II 

111TH CONGRESS 

1ST SESSION S. 271 

To amend the Internal Revenue Code of 1986 to provide incentives to accelerate the production and adoption of plug-in electric vehicles and related 

component parts. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 15, 2009 

Ms. CANTWELL (for herself, Mr. HATCH, Mr. KERRY, Mr. ALEXANDER, Ms. 

STABENOW, and Mr. NELSON of Florida) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

incentives to accelerate the production and adoption of 

plug-in electric vehicles and related component parts. 

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 ‘‘Fuel Reduction using 

5 Electrons to End Dependence on the Mid-East (FREE6 DOM) Act of 2009’’. 


jlentini on PROD1PC65 with BILLS
2 

•S 271 IS

1 SEC. 2. INCENTIVES FOR MANUFACTURING FACILITIES 

2 PRODUCING PLUG-IN ELECTRIC DRIVE 

3 MOTOR VEHICLE AND COMPONENTS. 

4 (a) DEDUCTION FOR MANUFACTURING FACILI5 TIES.—Part VI of subchapter B of chapter 1 of the Inter6 nal Revenue Code of 1986 (relating to itemized deductions 

7 for individuals and corporations) is amended by inserting 

8 after section 179E the following new section: 

9 ‘‘SEC. 179F. ELECTION TO EXPENSE MANUFACTURING FA10 CILITIES PRODUCING PLUG-IN ELECTRIC 

11 DRIVE MOTOR VEHICLE AND COMPONENTS. 

12 ‘‘(a) TREATMENT AS EXPENSES.—A taxpayer may 

13 elect to treat the applicable percentage of the cost of any 

14 qualified plug-in electric drive motor vehicle manufac15 turing facility property as an expense which is not charge16 able to a capital account. Any cost so treated shall be al17 lowed as a deduction for the taxable year in which the 

18 qualified manufacturing facility property is placed in serv19 ice. 

20 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

21 subsection (a), the applicable percentage is— 

22 ‘‘(1) 100 percent, in the case of qualified plug23 in electric drive motor vehicle manufacturing facility 

24 property which is placed in service before January 1, 

25 2012, and 


jlentini on PROD1PC65 with BILLS
3 

•S 271 IS

1 ‘‘(2) 50 percent, in the case of qualified plug2 in electric drive motor vehicle manufacturing facility 

3 property which is placed in service after December 

4 31, 2011, and before January 1, 2015. 

5 ‘‘(c) ELECTION.— 

6 ‘‘(1) IN GENERAL.—An election under this sec7 tion for any taxable year shall be made on the tax8 payer’s return of the tax imposed by this chapter for 

9 the taxable year. Such election shall be made in such 

10 manner as the Secretary may by regulations pre11 scribe. 

12 ‘‘(2) ELECTION IRREVOCABLE.—Any election 

13 made under this section may not be revoked except 

14 with the consent of the Secretary. 

15 ‘‘(d) QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR

16 VEHICLE MANUFACTURING FACILITY PROPERTY.—For 

17 purposes of this section— 

18 ‘‘(1) IN GENERAL.—The term ‘qualified plug-in 

19 electric drive motor vehicle manufacturing facility 

20 property’ means any qualified property— 

21 ‘‘(A) the original use of which commences 

22 with the taxpayer, 

23 ‘‘(B) which is placed in service by the tax24 payer after the date of the enactment of this 

25 section and before January 1, 2015, and 


jlentini on PROD1PC65 with BILLS
4 

•S 271 IS

1 ‘‘(C) no written binding contract for the 

2 construction of which was in effect on or before 

3 the date of the enactment of this section. 

4 ‘‘(2) QUALIFIED PROPERTY.— 

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

6 property’ means any property which is a facility 

7 or a portion of a facility used for the production 

8 of— 

9 ‘‘(i) any new qualified plug-in electric 

10 drive motor vehicle (as defined by section 

11 30D(c)), or 

12 ‘‘(ii) any eligible component. 

13 ‘‘(B) ELIGIBLE COMPONENT.—The term 

14 ‘eligible component’ means any battery, any 

15 electric motor or generator, or any power con16 trol unit which is designed specifically for use 

17 with a new qualified plug-in electric drive motor 

18 vehicle (as so defined). 

19 ‘‘(e) SPECIAL RULE FOR DUAL USE PROPERTY.—In 

20 the case of any qualified plug-in electric drive motor vehi21 cle manufacturing facility property which is used to 

22 produce both qualified property and other property which 

23 is not qualified property, the amount of costs taken into 

24 account under subsection (a) shall be reduced by an 

25 amount equal to— 


jlentini on PROD1PC65 with BILLS
5 

•S 271 IS

1 ‘‘(1) the total amount of such costs (determined 

2 before the application of this subsection), multiplied 

3 by 

4 ‘‘(2) the percentage of property expected to be 

5 produced which is not qualified property.’’. 

6 (b) REFUND OF CREDIT FOR PRIOR YEAR MINIMUM

7 TAX LIABILITY.—Section 53 of the Internal Revenue 

8 Code of 1986 (relating to credit for prior year minimum 

9 tax liability) is amended by adding at the end the following 

10 new subsection: 

11 ‘‘(g) ELECTION TO TREAT AMOUNTS ATTRIBUTABLE

12 TO QUALIFIED MANUFACTURING FACILITY.— 

13 ‘‘(1) IN GENERAL.—In the case of an eligible 

14 taxpayer, the amount determined under subsection 

15 (c) for the taxable year (after the application of sub16 section (e)) shall be increased by an amount equal 

17 to the applicable percentage of any qualified plug-in 

18 electric drive motor vehicle manufacturing facility 

19 property which is placed in service during the tax20 able year. 

21 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

22 of paragraph (1), the applicable percentage is— 

23 ‘‘(A) 35 percent, in the case of qualified 

24 plug-in electric drive motor vehicle manufacVerDate Nov 24 2008 22:50 Jan 20, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S271.IS S271

jlentini on PROD1PC65 with BILLS
6 

•S 271 IS

1 turing facility property which is placed in serv2 ice before January 1, 2012, and 

3 ‘‘(B) 17.5 percent, in the case of qualified 

4 plug-in electric drive motor vehicle manufac5 turing facility property which is placed in serv6 ice after December 31, 2011, and before Janu7 ary 1, 2015. 

8 ‘‘(3) ELIGIBLE TAXPAYER.—For purposes of 

9 this subsection, the term ‘eligible taxpayer’ means 

10 any taxpayer— 

11 ‘‘(A) who places in service qualified plug12 in electric drive motor vehicle manufacturing fa13 cility property during the taxable year, 

14 ‘‘(B) who does not make an election under 

15 section 179F(c), and 

16 ‘‘(C) who makes an election under this 

17 subsection. 

18 ‘‘(4) OTHER DEFINITIONS AND SPECIAL

19 RULES.— 

20 ‘‘(A) QUALIFIED PLUG-IN ELECTRIC DRIVE

21 MOTOR VEHICLE MANUFACTURING FACILITY

22 PROPERTY.—The term ‘qualified plug-in electric 

23 drive motor vehicle manufacturing facility prop24 erty’ has the meaning given such term under 

25 section 179F(d). 


jlentini on PROD1PC65 with BILLS
7 

•S 271 IS

1 ‘‘(B) SPECIAL RULE FOR DUAL USE PROP2 ERTY.—In the case of any qualified plug-in 

3 electric drive motor vehicle manufacturing facil4 ity property which is used to produce both 

5 qualified property (as defined in section 

6 179F(d)) and other property which is not quali7 fied property, the amount of costs taken into 

8 account under paragraph (1) shall be reduced 

9 by an amount equal to— 

10 ‘‘(i) the total amount of such costs 

11 (determined before the application of this 

12 subparagraph), multiplied by 

13 ‘‘(ii) the percentage of property ex14 pected to be produced which is not quali15 fied property. 

16 ‘‘(C) ELECTION.— 

17 ‘‘(i) IN GENERAL.—An election under 

18 this subsection for any taxable year shall 

19 be made on the taxpayer’s return of the 

20 tax imposed by this chapter for the taxable 

21 year. Such election shall be made in such 

22 manner as the Secretary may by regula23 tions prescribe. 

24 ‘‘(ii) ELECTION IRREVOCABLE.—Any 

25 election made under this subsection may 


jlentini on PROD1PC65 with BILLS
8 

•S 271 IS

1 not be revoked except with the consent of 

2 the Secretary. 

3 ‘‘(5) CREDIT REFUNDABLE.—For purposes of 

4 this title (other than this section), the credit allowed 

5 by reason of this subsection shall be treated as if it 

6 were allowed under subpart C.’’. 

7 (c) CLERICAL AMENDMENT.—The table of sections 

8 for part VI of subchapter B of chapter 1 of the Internal 

9 Revenue Code of 1986 is amended by adding at the end 

10 the following new item: 

‘‘Sec. 179F. Election to expense manufacturing facilities producing plug-in electric drive motor vehicle and components.’’. 

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

12 this section shall apply to taxable years beginning after 

13 the date of the enactment of this Act. 

14 SEC. 3. CONSUMER INCENTIVES FOR PLUG-IN ELECTRIC 

15 DRIVE MOTOR VEHICLES. 

16 (a) INCREASE IN NUMBER OF PLUG-IN ELECTRIC

17 DRIVE MOTOR VEHICLES ELIGIBLE FOR TAX CREDIT.— 

18 (1) IN GENERAL.—Subparagraph (B) of section 

19 30D(b)(2) of the Internal Revenue Code of 1986 is 

20 amended by striking ‘‘250,000’’ and inserting 

21 ‘‘500,000’’. 

22 (2) EFFECTIVE DATE.—The amendment made 

23 by this subsection shall apply to taxable years begin24 ning after December 31, 2008. 


jlentini on PROD1PC65 with BILLS
9 

•S 271 IS

1 (b) CONVERSION KITS.— 

2 (1) IN GENERAL.—Section 30B of the Internal 

3 Revenue Code of 1986 (relating to alternative motor 

4 vehicle credit) is amended by redesignating sub5 sections (i) and (j) as subsections (j) and (k), re6 spectively, and by inserting after subsection (h) the 

7 following new subsection: 

8 ‘‘(i) PLUG-IN CONVERSION CREDIT.— 

9 ‘‘(1) IN GENERAL.—For purposes of subsection 

10 (a), the plug-in conversion credit determined under 

11 this subsection with respect to any motor vehicle 

12 which is converted to a qualified plug-in electric 

13 drive motor vehicle is the lesser of— 

14 ‘‘(A) an amount equal to— 

15 ‘‘(i) $1,250, plus 

16 ‘‘(ii) $100 for each half kilowatt hour 

17 of capacity of the plug-in traction battery 

18 module installed in such vehicle in excess 

19 of 2.5 kilowatt hours, or 

20 ‘‘(B) 50 percent of the cost of the plug-in 

21 traction battery module installed in such vehicle 

22 as part of such conversion. 

23 ‘‘(2) LIMITATIONS.—The amount of the credit 

24 allowed under this subsection shall not exceed 


jlentini on PROD1PC65 with BILLS
10 

•S 271 IS

1 $4,000 with respect to the conversion of any motor 

2 vehicle. 

3 ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 

4 purposes of this subsection— 

5 ‘‘(A) QUALIFIED PLUG-IN ELECTRIC DRIVE

6 MOTOR VEHICLE.—The term ‘qualified plug-in 

7 electric drive motor vehicle’ means any new 

8 qualified plug-in electric drive motor vehicle (as 

9 defined in section 30D(c), determined without 

10 regard to paragraphs (4) and (6) thereof). 

11 ‘‘(B) PLUG-IN TRACTION BATTERY MOD12 ULE.—The term ‘plug-in traction battery mod13 ule’ means an electro-chemical energy storage 

14 device which— 

15 ‘‘(i) has a traction battery capacity of 

16 not less than 2.5 kilowatt hours, 

17 ‘‘(ii) is equipped with an electrical 

18 plug by means of which it can be energized 

19 and recharged when plugged into an exter20 nal source of electric power, 

21 ‘‘(iii) consists of a standardized con22 figuration and is mass produced, 

23 ‘‘(iv) has been tested and approved by 

24 the National Highway Transportation 

25 Safety Administration as compliant with 


jlentini on PROD1PC65 with BILLS
11 

•S 271 IS

1 applicable motor vehicle and motor vehicle 

2 equipment safety standards when installed 

3 by a mechanic with standardized training 

4 in protocols established by the battery 

5 manufacturer as part of a nationwide dis6 tribution program, and 

7 ‘‘(v) is certified by a battery manufac8 turer as meeting the requirements of 

9 clauses (i) through (iv). 

10 ‘‘(C) CREDIT ALLOWED TO LESSOR OF

11 BATTERY MODULE.—In the case of a plug-in 

12 traction battery module which is leased to the 

13 taxpayer, the credit allowed under this sub14 section shall be allowed to the lessor of the 

15 plug-in traction battery module. 

16 ‘‘(D) CREDIT ALLOWED IN ADDITION TO

17 OTHER CREDITS.—The credit allowed under 

18 this subsection shall be allowed with respect to 

19 a motor vehicle notwithstanding whether a cred20 it has been allowed with respect to such motor 

21 vehicle under this section (other than this sub22 section) in any preceding taxable year. 

23 ‘‘(4) TERMINATION.—This subsection shall not 

24 apply to conversions made after December 31, 

25 2012.’’. 


jlentini on PROD1PC65 with BILLS
12 

•S 271 IS

1 (2) CREDIT TREATED AS PART OF ALTER2 NATIVE MOTOR VEHICLE CREDIT.—Section 30B(a) 

3 of such Code is amended by striking ‘‘and’’ at the 

4 end of paragraph (3), by striking the period at the 

5 end of paragraph (4) and inserting ‘‘, and’’, and by 

6 adding at the end the following new paragraph: 

7 ‘‘(5) the plug-in conversion credit determined 

8 under subsection (i).’’. 

9 (3) NO RECAPTURE FOR VEHICLES CONVERTED

10 TO QUALIFIED PLUG-IN ELECTRIC DRIVE MOTOR VE11 HICLES.—Paragraph (8) of section 30B(h) of such 

12 Code is amended by adding at the end the following: 

13 ‘‘, except that no benefit shall be recaptured if such 

14 property ceases to be eligible for such credit by rea15 son of conversion to a qualified plug-in electric drive 

16 motor vehicle.’’. 

17 (4) EFFECTIVE DATE.—The amendments made 

18 by this subsection shall apply to property placed in 

19 service after December 31, 2008, in taxable years 

20 beginning after such date. 

21 (c) CERTAIN 2- OR 3-WHEELED MOTOR VEHICLES

22 ELIGIBLE FOR CREDIT.— 

23 (1) IN GENERAL.—Section 30D of the Internal 

24 Revenue Code of 1986 is amended— 


jlentini on PROD1PC65 with BILLS
13 

•S 271 IS

1 (A) by redesignating subsections (f) and 

2 (g) as subsections (g) and (h), respectively, and 

3 (B) by inserting after subsection (e) the 

4 following new subsection: 

5 ‘‘(f) 2- OR 3-WHEELED MOTOR VEHICLES.—For 

6 purposes of this section— 

7 ‘‘(1) IN GENERAL.—Except as provided in para8 graph (2), 2- or 3-wheeled motor vehicles shall be 

9 treated in the same manner as motor vehicles. 

10 ‘‘(2) EXCEPTIONS.— 

11 ‘‘(A) APPLICABLE AMOUNT.—For purposes 

12 of this subsection, the applicable amount shall 

13 be $1,250. 

14 ‘‘(B) OTHER EXCEPTIONS.— 

15 ‘‘(i) Subparagraph (B) of subsection 

16 (a)(2) shall be applied with respect to 2- or 

17 3-wheeled motor vehicles by substituting 

18 ‘$100 for each half kilowatt hour’ for 

19 ‘$417 for each kilowatt hour’. 

20 ‘‘(ii) Subparagraph (A) of subsection 

21 (b)(1) shall be applied with respect to 2- or 

22 3-wheeled motor vehicles by substituting 

23 ‘$3,750’ for ‘$7,500’. 

24 ‘‘(iii) Subsection (c)(1) shall be ap25 plied with respect to 2- or 3-wheeled motor 


jlentini on PROD1PC65 with BILLS
14 

•S 271 IS

1 vehicles by substituting ‘2.5 kilowatt hours’ 

2 for ‘4 kilowatt hours’. 

3 ‘‘(iv) Subsection (c)(3) shall not apply 

4 with respect to 2- or 3-wheeled motor vehi5 cles. 

6 ‘‘(3) APPLICATION OF LIMITATION.—The limi7 tation provided in subsection (b)(2) shall be applied 

8 separately with respect to 2- or 3-wheeled vehicles 

9 and with respect to other motor vehicles, and in ap10 plying such limitation to 2- or 3-wheeled vehicles, 

11 ‘50,000’ shall be substituted for ‘500,000’. 

12 ‘‘(4) 2- OR 3-WHEELED MOTOR VEHICLE.—The 

13 term ‘2- or 3-wheeled vehicle’ means any vehicle— 

14 ‘‘(A) which would be described in section 

15 30(c)(2) except that it has 2 or 3 wheels, 

16 ‘‘(B) with motive power having a seat or 

17 saddle for the use of the rider and designed to 

18 travel on not more than 3 wheels in contact 

19 with the ground, 

20 ‘‘(C) which has an electric motor that pro21 duces in excess of 5-brake horsepower, 

22 ‘‘(D) which draws propulsion from 1 or 

23 more traction batteries, and 

24 ‘‘(E) which has been certified to the De25 partment of Transportation pursuant to section 


jlentini on PROD1PC65 with BILLS
15 

•S 271 IS

1 567 of title 49, Code of Federal Regulations, as 

2 conforming to all applicable Federal motor vehi3 cle safety standards in effect on the date of the 

4 manufacture of the vehicle.’’. 

5 (2) EFFECTIVE DATE.—The amendments made 

6 by this subsection shall apply to property placed in 

7 service after December 31, 2008, in taxable years 

8 beginning after such date. 

9 (d) CREDIT WITH RESPECT TO LOW-SPEED VEHI10 CLES.— 

11 (1) IN GENERAL.—Subsection (e) of section 

12 30D of the Internal Revenue Code of 1986 is 

13 amended by adding at the end the following new 

14 paragraph: 

15 ‘‘(11) SPECIAL RULES FOR LOW-SPEED VEHI16 CLES.—In the case of a low-speed vehicle which 

17 meets the requirements of section 571.500 of title 

18 49, Code of Federal Regulations— 

19 ‘‘(A) subparagraph (A) of subsection 

20 (a)(2) shall be applied with respect low-speed 

21 vehicles by substituting ‘$1,250’ for ‘$2,500’, 

22 ‘‘(B) subparagraph (B) of subsection 

23 (a)(2) shall be applied with respect to low-speed 

24 vehicles by substituting ‘$100 for each half kilo25 watt hour’ for ‘$417 for each kilowatt hour’, 


jlentini on PROD1PC65 with BILLS
16 

•S 271 IS

1 ‘‘(C) subparagraph (A) of subsection (b)(1) 

2 shall be applied with respect to low-speed vehi3 cles by substituting ‘$3,750’ for ‘$7,500’, 

4 ‘‘(D) the limitation provided in subsection 

5 (b)(2) shall be applied separately with respect 

6 to low-speed vehicles and with respect to other 

7 motor vehicles, and in applying such limitation 

8 to low-speed vehicles, ‘50,000’ shall be sub9 stituted for ‘500,000’, and 

10 ‘‘(E) subsection (c)(3) shall not apply with 

11 respect to low-speed vehicles.’’. 

12 (2) EFFECTIVE DATE.—The amendment made 

13 by this subsection shall apply to property placed in 

14 service after December 31, 2008, in taxable years 

15 beginning after such date. 

16 SEC. 4. RECOVERY PERIOD FOR DEPRECIATION OF SMART 

17 METERS AND SMART GRID SYSTEMS. 

18 (a) 5-YEAR RECOVERY PERIOD.— 

19 (1) IN GENERAL.—Subparagraph (B) of section 

20 168(e)(3) of the Internal Revenue Code of 1986 is 

21 amended by striking ‘‘and’’ at the end of clause (vi), 

22 by striking the period at the end of clause (vii) and 

23 inserting ‘‘, and’’, and by adding at the end the fol24 lowing new clauses: 


jlentini on PROD1PC65 with BILLS
17 

•S 271 IS

1 ‘‘(viii) any qualified smart electric 

2 meter, and 

3 ‘‘(ix) any qualified smart electric grid 

4 system.’’. 

5 (2) CONFORMING AMENDMENTS.—Subpara6 graph (D) of section 168(e)(3) of such Code is 

7 amended by inserting ‘‘and’’ at the end of clause (i), 

8 by striking the comma at the end of clause (ii) and 

9 inserting a period, and by striking clauses (iii) and 

10 (iv). 

11 (b) TECHNICAL AMENDMENTS.—Paragraphs 

12 (18)(A)(ii) and (19)(A)(ii) of section 168(i) of the Internal 

13 Revenue Code of 1986 are each amended by striking ‘‘16 

14 years’’ and inserting ‘‘10 years’’. 

15 (c) EFFECTIVE DATES.— 

16 (1) IN GENERAL.—Except as provided in para17 graph (2), the amendments made by this section 

18 shall apply to property placed in service after the 

19 date of the enactment of this Act. 

20 (2) TECHNICAL AMENDMENT.—The amend21 ments made by subsection (b) shall take effect as if 

22 included in section 306 of the Energy Improvement 

23 and Extension Act of 2008. 


jlentini on PROD1PC65 with BILLS
18 

•S 271 IS

1 SEC. 5. EXPANSION AND EXTENSION OF ELECTRIC AND AL2 TERNATIVE FUEL VEHICLE REFUELING 

3 PROPERTY CREDIT. 

4 (a) IN GENERAL.—Section 30C of the Internal Rev5 enue Code of 1986 is amended— 

6 (1) by striking ‘‘30 percent’’ in subsection (a) 

7 and inserting ‘‘50 percent’’, and 

8 (2) by striking ‘‘$30,000’’ in subsection (b)(1) 

9 and inserting ‘‘$50,000’’. 

10 (b) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to property placed in service after 

12 the date of the enactment of this Act, in taxable years 

13 ending after such date. 

Æ 


jlentini on PROD1PC65 with BILLS