No tax credit for Rivian (effective April 18, 2023)

[Nix]

Would love to see Rivian come up with a lease-buyout option to utilize that loophole. No way this doesn’t hurt the conversion rate somewhat.

Folks using that loophole tread a fine line between tax avoidance (legal) and tax evasion (illegal).

It strikes me as being very similar to the rules for taking the credit when it comes to resale. It is legal to buy a Rivian and get the tax credit, and then decide afterwards to resell it. But you cannot buy a Rivian with the intention to resell it and still claim the tax credit. That would violate the tax law.

I haven't dug into this fully, but my initial impression would be that it would be perfectly fine to lease a car and get the credit, and then later decide to buyout the lease. But going into the lease with the intention of buying it out immediately just to get a tax credit that you wouldn't otherwise be entitled to through doing a straight purchase is a bit of a red flag. The IRS could determine that you essentially made a straight purchase and deny the credit and apply interest and penalties.

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[HeyEllwood]

I'll still take my R1S. But this is horse shit news.

 

[Picard]

I think the list of eligible vehicles will be amended (or I certainly hope so). I don't understand why Rivian nor BMW for that matter would be fully excluded when all vehicle assembly is happening in IL or SC for these manufacturers. Rivian is just as American as Ford/GM/Tesla and they need the same level of support that the government is willing to offer. Preaching to the choir, I know - but get on your local member of congress or sign petitions or whatever that each of you can do, do.

 

[sillyME]

I took delivery of my MYP at the peak price a yr ago when there was no credit available (local electric company, state or federal). Now I am in the 8-step process for my R1T and this news hit me hard. I need a GoFUNDme for my sorry butt!

 

[entsurv]

FuelEconomy.gov lists a requirement as:

The sale qualifies only if:

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.

I don't remember supplying my TIN to Rivian at any point during the purchase process. Ami I forgetting, or is a critical piece of this puzzle missing?

 

[Singletracker]

I suppose there’s an option where you file an extension, then when you get your truck, file your taxes, so you can skip the Amendment requirement.

Thanks for the extension heads up!!!! I was just about to file my 2022 taxes, today, but not now! I hope to have my R1T prior to October, so an extension seems like the cleanest way to go, hopefully avoiding the hassles of an amended 2022 return. BTW, I do have a BPA.

 

[mini2nut]

It will be interesting to see how this new IRS ruling affects R1T/S sales.

The upcoming Cybertruck should qualify for $7500 credit since the battery packs will be manufactured in the US.

If Tesla prices the Dual Motor at $64,990 I predict it’s going to take the wind out of R1T sales. Affordability will take priority over looks.

 

[mikehmb]

Thanks for the extension heads up!!!! I was just about to file my 2022 taxes, today, but not now! I hope to have my R1T prior to October, so an extension seems like the cleanest way to go, hopefully avoiding the hassles of an amended 2022 return. BTW, I do have a BPA.

Only warning I can add here is that if you are expected to owe taxes at all, pre-pay now. I’ve effed that up before and was hit with penalties.

 

[JayinNJ]

I also thought what was expected was $3750. They only updated this web site today so "known" might be a stretch or you have other information I don't/didn't which is entirely possible.

They didn't qualify under the battery rules. The materials didn't qualify and the batteries weren't assembled in North America.

 

[Singletracker]

Only warning I can add here is that if you are expected to owe taxes at all, pre-pay now. I’ve effed that up before and was hit with penalties.

Yeah, I’m well aware of that.

 

[BigSkies]

I must be behind on these rules. Won’t the $80k price cap disqualify most orders anyways? At least post price hike.

 

[Autolycus]

It seems that the list will continually be updated. From the NYT:

Ten vehicles that previously qualified, including the Nissan Leaf and the Volkswagen ID.4, will drop off the list, at least temporarily.

The Volkswagen ID.4, an S.U.V. made in Chattanooga, Tenn., did not make the list issued by the Treasury Department on Monday because it is still assessing its supply chain. But Pablo Di Si, the chief executive of Volkswagen Group of America, said he expected the model to qualify.

It doesn't make too much sense to me why the Rivians (and U.S. made VW) doesn't qualify for at least half of the $7,500. The only requirement for one side of the $3,750 is "final assembly."

I think the list of eligible vehicles will be amended (or I certainly hope so). I don't understand why Rivian nor BMW for that matter would be fully excluded when all vehicle assembly is happening in IL or SC for these manufacturers. Rivian is just as American as Ford/GM/Tesla and they need the same level of support that the government is willing to offer. Preaching to the choir, I know - but get on your local member of congress or sign petitions or whatever that each of you can do, do.

The vehicle final assembly requirement is a universal threshold, similar to income and vehicle price. The two specific requirements for the $3750 are "critical minerals" and "battery component".

For the "battery component" credit, 50% of the value of battery components must be built or assembled in North America. We don't know what the relative value is of battery cells vs. modules and packs.

 

[VSG]

Folks using that loophole tread a fine line between tax avoidance (legal) and tax evasion (illegal).

It strikes me as being very similar to the rules for taking the credit when it comes to resale. It is legal to buy a Rivian and get the tax credit, and then decide afterwards to resell it. But you cannot buy a Rivian with the intention to resell it and still claim the tax credit. That would violate the tax law.

I haven't dug into this fully, but my initial impression would be that it would be perfectly fine to lease a car and get the credit, and then later decide to buyout the lease. But going into the lease with the intention of buying it out immediately just to get a tax credit that you wouldn't otherwise be entitled to through doing a straight purchase is a bit of a red flag. The IRS could determine that you essentially made a straight purchase and deny the credit and apply interest and penalties.

Please don't speculate - all that does is confuse what is evidently an already extremely confusing subject to most people. And in this case your speculation is not based on facts.

The lease option is not a "loophole", and it is not borderline evasion. It is not illegal or unethical. In fact, the IRS itself ruled explicitly a few months ago that this was perfectly acceptable.

The leasing option is something that is now being offered by most EV manufacturers. It relies on the business tax credit, which is different than the consumer EV tax credit. The lessor, as a business, can take a $7500 tax credit for purchasing this business property. The lessor then may pass on that savings to the lessee (the consumer) by reducing the net capitalized value of the lease - essentially leasing the business-owned vehicle to the consumer at $7500 less than MSRP. Again, the IRS has ruled that this is perfectly valid. The consumer's intentions (whether they intend to buy out the lease, either immediately or at the end of the lease period) don't enter into the equation because it is the lessor that owns the vehicle and gets the credit.

 

[BrianR1S]

Some interesting rules. It looks like if you got your Rivian before April 18th you qualify. After you don't

https://fueleconomy.gov/feg/tax2023.shtml

If you signed a binding contract last August, you'll be able to ammend your '22 tax filing and get the $7500 credit (given income qualifications and tax liability of course). Our R1S is being delivered in May, and we've already contacted our CPA.

 

[tomis916]

It will be interesting to see how this new IRS ruling affects R1T/S sales.

The upcoming Cybertruck should qualify for $7500 credit since the battery packs will be manufactured in the US.

If Tesla prices the Dual Motor at $64,990 I predict it’s going to take the wind out of R1T sales. Affordability will take priority over looks.

I wouldn't drive one of those if they gave it to me.

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