Final Rule and Resolution of Key Issues

A. Summary

The final rule establishes a new class of 4-wheeled vehicles, called LSVs, and excludes them from passenger car class. LSVs are 4-wheeled vehicles, other than trucks, whose maximum speed exceeds 20 but is not greater than 25 miles per hour.

By removing them from the passenger car class, the rule relieves manufacturers of LSVs of the need they would otherwise have of complying with the full range of FMVSSs for those classes and substitutes Standard No. 500 as the only applicable FMVSS.

With the exception of the warning label, which was not adopted, LSVs are required to have all the safety features and equipment proposed in the NPRM, including seat belts, plus two additional items added in response to comments: a VIN, and a reflex reflector on the rear.

However, as an alternative to an AS-1 windshield, an AS-5 plastic windshield may be used.

B. Authority and Safety Need for this Final Rule

NHTSA was presented with a variety of arguments regarding its authority to regulate low-speed vehicles. WLF raised questions whether the vehicles covered by the agency's proposal are motor vehicles.

That organization also argued that issuing the final rule would not promote safety because there is no safety problem to be addressed. Conversely, Advocates and CFA argued that excluding small vehicles from the FMVSSs will create a safety problem.

AIA and Advocates stated that the agency had not adequately gathered and considered relevant data prior to issuing the proposal, citing agency statements about the dearth of data on LSV crashes and about the foreign experiences with small vehicles.

Special Tax Break on New Car Purchases Available in States With No Sales Tax

The Internal Revenue Service and Treasury Department today announced that a tax break for the purchase of new motor vehicles is available in states that do not have a state sales tax. Under the American Recovery and Reinvestment Act of 2009, taxpayers who buy a new motor vehicle this year are entitled to deduct state or local sales or excise taxes paid on the purchase.

The IRS and Treasury have determined that purchases made in states without a sales tax — such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon — can also qualify for the deduction.

The IRS said today that taxpayers who purchase a new motor vehicle in states that do not have state sales taxes are entitled to deduct other fees or taxes imposed by the state or local government. The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee. According to the IRS, Congress intended for these fees or taxes to qualify for this special tax deduction.

“This special tax break is available for people purchasing a new car this year, and that can include people in states without a sales tax,” said IRS Commissioner Doug Shulman. “This means that more people can take advantage of this deduction when they file their tax returns next year.”

To qualify for this deduction, the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010. Taxpayers can claim this special deduction only on their 2009 tax returns to be filed next year.

The deduction is limited to the fees or taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle.

The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.

The special deduction is available regardless of whether taxpayers itemize deductions on their returns. Taxpayers who do not itemize will add this additional amount to the standard deduction on their 2009 tax return. The IRS reminded taxpayers the deduction may not be taken on 2008 returns.