7500 EV tax credit update with new bill

[hydbob]

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.

Yea the CPA route is the way to go now that the IRS has issued actual guidance. Appreciate you sharing the info your CPA would give on this topic.

 

[DJL]

In a different post thread, it was suggested that I check with my CPA regarding the proper interpretation of the new EV tax credit rules. Given how complex and confusing this seems to be, I thought this was a good suggestion and did send an email to her last night. I have worked with her for over 25 years and given how complex my tax exposure has been over those years, I have learned to trust her guidance and advice. When I got up this morning, I discovered that she had already emailed to me her response. Here it is:
"I don’t know yet……..I am taking a class in a few weeks but it takes time for the dust to settle and for all the pieces to fall into place. If nothing else, the last few years have taught me that everything is uncertain……until it is certain. As soon as I have the confidence to answer your question I will………I have put this on my research list."
This response confirms to me that the confusion we have seen on this forum and in the various news articles reporting on this subject is well warranted. After all, if a highly expertised and respected CPA is taking a cautious position on this issue until ..."the dust settles", I think we should also. My next post on this subject will be when I hear back from her with some definitive answer. Best regards.

 

[joec]

In a different post thread, it was suggested that I check with my CPA regarding the proper interpretation of the new EV tax credit rules. Given how complex and confusing this seems to be, I thought this was a good suggestion and did send an email to her last night. I have worked with her for over 25 years and given how complex my tax exposure has been over those years, I have learned to trust her guidance and advice. When I got up this morning, I discovered that she had already emailed to me her response. Here it is:
"I don’t know yet……..I am taking a class in a few weeks but it takes time for the dust to settle and for all the pieces to fall into place. If nothing else, the last few years have taught me that everything is uncertain……until it is certain. As soon as I have the confidence to answer your question I will………I have put this on my research list."
This response confirms to me that the confusion we have seen on this forum and in the various news articles reporting on this subject is well warranted. After all, if a highly expertised and respected CPA is taking a cautious position on this issue until ..."the dust settles", I think we should also. My next post on this subject will be when I hear back from her with some definitive answer. Best regards.

That's the sign of a good accountant. Mine often makes the same sorts of statements on new rules, and I always trust her to dig through the deepest details and ask the correct people at the IRS for the correct interpretation. I haven't asked her about this yet, but I certainly plan to once my car is delivered. I still don't have much hope the credit will still happen, but it never hurts to run it past the professionals.

 

[hydbob]

In a different post thread, it was suggested that I check with my CPA regarding the proper interpretation of the new EV tax credit rules. Given how complex and confusing this seems to be, I thought this was a good suggestion and did send an email to her last night. I have worked with her for over 25 years and given how complex my tax exposure has been over those years, I have learned to trust her guidance and advice. When I got up this morning, I discovered that she had already emailed to me her response. Here it is:
"I don’t know yet……..I am taking a class in a few weeks but it takes time for the dust to settle and for all the pieces to fall into place. If nothing else, the last few years have taught me that everything is uncertain……until it is certain. As soon as I have the confidence to answer your question I will………I have put this on my research list."
This response confirms to me that the confusion we have seen on this forum and in the various news articles reporting on this subject is well warranted. After all, if a highly expertised and respected CPA is taking a cautious position on this issue until ..."the dust settles", I think we should also. My next post on this subject will be when I hear back from her with some definitive answer. Best regards.

Did she charge you the $350 for that answer?

 

[DJL]

Did she charge you the $350 for that answer?

Not yet but the clock is running.

 

[Overcharged]

I believe you received good advice from your CPA
People jumped on this convert to a contract bandwagon thing
i don’t believe the conversion leads to a contract that holds water
if the IRS buys it, great, but until they specifically opine on an example or accept the subsequent tax credit request on a 2023 return filed in 2024 related to a car delivered in 2023 its just a bunch of chitty chat

 

[DJL]

I have received some advice on this complex tax credit issue from my CPA. She indicated that for those who actually buy the car this year they will qualify for the tax credit. She says: "I do think that it would appear you meet the assembly location requirement: 'If you purchase and take possession of a qualifying electric vehicle after August 16, 2022 and before January 1, 2023, aside from the final assembly requirement, the rules in effect before the enactment of the Inflation Reduction Act for EV credit apply (including those involving caps on vehicles sold).'

To summarize what she says regarding those that take possession after 2022, well...in my words, you would not qualify because the Confirmation Order contract contains a liquidify damages cause where Lucid would use the down paymenr of $1,000 to cover their damages of a cancelled order. This amount ($1,000) is well below the amount used by the IRS as a safe harbor amount (i.e., 5% of the contract) in their use of the term "binding contract. This is critical because to qualify for the tax credit under the new tax credit statutory language, you need to have a "binding contract" in place prior to the enactment of the law. If one chooses to file a claim for the tax credit in 2023, one runs the risk of an IRS review or audit. If the IRS finding is contrary to one's filing, then fines and penalties may apply.

She goes on to say that she will be a in course next week where she hopes this will be covered in more detail. If she learns anything new or different, she will let me know.

 

[noobzilla]

Is this how the IRS is making revenue? Make very confusing and complicated laws, then fine and penalize you for breaking a law that they themselves probably don't know how to interpret either.

 

[changinator]

I have received some advice on this complex tax credit issue from my CPA. She indicated that for those who actually buy the car this year they will qualify for the tax credit. She says: "I do think that it would appear you meet the assembly location requirement: 'If you purchase and take possession of a qualifying electric vehicle after August 16, 2022 and before January 1, 2023, aside from the final assembly requirement, the rules in effect before the enactment of the Inflation Reduction Act for EV credit apply (including those involving caps on vehicles sold).'

To summarize what she says regarding those that take possession after 2022, well...in my words, you would not qualify because the Confirmation Order contract contains a liquidify damages cause where Lucid would use the down paymenr of $1,000 to cover their damages of a cancelled order. This amount ($1,000) is well below the amount used by the IRS as a safe harbor amount (i.e., 5% of the contract) in their use of the term "binding contract. This is critical because to qualify for the tax credit under the new tax credit statutory language, you need to have a "binding contract" in place prior to the enactment of the law. If one chooses to file a claim for the tax credit in 2023, one runs the risk of an IRS review or audit. If the IRS finding is contrary to one's filing, then fines and penalties may apply.

She goes on to say that she will be a in course next week where she hopes this will be covered in more detail. If she learns anything new or different, she will let me know.

So.. if we could increase our deposit to 5% of the vehicle MSRP before the end of the year, we would qualify for the old tax credit even if we take delivery next year?

 

[Shane_SLC]

Is this how the IRS is making revenue? Make very confusing and complicated laws, then fine and penalize you for breaking a law that they themselves probably don't know how to interpret either.

Reminds me of this tweet. Obviously a little hyperbolic, but you get the point.

https://twitter.com/x/status/1118141455061671939

 

[DJL]

Is this how the IRS is making revenue? Make very confusing and complicated laws, then fine and penalize you for breaking a law that they themselves probably don't know how to interpret either.

For what it is worth, the IRS had nothing to do with making this law. They just enforce it.

 

[steveairgt]

Is this how the IRS is making revenue? Make very confusing and complicated laws, then fine and penalize you for breaking a law that they themselves probably don't know how to interpret either.

It’s not the IRS who made the law; Congress did. Congress could have spelled out the meaning of a “binding” contract.

 

[joec]

Is this how the IRS is making revenue? Make very confusing and complicated laws, then fine and penalize you for breaking a law that they themselves probably don't know how to interpret either.

In fairness, the IRS didn’t make this law. Congress did. And we all know Congress doesn’t even read the laws they vote on.

 

[whywar]

So.. if we could increase our deposit to 5% of the vehicle MSRP before the end of the year, we would qualify for the old tax credit even if we take delivery next year?

No, The 5% deposit and the contract to buy had to be signed prior to Aug 16.

 

[noobzilla]

For what it is worth, the IRS had nothing to do with making this law. They just enforce it.

It’s not the IRS who made the law; Congress did. Congress could have spelled out the meaning of a “binding” contract.

In fairness, the IRS didn’t make this law. Congress did. And we all know Congress doesn’t even read the laws they vote on.

They advice Congress with the wording.

 

[steveairgt]

They advice Congress with the wording.

I don’t think so, although they should. If they did, the bill would have included specific language.

 

[changinator]

No, The 5% deposit and the contract to buy had to be signed prior to Aug 16.

Only the final assembly requirement went into effect Aug 16. The other eligibility requirements such as income, price cap, battery and material source don't go into effect until Jan 1, 2023. Lucid Airs final assembly is in 'Murica, so Lucid Airs, unlike most non-American EVs i.e. BMW, Mercedes, Audi, Volvo, Kia, Hyundai, Toyota, etc., are still eligible at the moment until end of year regardless of when deposit placed and contract is signed (regardless before or after Aug 16.) But the question is for deliveries in 2023.

 

[noobzilla]

I don’t think so, although they should. If they did, the bill would have included specific language.

Oh I forgot to put (joking). I don't think so either

 

[Volund]

Putting this here for continuation:

[Delivery Tracker] Lucid Air Touring

Would the credit be still be available in 2023 for people who don't meet the income threshold ($150K single, $300K married)? I'm struggling to get this clarified if confirmed reservations (back in Aug 2022) with delivery in 2023, or later, locks the credit forever. I understand we are all...

lucidowners.com

 

[maazymaaz]

What Is a Written Binding Contract?​

In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.

is it just me, or doesn't it Cleary state "if a customer has made a non-refundable deposit" someone please help me understand the confusion the thread seems to be having.
I have a touring that should be coming in 2023 that was confirmed before August 16th with a non-refundable deposit