Tax credit form - did dealer screw this up?

[TheBertShow]

On this page:

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

The IRS states on that page that "For a buyer to receive a tax credit, sellers and dealers must report clean vehicle credit information to the buyer at the time of sale and to the IRS."

It also sets forth that the dealer has two separate requirements: They must report the sale within 3 days, and the must furnish the report to the buyer within 3 days of submission.

It seems like while dealers have 3 days to report, the IRS guidance is based on an assumption (which is their recommendation) that the sale is reported at the same time as the sale. In that case they would have 3 days from the sale to give the buyer the report. But in reality, they have 6: 3 to report and 3 more to deliver the report to the buyer.

I don't believe the IRS guidance is 100% clear. It doesn't explicitly address the situation of a dealer not reporting the sale. Folks will just have to find out when they file and see if their return gets booted back. But I predict that lots of dealers didn't report, and the IRS will keep the buyers from getting screwed.

Will the IRS fix any screw ups by dealers in all likelihood? Yes, probably.

But will it be next year or 2-3 years down the road? What if the IRS moves the goalposts and says I have to report it in a particular year 2-3 years where I made too much money and wouldn't be able to claim it?

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[TaxmanHog]

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

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

 

[TaxmanHog]

Will the IRS fix any screw ups by dealers in all likelihood? Yes, probably.

But will it be next year or 2-3 years down the road? What if the IRS moves the goalposts and says I have to report it in a particular year 2-3 years where I made too much money and wouldn't be able to claim it?

Assuming the dealer has sold 10's to 100's of BEV's up to now, many customers will have difficulties next spring when they file the forms 1040 & 8936 for tax year 2024.

There is a high probability claims will be rejected, but I'm not 100% certain that "uploading proof & substantiation" might help get a manual bypass of the initial processing reject yielding in a tax credit.

This is my understanding after reading the Rev Proc's, filing procedures and Q&A list, what I'm interested in seeing is the IRM3 (processing procedures) and IRM4 (Examination & Audit procedures) I haven't spent any time on that yet, potentially these sections will not be fully updated until the end of the year in preparation for filing season 2025.

 

[chl]

On this page:

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

The IRS states on that page that "For a buyer to receive a tax credit, sellers and dealers must report clean vehicle credit information to the buyer at the time of sale and to the IRS."

It also sets forth that the dealer has two separate requirements: They must report the sale within 3 days, and the must furnish the report to the buyer within 3 days of submission.

It seems like while dealers have 3 days to report, the IRS guidance is based on an assumption (which is their recommendation) that the sale is reported at the same time as the sale. In that case they would have 3 days from the sale to give the buyer the report. But in reality, they have 6: 3 to report and 3 more to deliver the report to the buyer.

I don't believe the IRS guidance is 100% clear. It doesn't explicitly address the situation of a dealer not reporting the sale. Folks will just have to find out when they file and see if their return gets booted back. But I predict that lots of dealers didn't report, and the IRS will keep the buyers from getting screwed.

Well,

1) the FORM they are supposed to give you is a MUST also, but the IRS gives you an out if the dealer doesn't give it to you within 3 days or really ever, and

2) the form the dealer is to give you is a verification that the vehicle is one on the IRS list and qualifies and whether they gave the credit up-front or not, as I understand it.

Bottom line, the law is intended to reward the buyer of an EV with a tax credit if the EV meets the requirements, NOT to merely create paperwork and penalize innocent buyers because a dealer didn't comply with a gottcha.

The IRS has a list of such vehicles.
You have a VIN number.
And you have an MSRP on your paperwork that shows the MSRP cost.

In other words you can prove it is a qualifying vehicle under the law.

So you can fill out a claim for the credit on the proper IRS form at tax filing with all the relevant information EVEN IF the dealership did not comply with the "MUST" do this and MUST do that.

So I would have no problem claiming the credit on my tax return as entitled even if I cannot get the dealer paperwork.

I am sure there will be a bunch of Lightning buyers entitled to the credit even though the dealership did not dot the i's and cross the t's.

So the IRS will have to decide if they are going to thwart the law's intention (the Inflation Reduction Act) by denying the credit because of a paperwork failing that is no fault of the EV buyer, or grant the credit.

I would bet they grant the credit without the dealer compliance (if they even check for the dealer paperwork at their end which they might or might not).

That's all I have to say about it really.

Good night and good luck.

 

[TaxmanHog]

So the IRS will have to decide if they are going to thwart the law's intention (the Inflation Reduction Act) by denying the credit because of a paperwork failing that is no fault of the EV buyer, or grant the credit.

I would bet they grant the credit without the dealer compliance (if they even check for the dealer paperwork at their end which they might or might not).

That's all I have to say about it really.

I have great concerns for any business thwarting the written law, the procedures are there for a reason, some not so well stated or understood by the masses of retail buyers.

I look forward to reading revisions to IRM's 3 & 4 on this subject.

An opinion coming from a retired tax law enforcement / Revenue Officer / Program analyst.

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