Anyone do a BuyBack in 2024? - Tax Credit Question

[DesertEV]

Good luck looks like you have plenty of good advice noted above, sorry I was out of loop today.

Today was our 30th wedding anniversary, today's dinner turned into a trip to the ER, we just got home, all is well for the moment.

Happy 30th anniversary and hope all is well!

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[mags]

Happy 30th! And thanks for all the knowledge on this site.

 

[Vcrpromo]

Good luck looks like you have plenty of good advice noted above, sorry I was out of loop today.

Today was our 30th wedding anniversary, today's dinner turned into a trip to the ER, we just got home, all is well for the moment.

My prayers will be with you god bless you and your family always.

 

[mags]

I started a new thread, this saga is ongoing, Ford is refusing to refund my tax credits:
https://www.f150lightningforum.com/forum/threads/ford-rav-buyback-ev-rebate-headaches.20351/

Never mind I'll keep this thread going

 

[mags]

I had my pro bought back a couple weeks ago here in California. Whole process took about 2 months. The federal tax credit was not deducted from my payback. For me the value was based on what I paid minus a mileage penalty. The mileage penalty is based on the first time I took it in for warranty work, not what it had on the clock.

I took the money and bought a 2023 XLT ER a few days later for a killer deal.

When you say "the value was based on what I paid", does that mean the number at the bottom of your bill of sale, or the subtotal before the tax rebates? Ford is taking the stance that my tax credits were discounts and not cash paid from the government on my behalf.

 

[mags]

so to resurrect this thread, 8 weeks later I am still in negotiation with Ford.

Ford is refusing to reimburse the Federal and State EV credits applied to my purchase. I was under the impression these "rebates" were treated as cash down payments in the transaction.
(I am lined up for lemon law arbitration through the Maine AG if the buyback process doesn't work out)

I should clarify, the Maine rebate has a stipulation that I keep the vehicle for 3 years or return the money. There's a possibility that this buyback would require me to reimburse the state.

Also on principle, Ford got this money from the government, right? The RAV coordinator insists this was a "discount" on my purchase.

 

[KurtsRPMGarage]

When you say "the value was based on what I paid", does that mean the number at the bottom of your bill of sale, or the subtotal before the tax rebates? Ford is taking the stance that my tax credits were discounts and not cash paid from the government on my behalf.

I got the subtotal before any tax credits were factored in. Since it looks like you bought this year its much more complicated. I previously bought my truck in 2022 so the dealer/Ford was not involved in the tax credits at all.

 

[mags]

I got the subtotal before any tax credits were factored in. Since it looks like you bought this year its much more complicated. I previously bought my truck in 2022 so the dealer/Ford was not involved in the tax credits at all.

Thanks for responding! I watched your video on your new truck and was like, "Why isn't my buyback this pleasant??"
I'll probably have to escalate with a lawyer or take my chances in arbitration. The hilarious/sad thing is the part for my truck finally came in after over 3 months but I don't even want to start a conversation about keeping it, since there's a 5+ day delay for every correspondence with Ford.

 

[chl]

I initiated the buyback process for my '23 Lightning Pro which has been out of service since April 3 waiting for a heater module. I bought it in January 2024 an the point of sale tax credit was deducted from the price.
My question is, if ford offers a refund, will the credit be included? In other words, is it treated as a cash down payment, and therefore refunded?
If nobody knows, I will post a thread as soon as I hear back from Ford.
I am anxious to get this resolved so I can buy another Lightning!

I think it may depend on the timing of the "buyback", and how it is treated by the IRS.
Was it within 30 days, and was the buyback a "return" or a "cancellation?"
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My guess is that outside the 30 days from taking possession, there is no recapture by the IRS, but that needs to be looked up to be sure.

If outside the 30 days, it may mean that you took the tax credit, that is final and that it can't be undone - is irreversible.

If that is the case, the refund probably should include a refund to you of the tax credit - otherwise the dealer has made $7500 using your tax credit from the IRS but you have no EV, which would be inequitable. Assuming there is no recapture, then the dealer keeps the $7500 the IRS gave them and should pay it to you since it was essentially a down payment.

However, the IRS might treat the "buyback" as a resale by you, and if within 30 days, may want to recapture the tax credit FROM YOU. At least according to this CPA's post:

Resales of EVs Within 30 Days. If a purchaser sells an EV within 30 days of taking possession of the EV, the purchaser cannot claim the Section 30D EV tax credit for the EV. If the purchaser had elected to transfer the Section 30D EV tax credit to the dealer, the dealer keeps the advance payment made to the dealer by the IRS, and the IRS will collect the amount of the transferred credit from the purchaser. In addition, the Section 30D EV tax credit may not be claimed or transferred with respect to the EV going forward.

https://katten.com/updates-on-ev-tax-credits
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I think this is one for the CPA's to handle and figure out to be sure. Relying on what other people or dealerships have done may not turn out to comply with what the IRS says. This is the first year of being able to transfer the credit up-front, so things are unsettled.

The IRS might or might not have determined how to handle your situation, outside 30 days buyback.

It seems you may be able to buy one more EV this year and get the credit, assuming you are outside the 30days and the credit is irreversible:

Q7. How many transfer elections can I make in a year? (added Oct. 6, 2023)

A7. You can make no more than two elections to transfer a clean vehicle credit each tax year. Such elections could be for two Clean Vehicle Credits or one Clean Vehicle Credit and one Previously Owned Clean Vehicle Credit, but cannot be for two Previously Owned Clean Vehicle Credits. Accordingly, spouses may each transfer no more than two Clean Vehicle Credits each tax year.

The IRS says the dealer can treat the transferred credit as a down payment:

Q12. What benefits may a purchaser get in exchange for transferring a Clean Vehicle Tax Credit to a registered dealer? (added Oct. 6, 2023)

A12. A dealer can provide a purchasing taxpayer with a financial benefit in cash or in the form of a partial payment or down payment for the purchase of the vehicle. The taxpayer benefits by receiving an immediate financial benefit at the time of sale, rather than having to wait to file a tax return and claim the credit.


Q18. What happens if a vehicle is returned or a sale is canceled after a credit is transferred? (added Oct. 6, 2023)

A18. If a sale is canceled before the taxpayer places the vehicle in service (that is, before the taxpayer takes possession of the vehicle), the vehicle will still be eligible for a Clean Vehicle Credit upon a subsequent qualifying sale to another taxpayer. In that case, the credit would not yet have been transferred.

In the case of return made within 30 days of placing the vehicle in service, the purchaser cannot claim a Clean Vehicle Credit with respect to the vehicle. Such vehicle, once returned, was already placed in service by a taxpayer and a new Clean Vehicle Tax Credit is not available to a subsequent buyer.

In the case of a return of a previously owned clean vehicle, the vehicle, once returned, is not eligible for a credit upon a subsequent sale if the vehicle history reflects that such subsequent sale is not a qualified sale. However, if the vehicle history does not reflect the prior sale and return, the vehicle remains eligible.

If the taxpayer made an election to transfer the Clean Vehicle Credit, that vehicle transfer election is nullified, and any advance payment made pursuant to the clean vehicle transfer rules will be recaptured from the eligible entity as an excessive payment.


Q19. How are transferred tax credits treated for tax purposes? (added Oct. 6, 2023)

A19.

For dealers: Advance payments received by the registered dealer are not treated as a tax credit to the dealer and may exceed the dealer’s regular tax liability. Advance payments received by the registered dealer are not included in the gross income of the dealer. The payment made by the registered dealer to the buyer in exchange for the transferred credit is not deductible by the dealer. Such payment is treated as repaid by the buyer to the registered dealer as part of the purchase price of the vehicle and therefore is treated as included in the total amount received from the sale transaction.

For buyers: The payment made by the registered dealer to the buyer in the form of a cash payment, down payment or partial down payment is not [sic] includible in the gross income of the buyer. Such payment made by the registered dealer is treated as an advance payment of the credit to the buyer on behalf of the Secretary of the Treasury and the basis of such vehicle is reduced by the amount of such credit.

Q20. Do dealers and buyers need to claim transferred tax credits when filing their tax return? (added Oct. 6, 2023)

A20.

For dealers: No. The exclusive method for dealers to claim transferred tax credits is via the advance payment program through IRS Energy Credits Online.

For buyers: An electing taxpayer must file an income tax return for the taxable year in which the vehicle transfer election is made that notes such election. Specifically, the electing taxpayer must file a Form 1040, U.S. Individual Income Tax Return, and attach a completed Form 8936, Clean Vehicle Credits, or successor form, and any other additional forms, schedules or statements prescribed by the Commissioner of the IRS for purposes of making a return to report tax under Chapter 1 of the Internal Revenue Code.

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Remember there is no tax liability requirement, but there is an income limitation:

Q4: What if a buyer has insufficient tax liability to fully use a transferred credit? (added Oct. 6, 2023)

A4. The amount of the credit that the electing taxpayer elects to transfer to the eligible entity may exceed the electing taxpayer's regular tax liability for the taxable year in which the sale occurs, and the excess, if any, is not subject to recapture from the dealer or the buyer.


Q21. When do buyers need to repay tax credits transferred to the dealer? (added Oct. 6, 2023)

A21. If you transfer a credit to a registered dealer but exceed the relevant income limitations, you will need to repay the IRS when filing your tax return. Do not repay the dealer for a transferred tax credit if you end up not being eligible for the credit upon filing your tax return.


https://www.irs.gov/newsroom/topic-...it-and-previously-owned-clean-vehicles-credit

 

[mags]

I think it may depend on the timing of the "buyback", and how it is treated by the IRS.
Was it within 30 days, and was the buyback a "return" or a "cancellation?"
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My guess is that outside the 30 days from taking possession, there is no recapture by the IRS, but that needs to be looked up to be sure.

If outside the 30 days, it may mean that you took the tax credit, that is final and that it can't be undone - is irreversible.

Thanks for the extensive response. It's outside 30 days. I have to wonder if there is something about the way the dealer did my paperwork that gives Ford the impression I was given an extra $9500 discount on the truck (actually $13500 after the actual 4K off MSRP discount!). If my RAV person would answer the phone I might be able to sort this out easily. Or not! Shenanigans!

What stinks is that I found a replacement truck I want to buy, but I'm fixated on getting the 2K private offer that should come with the buyback. I should let that go.

 

[chl]

Last year I bought 2 EVs that qualified for the tax credit. A Tesla and a Lightning. I got to reduce my tax Liability by $15,000 last year when I filed my return.

As reporting has changed slightly since you can now claim it at point of sale, it is still the responsibility of the dealer to report to the IRS regardless of the way it is claimed.

Tesla gave me a completed 15400 at the beginning of 2024.
Ford Dealer gave me a Ford Form Seller report 30D at time of sale.

Feel free to use it to educate your dealership.

See attached are both with my PII, Personal Identifiable Information, redacted

I believe if the dealer did not give the buyer the report.paperwork, the buyer reports the vehicle information to the IRS on their tax return EV tax credit form, and the IRS will look it up by VIN and verify it qualifies as an EV subject to the tax credit. In other words the buyer can still claim the tax credit without the paperwork from the dealer.

I wonder what a buyer should do when a dealer after, Jan 1, 2024, gave a $7500 reduction in price but didn't specify it as a transferred tax credit from the buyer and doesn't provide any paperwork about it at the sale time.

Can the buyer assume that it is a transferred tax credit, without any paperwork saying so from the dealer, or can the buyer assume the dealer gave a discount but didn't apply for the tax credit transfer, and therefore the buyer can claim the tax the old way on their tax return the following April?

Some dealers were ready and some weren't ready with the IRS registration requirements and paperwork. So some may have applied for the tax credit but not had the paperwork to give the buyer indicating that.

Some dealers have apparently listed the $7500 as a generic discount on the sales price without the buyer notification paperwork that it was a tax credit. And some didn't apply for the tax credit but gave a $7500 credit to make the sale.

If the buyer applies for the tax credit on their return, but the deal already took it, there will be an IRS letter and an adjustment in tax liability for the buyer to deal with.

 

[chl]

Thanks for the extensive response. It's outside 30 days. I have to wonder if there is something about the way the dealer did my paperwork that gives Ford the impression I was given an extra $9500 discount on the truck (actually $13500 after the actual 4K off MSRP discount!). If my RAV person would answer the phone I might be able to sort this out easily. Or not! Shenanigans!

What stinks is that I found a replacement truck I want to buy, but I'm fixated on getting the 2K private offer that should come with the buyback. I should let that go.

Yes, that sounds like it could be the case though...I think some dealerships gave the $7500 as a discount and didn't apply for credit just so they could make the sale. They hadn't gotten the IRS requirements and registration done in time.

Or maybe they didn't apply in time - within 3 days of sale.

But others may have applied for the transferred tax credit but not given the buyer any paperwork to prove it later.

If they DID apply for the tax credit, the IRS should have it on file, could be looked up by VIN.

It would be a real conundrum if the IRS wants to recapture the tax credit from you but Ford didn't give it to you in the buyback!

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Report information to buyers

For vehicles placed in service in 2024 or later, providing buyers a copy of the seller report submitted to IRS Energy Credits Online and the confirmation that the IRS accepted the submission meets your reporting obligation.

For vehicles placed in service in 2023, you needed to provide the following information to buyers at the time of sale:

• Seller/Dealer name and taxpayer ID number
• Buyer's name and taxpayer ID number
• Maximum credit allowable under IRC 30D for new vehicles or IRC 25E for previously owned vehicles
• Vehicle identification number (VIN), unless the vehicle is not assigned one
• Battery capacity
• Date of sale
• Sale price
• For new vehicles, verification that the buyer is the original user

Each report must include a declaration of accuracy signed by a representative of your business with binding authority. The declaration must read: "Under penalties of perjury, I declare that I have examined this report submitted to the IRS pursuant to Revenue Procedure 2022-42 by [insert name of Seller], and to the best of my knowledge and belief I certify that this report is true, correct, and complete."
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https://www.nerdwallet.com/article/...mation-do-you-need-to-claim-the-ev-tax-credit

Transferring the clean vehicle tax credit to a dealer
Taxpayers who transfer the credit to the dealership get an immediate discount on the car rather than having to wait to claim a credit on their taxes. Although the discount has no effect on your tax bill, you still have to report the transaction on your tax return.

You’ll need to fill out Form 8936 when you file your return for that year to report on your election and provide the agency with your VIN. And buyer beware — if you take a rebate but are not eligible for it, you’ll be required to pay the IRS back

If you’re transferring the credit to the dealer
If you’re electing to transfer the credit to the dealer for a direct discount, you must disclose your taxpayer identification number — typically your Social Security number — and a photo ID at the time of purchase:

You must also officially attest to, or confirm, the following information:

• Your modified adjusted gross income (MAGI) falls within the eligibility threshold.
• You understand that you must repay the IRS any rebate amount you accepted if your MAGI was above the accepted limits.
• The car will be primarily for personal use.
• You will file a tax return for the tax year in which you bought the car and provide the vehicle’s identification number and the date of the transfer election to the IRS.
• You elected to voluntarily transfer the credit

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So if you didn't sign (attest to) a paper with this information, the dealer apparently didn't claim the tax credit and the $7500 was a dealer discount, so they don't need to pay it to you.

How to prove it one way or the other is the problem. Might have to have a tax lawyer call their accounting office and talk it over with them to get to the bottom of it if they are giving you the runaround.

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