Rev. Proc. 2022-42 Treasury and IRS set out procedures for manufacturers, sellers of clean vehicles

[TaxmanHog]

Issue Number: IR-2022-218
Inside This Issue

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Updates as of 12/29/2022

https://www.irs.gov/newsroom/treasu...-publish-regulations-regarding-clean-vehicles

https://www.irs.gov/pub/irs-drop/n-23-01.pdf
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Fact sheets & FAQ's

https://www.irs.gov/newsroom/irs-re...reviously-owned-and-commercial-clean-vehicles

https://www.irs.gov/pub/taxpros/fs-2022-42.pdf
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Treasury and IRS set out procedures for manufacturers, sellers of clean vehicles

WASHINGTON — The Treasury Department and Internal Revenue Service today issued a Revenue Procedure setting out key processes for manufacturers and sellers of clean vehicles. These processes are required for vehicles to be eligible for one or more clean vehicle tax incentives, including tax credits for new and previously owned clean vehicles, as well as for commercial clean vehicles.

For vehicle manufacturers, Revenue Procedure 2022-42 provides guidance on new rules in the tax law added by the Inflation Reduction Act on how to enter into a written agreement with the IRS and how to provide periodic written reports containing specified information related to each clean vehicle manufactured.

This revenue procedure also provides the procedures for persons selling vehicles to report specified information to the IRS for a vehicle to be eligible for the credit for new or previously owned clean vehicles.

https://www.irs.gov/pub/irs-drop/rp-22-42.pdf

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[TaxmanHog]

Issue Number: RP-2022-22 Revenue Procedure 2022-42 sets forth the procedures under § 30D(d)(3) of the Internal Revenue Code (Code) for qualified manufacturers to enter into a written agreement with the Secretary of the Treasury or her delegate under which such manufacturer agrees to make periodic written reports to the Secretary providing vehicle identification numbers and such other information related to each vehicle that is eligible for a clean vehicle credit manufactured by such manufacturer as the Secretary may require. Vehicles eligible for the clean vehicle credit under § 30D of the Code (§ 30D credit), the credit for qualified commercial clean vehicles under § 45W of the Code (§ 45W credit) and vehicles eligible for the credit for previously-owned clean vehicles under § 25E of the Code (§ 25E credit), respectively, generally must be manufactured by a qualified manufacturer as described in § 30D(d)(1)(C) and (d)(3). See §§ 45W(c)(1) and 25E(c)(1)(D)(i). This revenue procedure also provides the procedures for persons selling vehicles to report the information required to be reported to the Internal Revenue Service (IRS) in order for a vehicle to be eligible for the clean vehicle credit under § 30D or § 25E. Revenue Procedure 2022-42 will be in IRB 2022-52, dated December 27, 2022. ​

 

[Grumpy2]

Two points of interest to me:
1) nothing seems to prevent a manufacturer, dealer, or qualified shop of installing a diesel fueled heating system that would allow similar range capability year around. The vehicle must be propelled by electric power from battery.
2) It seems unlikely the manufacturer will provide the necessary information for a used vehicle once it has been put into service for 2 years. Unless it met these requirements at the time of original sale in 2023?

 

[Snappy22]

Section 8 punts (for the moment) on the battery mineral issue.

I didn’t see anywhere that it ruled how to verify income limit for federal rebate.

 

[Grumpy2]

It seems the manufacturer must certify the battery is proven to meet the mineral issue.

The dealer supplies VIN. I assume the tax form will ask for VIN if your seek a tax credit. IRS computer will be able to quickly confirm match on your tax form in 2023. I can't see how it will work that way in 2024?

 

[Amps]

I assume that 2023 EV tax credit for new vehicles will be based on 2023 income? It seems like they are setting up for current year cross checking. Unlike, say IRMAA adjustments to Medicare premiums that go back a couple of years to determine their amount?

 

[TaxmanHog]

Tax year 2023, your still claiming the credit by filing the 1040 and appropriate schedules when the filing season starts right after 1/1/2024, if your 2023 income is not so high as to disqualify you from claiming the credit.

Calendar year 2024 retail purchase procedures have not been ironed out, but I'll take a wild guess that the dealer F&I guy would take your word at face value that you would qualify, assuming your income is not close to the cut of margin. If you claim it improperly, expect the long arm of Uncle to dig deep into your pocket later with penalties and interest accrued & assessed if there were indications of wilfully false claims, like your average AGI was well above qualifying thresholds and you still claimed the retail credit at purchase.

It's always interesting to see the rat's nest of compliance issues crop up with these new programs. People are going to get caught in a drag net one way or another. I don't know for sure that the dealer would be held liable for customer error-to-fraud

 

[TheBigBezo]

From reading that, I imagine then there won't be any way to wiggle around the 80k limit for ER Lightnings? It seems pretty clear that MSRP is the limit, and although I didn't see anything regarding options, I know my window sticker says MSRP after options (Lariat ER) exceeds the cutoff.

 

[TaxmanHog]

From reading that, I imagine then there won't be any way to wiggle around the 80k limit for ER Lightnings? It seems pretty clear that MSRP is the limit, and although I didn't see anything regarding options, I know my window sticker says MSRP after options (Lariat ER) exceeds the cutoff.

That is the way I would recommend interpreting it, I know it's unpopular, but how some states might do it is not how the IRS is going to do it. Bottom line is the bottom line for the MSRP with as delivered options.

 

[VTRedWingsFan]

That is the way I would recommend interpreting it, I know it's unpopular, but how some states might do it is not how the IRS is going to do it. Bottom line is the bottom line for the MSRP with as delivered options.

And the private offer for 22 -> 23 converts is no help, as its after bottom line. Correct ?

 

[shadycoh]

And the private offer for 22 -> 23 converts is no help, as its after bottom line. Correct ?

that totally depends on how the dealership you are working with handles the transaction.

 

[Pioneer74]

that totally depends on how the dealership you are working with handles the transaction.

I don't think that's how it works. MSRP doesn't change depending on rebates or private cash.

 

[EdwinT]

The SELLER'S REPORTS section has me afraid of my early 2023 purchase! what if the dealer is confused of all this at the time of the sale and doesn't get the paperwork done?! Now the dealers are required to be IRS agents lol?!?

"SECTION 5. SELLER’S REPORTS .01 Required Reports under Sections 30D and 25E. For purposes of § 30D(d)(1)(H), the person who sells any vehicle to the taxpayer or, for purposes of § 25E(c)(1)(D)(i), the dealer (as defined in § 30D(g)(8)) who sells any vehicle to the taxpayer, as applicable, (collectively, Seller) must furnish a report to the taxpayer and the IRS, at such time and in such manner as the Secretary provides containing information that is listed in this section 5.01. Accordingly, for vehicle sales occurring in calendar year 2023 or later, the Seller must provide the report to the taxpayer not later than the date the vehicle is purchased and must submit the report to Secretary within fifteen (15) days of the end of the calendar year containing the following:"

 

[TaxmanHog]

There is another thread discussing US Treasury delay on issuing certain guidance,
https://www.f150lightningforum.com/...-on-2023-ford-lightning-rebate-in-2022.13665/

I don't know if Section 5 needs any further clarification for the sellers report to the buyer, seems that could be a straight forward letterhead with stipulated information from dealer to buyer on sale date or within mandated 15 day deadline.

The part about a consolidated report to IRS would be due at the end of January 2024 for calendar year 2023 sales and manufacturing, the methods, forms and electronic data transmission formats are definitely still under development, but not of concern to retail customers.

If you get the letter in lieu of a specifically formatted OMB form I would say you're covered and should not stress over the matter, it's not important until you file your 2023 tax return in 2024.

Until they iron out the minutia, collect and maintain your original or copies of the bill of sales, MCO, registration documents regarding the purchase of the truck.

[OPINION] It really aggravates me when congress makes windfall changes in law and does not allot sufficient time to implement policy and process changes, in my 33+ year IRS career, I frequent dealt with and observed the organization struggle with implementation of the last minute changes to law, when Congress plays political games on the cusp of a calendar year (IE) the 7 day continuing resolution and have YET to formulate a fiscal year 2023 appropriations budget shit shows like this occur [/opinion]

 

[TaxmanHog]

https://www.irs.gov/newsroom/treasu...-publish-regulations-regarding-clean-vehicles

https://www.irs.gov/pub/irs-drop/n-23-01.pdf

Fact sheets & FAQ's

https://www.irs.gov/newsroom/irs-re...reviously-owned-and-commercial-clean-vehicles

https://www.irs.gov/pub/taxpros/fs-2022-42.pdf

https://www.irs.gov/credits-deductions/clean-vehicle-credit-seller-or-dealer-requirements

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