7500 EV tax credit update with new bill

Will you continue to purchase without the EV Credit?

  • Yes

    Votes: 7 70.0%
  • No

    Votes: 3 30.0%

  • Total voters
    10
Sorry, didn't think I was venting! Just sharing an opinion. Trying to offer a solution. Tons of posts here about the nuance of the interpretation IRS guidelines and what constitutes a confirmed contract or not. Thought I had a different, interesting angle on the problem to share. I kind of feel like that is what the forums are about.
Sorry it sounded like you have an urgent situation that you personally want your Touring to be upgraded and delivered before end of 2022 and was frustrated that you cant.

I had also wondered why theyre not allowing GT upgrade anymore for original pricing. I think they wanted to get the GT batch produced altogether and be done with it instead of having a ton of people reserving Pure to lock in GT price. Again, if they see youre an old reservation holder they could do it on case by case basis.
 
No, Retired International Farmer that has grown crops in the U.S., Brazil, Argentina, Spain, Italy, and Lebanon. In all my years of business I have never experienced a product in short supply where the price went down.
OK sorry if you took offence at my previous comment. I am currently getting an MBA and have had several arguments about exactly what you are talking about with a professor recently.
 
Sorry it sounded like you have an urgent situation that you personally want your Touring to be upgraded and delivered before end of 2022 and was frustrated that you cant.

I had also wondered why theyre not allowing GT upgrade anymore for original pricing. I think they wanted to get the GT batch produced altogether and be done with it instead of having a ton of people reserving Pure to lock in GT price. Again, if they see youre an old reservation holder they could do it on case by case basis.
Yeah sorry if I seemed a bit short in my response. I actually took your advice and reached out to my DA/SA whatever they are. Will post if I get any response.
 
I mean I'm not sure how it wouldn't be. Here's how I see it going:
  • Send out an email to all reservation holders of Touring/Pure placed before Jan 1 '22 (those who could have had a reasonable expectation of receiving their vehicle in '22)
  • Offer the upgrade to GT again for original price ($139k).
  • Offer remains open for 2 weeks
If people accept it turns more orders into higher revenue orders. It also adds to the backlog of orders that they can currently produce vs versions they can't currently produce, so potential to turn more revenue before end of the year.

If people don't accept then no harm no foul. At least they tried to help accommodate people due to a regulatory issues outside of their control. If people don't accept the opportunity then that's on them.

The only scenario where this is not good for Lucid is if they can't make a profit on GT @ $139k, in which case we should all be running for the hills because they are not gonna be around for long.
The problem with this is you are assuming that if you take them up on this offer, they can DEFINITELY produce a GT for you by the end of the year. They can’t guarantee that. If they could, they could also guarantee your Touring by year’s end.

Imagine how upset customers who agree to upgrade an extra $28k will be when their cars get delivered on January 2nd, 2023, and they lose the credit AGAIN?
 
I personally don't fault Lucid for the issues with the IRS guidance and the level of deposit that is required for meeting the context of a binding contract. They took a shot at helping us out and it didn't work.

The thing that is starting to grate on me a little bit as a very early Touring reservation holder is the production scheduling choices. I get that the GT's make them more margin, but we have been consistently told that Touring production was imminent. Even when given the choice to upgrade reservations for the initial pricing, the indication was still that Touring's would be in production in Q3 and some delivered in Q4.

Now here we are in late August and I have no faith in my car being delivered in 2022, meaning I will now miss out on the tax rebate (again not directly Lucid's fault) but I have to believe there are folks placing GT orders in early '22 (following release of the DE's and all the favorable press etc) who will get their vehicles in '22 and will get the rebate, when I most likely won't.

Again, no ill will to any late GT order holders, just think it can't be that hard (especially having seen some of the tech talk videos) to produce vehicles with lower specs by simply not installing some of the modular components in your modular design.

Perhaps Lucid can reopen the offer to some of us early reservation holders to upgrade to a vehicle they can produce in '22, but honoring the original pricing still. I can't believe that would hurt them overall because they still end up with potentially more takers of the higher spec.

For me, I was looking at a high spec Touring (about $111k if memory serves me right) vs standard spec GT (about $139k) and couldn't justify the $28k difference. If that difference can now be $20k due to a GT delivered in '22 will get me the rebate whereas my '23 delivered Touring won't, maybe that is something I would do now to get the power increase and massaging seats?
Unless the IRS specifically says 5% non-refundable is required, I'm claiming the credit. I had a "written binding contract." If the IRS wants to audit me, and tell me their definition is different based on their general guidance, thats fine. My interpretation of written binding contract is the same as Lucid's. I partially purchased my Lucid before the law passed, so I should be grandfathered.
 
Unless the IRS specifically says 5% non-refundable is required, I'm claiming the credit. I had a "written binding contract." If the IRS wants to audit me, and tell me their definition is different based on their general guidance, thats fine. My interpretation of written binding contract is the same as Lucid's. I partially purchased my Lucid before the law passed, so I should be grandfathered.
That’s fine, so long as the audit doesn’t uncover any other possible “errors” you’ve made on your returns in the past seven years.

It’ll probably cost you a bit more than $7,500 to defend yourself, meanwhile.
 
That’s fine, so long as the audit doesn’t uncover any other possible “errors” you’ve made on your returns in the past seven years.

It’ll probably cost you a bit more than $7,500 to defend yourself, meanwhile.
My taxes are pretty boring. I'm not concerned. If they insist on undoing the credit, thats fine.

Plus - don't spread fud, IRS typically has specific questions on the past years's return when they audit. They don't go multiple years back unless they think you're committing fraud.
 
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Stop spreading FUD.

The order confirmation for your Lucid Air is considered a written binding agreement under the Transition Rule, there is no specific percentage (IRS only uses 5% as a general example, but it is not limited to at least that) as long as the order converts your reservation deposit into a non-refundable order deposit.

The only change on August 16, 2022 when the bill was passed is that EVs that qualify for any EV tax credit under the old or new rule must have final assembly in North America as per the Final Assembly Requirement. This has no effect on Lucid Airs since Lucid Air is already assembled in USA. See here if you don't believe me on which cars qualify.

Additionally, you can technically still confirm your Lucid Air until December 31, 2022 and qualify for the old EV tax credit rule under the Transition Rule.

Even if so, the IRS will be conducting future guidance on how to manuever this transitory period between the old and new EV tax credit rules, which means in the following weeks, they will be fielding surveys to see what qualifies and doesn't qualify as they themselves don't know just yet. Rivian, Fisker, Nissan, Toyota, Kia and Volkswagen have all sent out very similiar options to reservation holders in an attempt to qualify them for the old EV tax credits under the Transition Rule either prior to August 16 or January 1. Tens to hundreds of thousands of reservation holders on top of most automakers will be likely be prodding the IRS to qualify these as written binding agreements.

Lastly, if in the following weeks the IRS updates specifically details that all written binding agreements must require at least 5% deposit or down payment, Lucid still has until December 31, 2022 to request 5% deposit from reservation holders that already confirmed their orders in order to qualify for this stipulation.

Use this site from IRS to read the full info:

 
Put on top of that, I have now lost the $7,500 tax credit I was look forward to because Lucid refused to remove the liquidated damages clause in our confirmation purchase agreement.
You'll get the credit as long as it's delivered before Jan 1
 
Stop spreading FUD.

The order confirmation for your Lucid Air is considered a written binding agreement under the Transition Rule, there is no specific percentage (IRS only uses 5% as a general example, but it is not limited to at least that) as long as the order converts your reservation deposit into a non-refundable order deposit.

The only change on August 16, 2022 when the bill was passed is that EVs that qualify for any EV tax credit under the old or new rule must have final assembly in North America as per the Final Assembly Requirement. This has no effect on Lucid Airs since Lucid Air is already assembled in USA. See here if you don't believe me on which cars qualify.

Additionally, you can technically still confirm your Lucid Air until December 31, 2022 and qualify for the old EV tax credit rule under the Transition Rule.

Even if so, the IRS will be conducting future guidance on how to manuever this transitory period between the old and new EV tax credit rules, which means in the following weeks, they will be fielding surveys to see what qualifies and doesn't qualify as they themselves don't know just yet. Rivian, Fisker, Nissan, Toyota, Kia and Volkswagen have all sent out very similiar options to reservation holders in an attempt to qualify them for the old EV tax credits under the Transition Rule either prior to August 16 or January 1. Tens to hundreds of thousands of reservation holders on top of most automakers will be likely be prodding the IRS to qualify these as written binding agreements.

Lastly, if in the following weeks the IRS updates specifically details that all written binding agreements must require at least 5% deposit or down payment, Lucid still has until December 31, 2022 to request 5% deposit from reservation holders that already confirmed their orders in order to qualify for this stipulation.

Use this site from IRS to read the full info:

The IRS example is what they call a "Safe Harbor" example. In other words, if your liquidated damages clause is for 5% or more, they will consider your contract as a "binding written contract". The further away you are from that value, the more you expose yourself to a contrary ruling by the IRS and the more exposure you have to fines and penalties if audited. While, technically, you are correct in stating that the IRS could issue further guidance on this subject, you should know that they have been relying on this definition and their 5% safe harbor value for over 20 years in numerous cases. With that said, I sure hope you are correct that they will revisit their guidance and lower their safe habor value to be less than .07% (i.e., $1,000/$139,000). I am not sure what would motivate them to do that, but who knows.
Thus, it is my advise to you to not hold your breath waitng for a change in their position. I never live within the 'grey" area of the IRS regulations, statutes and guidance documents. I always live within the "white" areas of understanding simply because once one gets within the sights of the IRS, it is very difficult to get out without some difficulties. I created my wealth by using various legal tax advoidance strategies approved by my tax lawyers and CPAs. I caution you to look at the IRS guidance very carefully and seek legal advice before you move forward on claiming the tax credit under this new transition diefinition that Congress has created and the IRS will enforce.
 
Yah, but you are waiting ahead of me. Sigh. Confirmation: 4/19/2022, Red, Santa Cruz, 19 inches. Given the reduced production numbers, I now have my fingers crossed for the end of this year delivery. However, I no longer have much faith in this. Maybe their 3rd quarter report will restore my hope but after the last two crappy quarterly reports I am no longer holding my breath. Put on top of that, I have now lost the $7,500 tax credit I was look forward to because Lucid refused to remove the liquidated damages clause in our confirmation purchase agreement.
Why did you opt to lose the $7,500 credit over a liquidated damages clause? Does your state have weak lemon laws?
 
Why did you opt to lose the $7,500 credit over a liquidated damages clause? Does your state have weak lemon laws?
No,. The liquidated damages clause is in my confirmation purchase agreement. It is in Aricle 3, which is entitled: "Order Process - Cancellation" My deposit of $1,000 is only 0.07% of the contracted amount and, as such, does not meet the IRS' safe harbor value of 5% inorder to meet their definition of a "binding written contract". See my posting at: https://lucidowners.com/threads/7500-ev-tax-credit-update-with-new-bill.2120/page-21#post-56321 for more info.
 
No,. The liquidated damages clause is in my confirmation purchase agreement. It is in Aricle 3, which is entitled: "Order Process - Cancellation" My deposit of $1,000 is only 0.07% of the contracted amount and, as such, does not meet the IRS' safe harbor value of 5% inorder to meet their definition of a "binding written contract". See my posting at: https://lucidowners.com/threads/7500-ev-tax-credit-update-with-new-bill.2120/page-21#post-56321 for more info.
Oh, I get it. I thought you were getting a Gt.
 
You'll get the credit as long as it's delivered before Jan 1
Can you show me where in the new law it says that. I have difficulty in finding it. Sure hope you are right and I look forward to reading it. Thanks.
 
Can you show me where in the new law it says that. I have difficulty in finding it. Sure hope you are right and I look forward to reading it. Thanks.

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Just to be clear, you are saying that under this clause, while the confirmation purchase agreement I currently have does not qualify as a "binding written contract" because it does not meet the 5% safe harbor criteria the IRS has set, if I receive and sign the final buy/sale agreement and take possession of the car before Jan. 1, I will still qualify for the tax credit?
 
Just to be clear, you are saying that under this clause, while the confirmation purchase agreement I currently have does not qualify as a "binding written contract" because it does not meet the 5% safe harbor criteria the IRS has set, if I receive and sign the final buy/sale agreement and take possession of the car before Jan. 1, I will still qualify for the tax credit?
Seems like the written binding contract is for deliveries that occur next year. If you can still get your car this year, you can still get the credit as long as it's assembled in the US. I would ask your CPA for the interpretation of the IRS guidelines!
 
I don't want to claim with 100% certainty you would receive the credit, but the exception for August 16 - December 31 vehicle deliveries falling under the old $7500 rule is in very plain English, which I bet was the IRS's intent to clear up all the confusion.

I'd call it 99.99% certainty.
 
Seems like the written binding contract is for deliveries that occur next year. If you can still get your car this year, you can still get the credit as long as it's assembled in the US. I would ask your CPA for the interpretation of the IRS guidelines!
I appreciate you taking the time to share this thought with me However, I believe the transition rule applies to those "binding written agreements" written before the enactment of the legislation and for vehicles received after it, including this year. I.e.: "If you entered into a written binding contract to purchase a new qualifying electric vehicle before August 16, 2022, but do not take possession of the vehicle until on or after August 16, 2022 (for example, because the vehicle has not been delivered), you may claim the EV credit based on the rules that were in effect before August 16, 2022. The final assembly requirement does not apply before August 16, 2022.
Nevertheless, I believe your suggestion of checking with my CPA is a good one. I have been holding off in hope sof getting a definitive understanding through this forum since she charges $350/hr or fraction thereof. Once I get her response, I will post it. It now seem like a reasonable cost to get a definitive answer to a complex issue. Best regards.
 
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