I disagree with the proposed assessment of $2,016 against my 1999 Arizona individual income tax return, as summarized in the letter I received on January 8, 2003.  Code 5829 in the letter stated that ARS 43-1086 specifically excluded motorcycles from the 1999 alternative fuel credit (form 313).  Although the statute at present does indeed exclude motorcycles, the statute did not exclude them at the time I filed my tax return.

ARS 43-1086, effective for taxable years beginning after December 31, 1998, was added during the legislature’s First Regular Session of 1999 (see Laws 1999, Ch. 168, sec. 19), and in its initial language, did not exclude motorcycles.  I purchased my motorcycle on January 29, 1999, took possession of it March 8, 1999, and filed my 1999 state tax return prior to April 15, 2000.

In July of 2000, the legislature passed SB 1504, the 2000 Clean Air Act (Laws 2000, Ch. 405).  This bill added language to ARS 43-1086 to prohibit motorcycles from being eligible from the credit.

Since this exclusion was not part of the law at the end of 1999, nor when I purchased my electric motorcycle, nor even at the time I filed my return, I believe that my motorcycle was indeed eligible in 1999, and that my claim of the credit on form 313 of that return is correct and does not require amendment.

Codes 9906 and 9908 in the assessment I received further requested that my 2000 and 2001 returns be amended, since I carried forward the unused part of the 1999 credit on those returns.  Since, as I have shown, my 1999 return is correct, my 2000 and 2001 returns should also stand as filed and do not need amendment either.

I trust that the information in this protest answers the proposed assessment and that this matter is closed, and I look forward to confirmation of same from the Arizona Department of Revenue.