Latest EV tax credit status (as of 12/30/22) - summary by NYT

[Killer95Stang]

So the current msrp of my config rests at exactly $80,000. With these rules it wouldn’t qualify because it needs to be less than $80,000, so $79,999?

The trimming options by rivian put me at $79200. Guess I'm staying with 21s.

Sponsored

 

[TexasBob]

Yes but... as widely reported yesterday and ignored by NYT, the new guidance on the Leasing rule blows up all of this. According to the IRS guidance linked below (see section G), a company buying a vehicle to lease to you will qualify for the Commercial Clean Vehicle Credit of $7,500. So all you have to do is lease it. There are NO requirements for battery materials, no MSRP limits, no income limits, no N. A. assembly requirements. Nada. It is designed to do an end-run around the law and make Hyundai/Kia and the European manufacturers eligible again.

Rivian needs to get the leasing mess figured out asap.

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

 

[SANZC02]

Yes but... as widely reported yesterday and ignored by NYT, the new guidance on the Leasing rule blows up all of this. According to the IRS guidance linked below (see section G), a company buying a vehicle to lease to you will qualify for the Commercial Clean Vehicle Credit of $7,500. So all you have to do is lease it. There are NO requirements for battery materials, no MSRP limits, no income limits, no N. A. assembly requirements. Nada. It is designed to do an end-run around the law and make Hyundai/Kia and the European manufacturers eligible again.

Rivian needs to get the leasing mess figured out asap.

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

But if you lease the vehicle you are not buying it.

If this goes the same way as the solar credits work, if you lease the solar panels the person you lease from is the buyer and they get the solar rebates. This is why I purchased my solar panels and did not lease them.

That would possibly be the same for leasing an EV so it really needs to be looked into if that becomes an option.

 

[TexasBob]

But if you lease the vehicle you are not buying it.

If this goes the same way as the solar credits work, if you lease the solar panels the person you lease from is the buyer and they get the solar rebates. This is why I purchased my solar panels and did not lease them.

That would possibly be the same for leasing an EV so it really needs to be looked into if that becomes an option.

It absolutely would be going to the leasing company. Old program allowed the same and leasing companies have lots of experience with this. Leasing company uses it to buy down cost of lease usually as direct payment up front.

 

[ads75]

Then make it 100K. But the fact of the matter is the Polestar 3, Volvo XC90, and Rivian R1S all start in the mid to high 70s. Granted it’s a different market but if this was about making EVs more affordable look at the market and see what many of the large 2 rows and 3 rows are priced at

You literally picked 3 "luxury" brands as your examples of the market. You are obviously shopping the luxury part of the market. Manufacturers are building luxury brands because they have higher profit margins. Hopefully the incentives can help incentivize manufacturers to build more affordable brands.

 

[theyoungone]

You literally picked 3 "luxury" brands as your examples of the market. You are obviously shopping the luxury part of the market. Manufacturers are building luxury brands because they have higher profit margins. Hopefully the incentives can help incentivize manufacturers to build more affordable brands.

That’s because there aren’t many non-luxury EVs on the market yet ?? All the legacy automakers won’t be releasing theirs for another year to year and a half. I don’t want a Chevy Bolt or a Nissan Leaf. Anything else is super close to that 50-55K cap in the IRA.

 

[SANZC02]

I’m fine with the cap, I am just frustrated that they took the manufacturer build numbers out of the equation. That will not help the buyers. I’m basing this off of how Tesla kept their prices high until they aged out of the rebates then rolled prices back. You will see the dealers getting these dollars as well. It is based off MSRP, not sales price so a dealer will put ADLs on the cars to bleed the money from the consumers.

Originally the rebate was to induce the manufacturers to start making the vehicles, they should have left it that way.

Don’t get me wrong, if I can qualify I will certainly try to get some of my paid taxes back but if I can or can’t qualify has never entered into my purchase decision.

 

[astonius]

How long must you own the vehicle to avoid having to pay back the tax credit?

There are no requirements for time of ownership. The guidance says you must purchase in good faith to keep and not resell, but they’d have to prove that was your intent somehow.

 

[Autolycus]

I kind of wonder if the lease interpretation loophole is a way for the administration to get Manchin et al into a compromise bill to make some tweaks, allowing more time for manufacturers to adjust and maybe some other changes to the law.

As their interpretation goes, there will probably be lots of creative ways of leasing vehicles to get customers the full credit while basically buying it at a small extra cost compared to cash price that wouldn’t be eligible for the tax credit. Short lease with buy option might become very popular.

 

[Bobthebuilder352]

Can you get around the income cap if you buy it through a company you own? Need a new car for my wife in 23.

 

[Bobthebuilder352]

There are no requirements for time of ownership. The guidance says you must purchase in good faith to keep and not resell, but they’d have to prove that was your intent somehow.

No. In an audit YOU have the burden of proof. Not the IRS. How would YOU prove it was bought to be kept? Maybe you can show a job loss or maybe you spent $1k on customizing the vehicle and then decided the ride hurt your back and you’ve got a doctors bill.

 

[Jac]

I kind of wonder if the lease interpretation loophole is a way for the administration to get Manchin et al into a compromise bill to make some tweaks, allowing more time for manufacturers to adjust and maybe some other changes to the law.

As their interpretation goes, there will probably be lots of creative ways of leasing vehicles to get customers the full credit while basically buying it at a small extra cost compared to cash price that wouldn’t be eligible for the tax credit. Short lease with buy option might become very popular.

I wish I could be optimistic about your first point.

I’m trying to imagine how any potential compromise Senate bill that might be seen as remotely encouraging EV adoption, especially if the bill has the President’s support, could be other than DOA in the 2023 House.

 

[Autolycus]

I wish I could be optimistic about your first point.

I’m trying to imagine how any potential compromise Senate bill that might be seen as remotely encouraging EV adoption, especially if the bill has the President’s support, could be other than DOA in the 2023 House.

Because the alternative to a compromise is leaving in place a massive loophole that basically means every single EV sold will qualify for the full $7500 as long as a third party buys it to lease and sell to the customer.

 

[Yossarian]

Correct me if I’m wrong here, if we signed the agreement and had $100 of the $1000 reservation cost non-refundable, the income cap and price cap aren’t in place. Am I wrong on that?

Wow. A lot to digest here... @COdogman's comment about whether or not the IRS and your State will honor that agreement is Accurate under former IRS documentation regarding 'Written Binding Contract' terms, but now I can't find that verbiage anywhere.
. . .

There was quite a bit of discussion on another Rivian forum regarding the validity of the Preliminary Buyers Agreement as binding per the IRS rules. A couple of CPA's weighed in with one saying it almost certainly would NOT be acceptable and another saying that it MAY be OK.

The issue seems to be the value of the non-refundable portion of the agreement, which apparently must be greater 5% of value of item to be delivered. Here is the IRS language that the CPA in the "NO" camp posted as to why he believed the IRS will reject the existing Rivian PBA:

"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."

I think that the IRS stated they would be issuing further clarification of the EV tax credit in Q1 of 2023, so perhaps we will know more in the near future. My take-away from what I've read so far however has made me pretty pessimistic that the IRS will accept the 2022 PBA's that folks signed with Rivian, Lucid, Fisker, etc.

 

[EarlyAdptr]

I have my guide looking into this portion, seems Rivian has to report the sale with buyers name and SS at time of purchase but they are not collecting that information in the 8 step process. I’ll let you know what they say as with pre-March pricing my R1S comes in at 77k.

The sale qualifies only if:

• You buy the vehicle new
• The seller reports required information to you at the time of sale and to the IRS.
  • Sellers are required to report your name and taxpayer identification number to the IRS for you to be eligible to claim the credit.

PLEASE, let us know what you hear back.

Sponsored