New Treasury guidelines for Tax Credit coming soon

[mallig]

Treasury releases additional information on clean vehicle provisions of inflation reduction act - briefing.com @11:37 12/29/22

• "FAQs for consumers on the clean vehicle tax credits that will help them better understand how to access the various tax incentives for the purchase of new and used electric vehicles available beginning January 1. These FAQs include a link containing a list of clean vehicles that manufacturers have indicated to the IRS meet the requirements to claim the new clean vehicle tax credit beginning January 1, 2023. This list will be updated over the coming days and weeks so consumers looking to purchase a new clean vehicle in the new year should be sure to check it regularly.
• A notice on the "incremental cost" of vehicles eligible for the commercial clean vehicle tax credit. For vehicles under 14,000 pounds, this tax credit is the lesser of $7,500, 15% of a qualifying vehicle's cost (30% if the vehicle is not gas- or diesel-powered), or the "incremental cost" of the vehicle relative to a solely gas- or diesel-powered vehicle of comparable size and use. Today's notice clarifies the incremental cost in 2023 for commercial clean vehicles.
• A notice of intent to propose regulations on the tax credit for new clean vehicles. This includes definitions that will provide clarity to manufacturers and buyers around the changes that take effect automatically on January 1, such as Manufacturer's Suggested Retail Price limits. Importantly, the notice specifies that a vehicle is considered to be "placed in service" for the purposes of the tax credit on the date the taxpayer takes possession of the vehicle, which may or may not be the same date as the purchase date."

 

[mallig]

Added to this commentary is the article from The Hill publication - https://thehill.com/policy/energy-e...ric-vehicle-tax-credits-drawing-manchins-ire/

It looks like the covernment is slow to enact the bill - we may have til March to grab the tax credits - whoopee !

 

[Sid432]

Oh. That's such a relief. I am happy now that I don't have to rush for delivery...

 

[noobzilla]

Added to this commentary is the article from The Hill publication - https://thehill.com/policy/energy-e...ric-vehicle-tax-credits-drawing-manchins-ire/

It looks like the covernment is slow to enact the bill - we may have til March to grab the tax credits - whoopee !

Oh. That's such a relief. I am happy now that I don't have to rush for delivery...

I think the delay is for the battery requirements only.

 

[Miami]

I think the delay is for the battery requirements only.

I am not a tax expert, but I read through the new IRS guidelines, and noobzilla is correct that the March deadline change is specific to rules regarding battery content, while the MSRP restriction continues to apply to vehicles delivered on or after January 1, 2023. In other words, it’s clear to me that Lucid vehicles delivered after Dec 31, 2022 will not qualify for the tax credit. My opinion is based on the following language from recently revised IRS FAQs:

If I order a new clean vehicle in one year and don’t receive it until a subsequent year, when do I claim the credit? (added December 29, 2022)
The new clean vehicle credit is claimed in the tax year that the vehicle is placed in service, meaning the tax year that includes the date the taxpayer takes delivery of the vehicle.

What additional changes to the credit apply for vehicles placed in service on or after January 1, 2023? (added December 29, 2022)
The most significant changes to the credit for vehicles delivered on or after January 1, 2023, include:
• The minimum battery capacity is increased to 7 kilowatt hours
• Vehicles must be made by a qualified manufacturer (see Topic A, FAQ 9 for more detail)
• MSRP limitations apply, based on the type of vehicle (see Topic B, FAQs 2 and 5 for more detail)
• Income limits apply to taxpayers (see Topic B, FAQ 1 for more detail)
• The taxpayer must report the vehicle identification number (VIN) of the vehicle on the taxpayer's income tax return
• Sellers must provide reports to the taxpayer and the IRS regarding the sale of the vehicle

Are there any price limitations on new clean vehicles eligible for the credit? (added December 29, 2022)
Yes. The manufacturer’s suggested retail price (MSRP) for the new clean vehicle may not exceed the following amounts for the following vehicle types:
• Vans - $80,000
• Sport Utility Vehicles - $80,000
• Pickup Trucks - $80,000
• Other - $55,000
If the MSRP exceeds the limitation for that specific vehicle type, that vehicle is not eligible for the new clean vehicle credit.

Do I have to report the vehicle identification number on my return to claim the new clean vehicles credit? (added December 29, 2022) Yes. The vehicle identification number of the new clean vehicle is required to be included on Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit, when you file your income tax return.

In other words, the new MSRP restrictions apply starting January 1, 2023, and you must claim the vehicle credit in the year you take delivery. In addition, for those intending to push the tax rebate envelope and beg forgiveness if caught, note that the IRS now requires manufacturers to provide them with VINs for qualifying vehicles, and it requires taxpayers to report their qualifying new vehicle VINs when filing taxes. In other words, the IRS can tell if you’re cheating.

Here’s the link to the guidance that I cited.

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

 

[Miami]

One additional bit of IRS guidance that is relevant to my opinion that the tax credits will no longer be available to Lucid owners:

Purchase date vs. delivery date: If you entered a written binding contract to buy a vehicle before August 16, 2022, but took possession on or after August 16, 2022, and before January 1, 2023, you may claim the credit based on the prior rules and disregard the assembly requirement.

In other words, placing an order before August 16 was only relevant to those Lucid buyers who took delivery of their cars by December 31, 2022. The new rules, including the MSRP restriction, applies to everyone taking delivery on or after January 1, 2023, including those like me who placed orders before August 16.

 

[cabood]

For those who took delivery in 2022, did you receive tax credit paperwork from Lucid?

 

[Tim-in-CA]

For those who took delivery in 2022, did you receive tax credit paperwork from Lucid?

In the past, for other vehicles I've claimed a credit, I just use the paperwork I received at pickup and my sales order as proof in the event I am audited. There is nothing specific from Lucid that you file with the IRS.

 

[Miami_Lucid_Man]

One additional bit of IRS guidance that is relevant to my opinion that the tax credits will no longer be available to Lucid owners:

Purchase date vs. delivery date: If you entered a written binding contract to buy a vehicle before August 16, 2022, but took possession on or after August 16, 2022, and before January 1, 2023, you may claim the credit based on the prior rules and disregard the assembly requirement.

In other words, placing an order before August 16 was only relevant to those Lucid buyers who took delivery of their cars by December 31, 2022. The new rules, including the MSRP restriction, applies to everyone taking delivery on or after January 1, 2023, including those like me who placed orders before August 16.

Seems to be the nail in the coffin of hope for those of us who converted the reservation to non-refundable deposit. Oh well. We all knew it wasn't guaranteed.

 

[Bus Driver]

I’m bummed that the cap for “Other” EVs is capped at $55,000.

 

[Bnwbaron]

For those who took delivery in 2022, did you receive tax credit paperwork from Lucid?

No, and my CPA is asking for it. Lucid SA says the purchase agreement should suffice. So I have a stand off in progress, and I am waiting to see who blinks first.

 

[Bobby]

No, and my CPA is asking for it. Lucid SA says the purchase agreement should suffice. So I have a stand off in progress, and I am waiting to see who blinks first.

Weird. My CPA didn’t ask for anything more than the purchase contract.

 

[Bnwbaron]

Weird. My CPA didn’t ask for anything more than the purchase contract.

Hi, Bobby. After reading around this forum and posting on it myself, I am pretty convinced it varies by CPA.

 

[Sid432]

my CPA didn’t even ask PA. Just the VIN….

 

[Bnwbaron]

No, and my CPA is asking for it. Lucid SA says the purchase agreement should suffice. So I have a stand off in progress, and I am waiting to see who blinks first.

For the good of the community.....My CPA lost the stand-off (yay). I am posting her comment in case anyone else runs into the same drama with their CPA.


It turns out that that was a software glitch due to the revised instructions for filing the 8936, so my apologies for all the trouble, you do qualify for the credit it is in your tax return.