I 
111TH CONGRESS 
1ST SESSION 
H. R. 159 
To amend the Internal Revenue Code of 1986 to allow an above-the-line 
deduction against individual income tax for interest on indebtedness 
and for State and local sales and excise taxes with respect to the 
purchase of certain motor vehicles. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 6, 2009 
Mr. PASCRELL (for himself, Mr. LATOURETTE, Mr. VAN HOLLEN, Mr. SIRES, 
Mr. LOBIONDO, Ms. JACKSON-LEE of Texas, Mr. MANZULLO, Mr. CON-
YERS, Mr. MCKEON, Mr. PAUL, Mr. RUPPERSBERGER, Mr. FARR, Mr. 
BRADY of Pennsylvania, Mrs. MYRICK, Mr. REICHERT, Mr. AL GREEN 
of Texas, Mr. PLATTS, Mr. KAGEN, Mr. CAMPBELL, Mr. MOLLOHAN, and 
Mr. HOLT) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to allow an 
above-the-line deduction against individual income tax 
for interest on indebtedness and for State and local 
sales and excise taxes with respect to the purchase of 
certain motor vehicles. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. ABOVE-THE-LINE DEDUCTION FOR INTEREST 
ON INDEBTEDNESS WITH RESPECT TO THE 
PURCHASE OF CERTAIN MOTOR VEHICLES. 
(a) IN GENERAL.—Paragraph (2) of section 163(h) 
of the Internal Revenue Code of 1986 is amended— 
(1) by striking ‘‘and’’ at the end of subpara-
graph (E), 
(2) by striking the period at the end of sub-
paragraph (F) and inserting ‘‘, and’’, and 
(3) by adding at the end the following new sub-
paragraph: 
‘‘(G) any qualified motor vehicle interest 
(within the meaning of paragraph (5)).’’. 
(b) QUALIFIED MOTOR VEHICLE INTEREST.—Sec-
tion 163(h) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new para-
graph: 
‘‘(6) QUALIFIED MOTOR VEHICLE INTEREST.— 
For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
motor vehicle interest’ means any interest which 
is paid or accrued during the taxable year on 
any indebtedness which— 
‘‘(i) is incurred after November 12, 
2008, and before January 1, 2010, in ac-
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quiring any qualified motor vehicle of the 
taxpayer, and 
‘‘(ii) is secured by such qualified 
motor vehicle. 
Such term also includes any indebtedness se-
cured by such qualified motor vehicle resulting 
from the refinancing of indebtedness meeting 
the requirements of the preceding sentence (or 
this sentence); but only to the extent the 
amount of the indebtedness resulting from such 
refinancing does not exceed the amount of the 
refinanced indebtedness. 
‘‘(B) DOLLAR
LIMITATION.—The aggre-
gate amount of indebtedness treated as de-
scribed in subparagraph (A) for any period 
shall not exceed $49,500 ($24,750 in the case 
of a separate return by a married individual). 
‘‘(C) INCOME
LIMITATION.—The amount 
otherwise treated as interest under subpara-
graph (A) for any taxable year (after the appli-
cation of subparagraph (B)) shall be reduced 
(but not below zero) by the amount which bears 
the same ratio to the amount which is so treat-
ed as— 
‘‘(i) the excess (if any) of— 
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‘‘(I) the taxpayer’s modified ad-
justed gross income for such taxable 
year, over 
‘‘(II) $125,000 ($250,000 in the 
case of a joint return), bears to 
‘‘(ii) $10,000. 
For purposes of the preceding sentence, the 
term ‘modified adjusted gross income’ means 
the adjusted gross income of the taxpayer for 
the taxable year increased by any amount ex-
cluded from gross income under section 911, 
931, or 933. 
‘‘(D) QUALIFIED
MOTOR
VEHICLE.—The 
term ‘qualified motor vehicle’ means a pas-
senger automobile (within the meaning of sec-
tion 30B(h)(3)) or a light truck (within the 
meaning of such section)— 
‘‘(i) which is acquired for use by the 
taxpayer and not for resale after November 
12, 2008, and before January 1, 2010, 
‘‘(ii) the original use of which com-
mences with the taxpayer, and 
‘‘(iii) which has a gross vehicle weight 
rating of not more than 8,500 pounds.’’. 
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(c) DEDUCTION ALLOWED ABOVE-THE-LINE.—Sec-
tion 62(a) of the Internal Revenue Code of 1986 is amend-
ed by inserting after paragraph (21) the following new 
paragraph: 
‘‘(22) QUALIFIED
MOTOR
VEHICLE
INTER-
EST.—The deduction allowed under section 163 by 
reason of subsection (h)(2)(G) thereof.’’. 
(d) REPORTING OF QUALIFIED MOTOR VEHICLE IN-
TEREST.— 
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61 of the Internal Revenue 
Code of 1986 is amended by adding at the end the 
following new section: 
‘‘SEC. 6050X. RETURNS RELATING TO QUALIFIED MOTOR 
VEHICLE INTEREST RECEIVED IN TRADE OR 
BUSINESS FROM INDIVIDUALS. 
‘‘(a) QUALIFIED MOTOR VEHICLE INTEREST.—Any 
person— 
‘‘(1) who is engaged in a trade or business, and 
‘‘(2) who, in the course of such trade or busi-
ness, receives from any individual interest aggre-
gating $600 or more for any calendar year on any 
indebtedness secured by a qualified motor vehicle (as 
defined in section 163(h)(6)(D)), 
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shall make the return described in subsection (b) with re-
spect to each individual from whom such interest was re-
ceived at such time as the Secretary may by regulations 
prescribe. 
‘‘(b) FORM AND MANNER OF RETURNS.—A return 
is described in this subsection if such return— 
‘‘(1) is in such form as the Secretary may pre-
scribe, 
‘‘(2) contains— 
‘‘(A) the name and address of the indi-
vidual from whom the interest described in sub-
section (a)(2) was received, 
‘‘(B) the amount of such interest received 
for the calendar year, and 
‘‘(C) such other information as the Sec-
retary may prescribe. 
‘‘(c) APPLICATION TO GOVERNMENTAL UNITS.—For 
purposes of subsection (a)— 
‘‘(1) TREATED AS PERSONS.—The term ‘per-
son’ includes any governmental unit (and any agency 
or instrumentality thereof). 
‘‘(2) SPECIAL RULES.—In the case of a govern-
mental unit or any agency or instrumentality there-
of— 
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‘‘(A) subsection (a) shall be applied with-
out regard to the trade or business requirement 
contained therein, and 
‘‘(B) any return required under subsection 
(a) shall be made by the officer or employee ap-
propriately designated for the purpose of mak-
ing such return. 
‘‘(d) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under 
subsection (a) shall furnish to each individual whose name 
is required to be set forth in such return a written state-
ment showing— 
‘‘(1) the name, address, and phone number of 
the information contact of the person required to 
make such return, and 
‘‘(2) the aggregate amount of interest described 
in subsection (a)(2) received by the person required 
to make such return from the individual to whom 
the statement is required to be furnished. 
The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the 
year following the calendar year for which the return 
under subsection (a) was required to be made. 
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‘‘(e) RETURNS WHICH WOULD BE REQUIRED TO BE 
MADE BY 2 OR MORE PERSONS.—Except to the extent 
provided in regulations prescribed by the Secretary, in the 
case of interest received by any person on behalf of an-
other person, only the person first receiving such interest 
shall be required to make the return under subsection 
(a).’’. 
(2) AMENDMENTS RELATING TO PENALTIES.— 
(A) Section 6721(e)(2)(A) of such Code is 
amended by striking ‘‘or 6050L’’ and inserting 
‘‘6050L, or 6050X’’. 
(B) Section 6722(c)(1)(A) of such Code is 
amended by striking ‘‘or 6050L(c)’’ and insert-
ing ‘‘6050L(c), or 6050X(d)’’. 
(C) 
Subparagraph 
(B) 
of 
section 
6724(d)(1) of such Code is amended by redesig-
nating clauses (xvi) through (xxiii) as clauses 
(xvii) through (xxiv), respectively, and by in-
serting after clause (xv) the following new 
clause: 
‘‘(xvi) section 6050X (relating to re-
turns relating to qualified motor vehicle in-
terest received in trade or business from 
individuals),’’. 
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(D) Paragraph (2) of section 6724(d) of 
such Code is amended by striking the period at 
the end of subparagraph (EE) and inserting a 
comma, by striking the period at the end of 
subparagraph (FF) and inserting ‘‘, or’’, and 
by inserting after subparagraph (FF) the fol-
lowing new subparagraph: 
‘‘(GG) section 6050X(d) (relating to re-
turns relating to qualified motor vehicle interest 
received in trade or business from individ-
uals).’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of 
chapter 61 of such Code is amended by inserting 
after the item relating to section 6050W the fol-
lowing new item: 
‘‘Sec. 6050X. Returns relating to qualified motor vehicle interest received in 
trade or business from individuals.’’. 
SEC. 2. ABOVE-THE-LINE DEDUCTION FOR STATE AND 
LOCAL SALES TAX AND EXCISE TAX ON THE 
PURCHASE OF CERTAIN MOTOR VEHICLES. 
(a) IN GENERAL.—Subsection (a) of section 164 of 
the Internal Revenue Code of 1986 is amended by insert-
ing after paragraph (5) the following new paragraph: 
‘‘(6) Qualified motor vehicle taxes.’’. 
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(b) QUALIFIED
MOTOR
VEHICLE
TAXES.—Sub-
section (b) of section 164 of the Internal Revenue Code 
of 1986 is amended by adding at the end the following 
new paragraph: 
‘‘(6) QUALIFIED MOTOR VEHICLE TAXES.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘qualified motor vehicle taxes’ 
means any State or local sales or excise tax im-
posed on the purchase of a qualified motor vehi-
cle (as defined in section 163(h)(6)(D)). 
‘‘(B) INCOME
LIMITATION.—The amount 
otherwise taken into account under subpara-
graph (A) for any taxable year shall be reduced 
(but not below zero) by the amount which bears 
the same ratio to the amount which is so treat-
ed as— 
‘‘(i) the excess (if any) of— 
‘‘(I) the taxpayer’s modified ad-
justed gross income for such taxable 
year, over 
‘‘(II) $125,000 ($250,000 in the 
case of a joint return), bears to 
‘‘(ii) $10,000. 
For purposes of the preceding sentence, the 
term ‘modified adjusted gross income’ means 
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the adjusted gross income of the taxpayer for 
the taxable year increased by any amount ex-
cluded from gross income under section 911, 
931, or 933. 
‘‘(C) QUALIFIED MOTOR VEHICLE TAXES 
NOT INCLUDED IN COST OF ACQUIRED PROP-
ERTY.—The last sentence of subsection (a) 
shall not apply to any qualified motor vehicle 
taxes. 
‘‘(D) 
COORDINATION
WITH
GENERAL 
SALES TAX.—This paragraph shall not apply in 
the case of a taxpayer who makes an election 
under paragraph (5) for the taxable year.’’. 
(c) CONFORMING AMENDMENTS.—Paragraph (5) of 
section 163(h) of the Internal Revenue Code of 1986, as 
added by section 1, is amended— 
(1) by adding at the end the following new sub-
paragraph: 
‘‘(E) EXCLUSION.—If the indebtedness de-
scribed in subparagraph (A) includes the 
amounts of any State or local sales or excise 
taxes paid or accrued by the taxpayer in con-
nection with the acquisition of a qualified motor 
vehicle, the aggregate amount of such indebted-
ness taken into account under such subpara-
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graph shall be reduced, but not below zero, by 
the amount of any such taxes for which a de-
duction is allowed under section 164(a) by rea-
son of paragraph (6) thereof.’’, and 
(2) by inserting ‘‘, after the application of sub-
paragraph (E),’’ after ‘‘for any period’’ in subpara-
graph (B). 
(d) DEDUCTION ALLOWED ABOVE-THE-LINE.—Sec-
tion 62(a) of the Internal Revenue Code of 1986, as 
amended by section 1, is amended by inserting after para-
graph (22) the following new paragraph: 
‘‘(23) QUALIFIED
MOTOR
VEHICLE
TAXES.— 
The deduction allowed under section 164 by reason 
of subsection (a)(6) thereof.’’. 
Æ 
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