Problems with an alternative fuel tax credit program were not isolated to state government cost concerns.
A review of the state Department of Revenue’s emails shows that two taxpayers received a credit for the entire purchase price of their vehicles, instead of the allowable 10 percent up to $3,000.
“I wish the state would buy me a vehicle,” revenue tax research analyst Michelle Galland wrote in a May 10 email. Galland discovered the problem while reviewing the accounts.
Byron Henderson, spokesman for the state Department of Revenue, attributed the glitch to human error that allowed the $38,146.50 mistake to initially escape the agency’s attention.
Henderson said one taxpayer repaid the funds, including interest. Fixing the other taxpayer’s mistake was simpler, he said, because the credit benefit was applied to future tax liabilities rather than issued as a refund.
Henderson declined to identify the vehicles or taxpayers involved, citing confidentiality guidelines.
The glitch is just one indication of the multitude of problems surrounding a years-old alternative fuel tax credit program that ignited into controversy soon after the legislative session ended.
State Revenue Secretary Cynthia Bridges abruptly resigned June 15, a day after Gov. Bobby Jindal rescinded action that she took that expanded the number of vehicles eligible for the tax credit.
Taking Bridges’ place, at least temporarily, is Jane Smith, who as a legislator sponsored the bill creating the current tax credit program.
Smith did not respond to repeated requests for comment over two days.
The emails trace the credit’s history, including the expansion that made legislators nervous about the implications for the state operating budget. Left unclear is when the Jindal administration discovered the problem.
The Governor’s Office insists Jindal did not know about the expansion until shortly before he rescinded it.
State Department of Natural Resources Secretary Scott Angelle, who acts as the governor’s legislative liaison, wrote Bridges on June 14 about the tax credit being allowed for alternative fuel vehicles other than natural gas and electric vehicles.
“Scott, this is the matter that you discussed with my staff a few months ago. I believe GM was inquiring about the eligibility of their vehicles,” Bridges responded.
Three minutes later, Angelle replied that GM’s issue was electric cars.
“If a ruling came out that went beyond electric cars and natural gas I think it could be potentially problematic,” he wrote.
The tax credit stems from legislation that Smith sponsored in 2009 to create an incentive for “clean-burning motor vehicle fuel property.”
The legislation enhanced a credit already on the books.
Earlier this year, Bridges issued a rule allowing the credit to apply to flexible-fuel vehicles designed to run on more than one type of fuel, such as ethanol, but capable of running on regular unleaded gas alone. The April 30 rule greatly expanded the list of applicable vehicles.
Department emails detail why Bridges felt the rule was necessary three years after the legislation’s passage.
Legislative assistants and accountants were bombarding the agency with questions about the program’s mechanics. Car dealers made the credit part of their sales pitch, guaranteeing buyers $3,000 back from the state. But accountants were unsure which vehicles qualified.
Tax preparer Trudy Hebert complained in a March 29 email to state Sen. Page Cortez, R-Lafayette, that she was receiving conflicting information from the state.
“The first response was that the Flex Fuel vehicle was included, but since then all answers have been that it is only vehicles that use 100% Alternative Fuels. The taxpayers are telling me that ... Louisiana does not sell alternative fuel, and would like to know the point of the credit.”
Other tax preparers had similar questions about the flexible-fuel vehicles.
On April 30, Bridges’ rule — the first on the alternative fuel tax credit program — clarified that flexible-fuel vehicles were included.
By May 16, agency officials received notification that CPAs were spreading the word about the inclusion of flexible-fuel vehicles and the likelihood of a drastic increase in amended returns.
Less than a month later, Bridges sent out a cryptic message to her employees.
“A situation has occurred regarding the Alternative Fuel Tax Credit,” she wrote. “Please do not respond to any inquiries regarding this matter. Select staff is working with the Governor’s office on the matter.”
Bridges submitted her resignation the next day.
Meanwhile, applications for the tax credit continued to come into the revenue department, with nearly 2,000 applying in the five days after the governor revoked the rule allowing flexible-fuel cars.
For now, those applications will sit in a stack at the agency’s offices.
“We are not processing any claims for credits postmarked after June 14, 2012. Any action on claims postmarked after that date will wait until the conclusion of the rule-making process,” Henderson said.