vehicle dealerships in the United 

3 States was $576,000,000,000 which constituted 14.6 

4 percent of total retail sales in the United States. 

5 (5) In 2008, the 1,057,500 persons employed in 

6 new-vehicle dealerships in the United States, an av7 erage of 53 employees per dealership, earned on av8 erage $48,963 per year, generating a national pay9 roll of more than $52,000,000,000 and $2,660,000 

10 per dealership and millions more in tax revenue for 

11 State and local governments. 

12 (6) Because a well capitalized, financially sound 

13 dealer network is essential to the success of every 

14 automobile manufacturer, especially a manufacturer 

15 facing economic challenges, preserving the viability 

16 of the new-vehicle dealer industry further the na17 tional economic interest of the United States. 

18 (7) Because sales of new vehicles is highly de19 pendent on consumer confidence and the existence of 

20 incentives to motivate consumers to purchase a new21 vehicle, a reduction in the cost of capital needed to 

22 finance the purchase of a new vehicle over a period 

23 of years will have a positive effect on the viability of 

24 the new-vehicle dealer industry, which in turn will 


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1 strengthen the automotive manufacturing industry 

2 and the national economy. 

3 (8) Payment of nonmortgage interest payments, 

4 such as automobile loan debt, was deductible for 

5 Federal income tax purposes for 73 years, from the 

6 inception of the Internal Revenue Code in 1913 until 

7 Congress ended the deduction in 1986 when the Tax 

8 Reform Act of 1986 was passed. 

9 SEC. 3. DEDUCTION FOR INTEREST ON INDEBTEDNESS IN10 CURRED TO ACQUIRE A PASSENGER CAR OR 

11 LIGHT TRUCK. 

12 (a) IN GENERAL.—Paragraph (2) of section 163(h) 

13 of the Internal Revenue Code of 1986 is amended by strik14 ing ‘‘and’’ at the end of subparagraph (E), by striking 

15 the period at the end of subparagraph (F) and inserting 

16 ‘‘, and’’, and by adding at the end the following new sub17 paragraph: 

18 ‘‘(G) in the case of the acquisition of a 

19 qualified vehicle, any qualified vehicle interest 

20 if, for the calendar quarter preceding the date 

21 on which such vehicle is acquired, the average 

22 national unemployment rate for such quarter is 

23 not less than 7 percent.’’. 


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1 (b) QUALIFIED VEHICLE INTEREST.—Paragraph (5) 

2 of section 163(h) of the Internal Revenue Code of 1986 

3 is amended to read as follows: 

4 ‘‘(5) QUALIFIED VEHICLE INTEREST.—For pur5 poses of paragraph (2)(G) and this paragraph— 

6 ‘‘(A) IN GENERAL.—The term ‘qualified 

7 vehicle interest’ means any interest which— 

8 ‘‘(i) is properly chargeable on indebt9 edness incurred in acquiring a qualified ve10 hicle, and 

11 ‘‘(ii) is properly allocable to the 36- 

12 month period described in subparagraph 

13 (B)(ii). 

14 ‘‘(B) LIMITATIONS.— 

15 ‘‘(i) DOLLAR LIMITATION.—The 

16 amount of interest taken into account 

17 under this paragraph (after the application 

18 of subparagraph (A)(ii)) with respect to a 

19 qualified vehicle shall not exceed $5,000. 

20 ‘‘(ii) PERIOD LIMITATION.—Only in21 terest on such indebtedness properly allo22 cable to the 36-month period beginning on 

23 the date such indebtedness is incurred may 

24 be taken into account under this para25 graph. 


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1 ‘‘(C) QUALIFIED VEHICLE.— 

2 ‘‘(i) IN GENERAL.—The term ‘quali3 fied vehicle’ means a motor vehicle— 

4 ‘‘(I) the original use of which 

5 commences with the taxpayer, 

6 ‘‘(II) which is acquired for use by 

7 the taxpayer and not for resale, 

8 ‘‘(III) with respect to which no 

9 payment is made under section 1302 

10 of the Consumer Assistance to Recycle 

11 and Save Act of 2009, 

12 ‘‘(IV) which is made by a manu13 facturer, 

14 ‘‘(V) which is treated as a motor 

15 vehicle for purposes of title II of the 

16 Clean Air Act, 

17 ‘‘(VI) which has a gross vehicle 

18 weight rating of 6,000 pounds or less, 

19 and 

20 ‘‘(VII) which is a passenger auto21 mobile or light truck. 

22 ‘‘(ii) MOTOR VEHICLE.—The term 

23 ‘motor vehicle’ means any vehicle which is 

24 manufactured primarily for use on public 

25 streets, roads, and highways (not including 


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1 a vehicle operated exclusively on a rail or 

2 rails) and which has at least 4 wheels. 

3 ‘‘(iii) OTHER TERMS.—The terms 

4 ‘automobile’, ‘passenger automobile’, ‘light 

5 truck’, and ‘manufacturer’ have the mean6 ings given such terms in regulations pre7 scribed by the Administrator of the Envi8 ronmental Protection Agency for purposes 

9 of the administration of title II of the 

10 Clean Air Act (42 U.S.C. 7521 et seq.). 

11 ‘‘(D) AVERAGE NATIONAL UNEMPLOYMENT

12 RATE.—The average national unemployment 

13 rate for a calendar quarter means the national 

14 unemployment rate means the average of the 

15 monthly national unemployment rates for 

16 months in the calendar quarter, as reported by 

17 the Bureau of Labor Statistics, Department of 

18 Labor.’’. 

19 (c) DEDUCTION ALLOWED IN COMPUTING ADJUSTED

20 GROSS INCOME.—Subsection (a) of section 62 of such 

21 Code is amended by inserting before the last sentence the 

22 following new paragraph: 

23 ‘‘(22) QUALIFIED VEHICLE INTEREST.—The 

24 deduction allowed by reason of section 163(h)(5).’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply with respect to vehicles acquired 

3 on or after January 1, 2008. 

Æ 


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