Credit for hybrid conversion

(a)

In general

Section 30B of the Internal Revenue Code of 1986 is amended by redesignating subsections (j) and (k) as subsections (k) and (l), respectively, and by inserting after subsection (i) the following new subsection:

(j)

Hybrid conversion credit

(1)

Credit allowed

(A)

In general

For purposes of subsection (a), the hybrid conversion credit determined under this subsection with respect to any motor vehicle which is converted to a qualified hybrid motor vehicle is an amount equal to so much of the cost of the conversion of such vehicle as does not exceed the applicable amount determined under the following table: If gross vehicle weight (prior to conversion) is:The applicable amount is: Not more than 8,500 pounds$3,000 More than 8,500 pounds but not more than 14,000 pounds$4,000 More than 14,000 pounds but not more than 26,000 pounds$6,000 More than 26,000 pounds$8,000.

(2)

Qualified hybrid motor vehicle

For purposes of this subsection, the term qualified hybrid motor vehicle means any new qualified hybrid motor vehicle (as defined in subsection (d)(3), determined without regard to whether such vehicle is made by a manufacturer or whether the original use of such vehicle commences with the taxpayer) which— (A)is used or leased by the taxpayer and is not for resale, and (B)achieves the minimum required reduction in fuel consumption determined under the following table, relative to the fuel consumption of an uncoverted vehicle of the same make and model under the Urban Dynamometer Driving Schedule (UDDS) test procedure issued by the Environmental Protection Agency (40 CFR 86.115 and appendix I to 40 CFR part 86): If vehicle (prior to conversion) is:The minimum required reduction is: A passenger vehicle with a gross vehicle weight of not more than 8,500 pounds19 percent A light truck with a gross vehicle weight of not more than 8,500 pounds15 percent A diesel vehicle with a gross vehicle weight of more than 8,500 pounds but not more than 14,000 pounds17 percent A gasoline vehicle with a gross vehicle weight of more than 8,500 pounds but not more than 14,000 pounds12 percent A vehicle with a gross vehicle weight of more than 14,000 pounds10 percent.

(3)

Credit allowed in addition to other credits

The credit allowed under this subsection shall be allowed with respect to a motor vehicle notwithstanding whether a credit has been allowed with respect to such motor vehicle under this section (other than this subsection and subsection (i)) in any preceding taxable year. No credit shall be allowed under this subsection with respect to a motor vehicle if the credit under subsection (i) is allowed with respect to such motor vehicle in any taxable year. (4)

Limitation on number of hybrid conversions eligible for credit

This subsection shall not apply to the conversion of any motor vehicle after the last day of the calendar quarter which includes the first date on which the total number of conversions with respect to which a credit under this subsection has been allowed for all taxable years is at least equal to the applicable number determined under the following table: If gross vehicle weight (prior to conversion) is:The applicable number is: Not more than 8,500 pounds100,000 More than 8,500 pounds but not more than 14,000 pounds70,000 More than 14,000 pounds but not more than 26,000 pounds20,000 More than 26,000 pounds10,000.

(5)

Termination

This subsection shall not apply to conversions made after the date which is 5 years after the date of the enactment of the RETRO Act.

(b)

Credit treated as part of alternative motor vehicle credit

Subsection (a) of section 30B of the Internal Revenue Code of 1986 is amended— (1)by striking and at the end of paragraph (4), (2)by striking the period at the end of paragraph (5) and inserting , and, and (3)by adding at the end the following new paragraph:

(6)the hybrid conversion credit determined under subsection (j).

(c)

No recapture for vehicles converted to qualified hybrid motor vehicles

Paragraph (8) of section 30B(h) of the Internal Revenue Code of 1986 is amended by striking a vehicle) and all that follows and inserting a vehicle), except that no benefit shall be recaptured if such property ceases to be eligible for such credit by reason of conversion to a qualified plug-in electric drive motor vehicle or a qualified hybrid motor vehicle.. (d)

Denial of double benefit

Paragraph (3) of section 30B(i) of the Internal Revenue Code of 1986 is amended by adding at the end the following: No credit shall be allowed under this subsection with respect to a motor vehicle if the credit under subsection (j) is allowed with respect to such motor vehicle in any taxable year.. (e)

Effective date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act. (f)

Rescission of unobligated Federal funds to offset loss in revenues

(1)

In general

Notwithstanding any other provision of law, of all available unobligated funds, appropriated discretionary funds are hereby rescinded in such amounts as determined by the Director of the Office of Management and Budget such that the aggregate amount of such rescission equals the reduction in revenues to the Treasury by reason of the amendments made by this section. (2)

Implementation

The Director of the Office of Management and Budget shall determine and identify from which appropriation accounts the rescission under paragraph (1) shall apply and the amount of such rescission that shall apply to each such account. Not later than 60 days after the date of the enactment of this Act, the Director of the Office of Management and Budget shall submit a report to the Secretary of the Treasury and Congress of the accounts and amounts determined and identified for rescission under the preceding sentence. (3)

Exception

This subsection shall not apply to the unobligated funds of the Department of Veterans Affairs, the Department of Defense, or any funds appropriated for disaster relief.