No tax credit for customers with binding contracts.

[BullWink181]

The page for 2022 purchases explicitly states "took possession" when discussing BPA applicability and limits that window to before Jan 1, 2023.

I understand what the guidance page says. However, the guidance is not the authoritative document. The statute is. The guidance is merely the IRS' interpretation of the statute. It is possible for the guidance to be incorrect. And if the guidance is incorrect, then the statute will override it.

The Transition Rule says:
Transition Rule.--Solely for purposes of the application of
section 30D of the Internal Revenue Code of 1986, in the case of a
taxpayer that--

(1) after December 31, 2021, and before the date of
enactment of this Act, purchased, or entered into a written
binding contract to purchase, a new qualified plug-in electric
drive motor vehicle (as defined in section 30D(d)(1) of the
Internal Revenue Code of 1986, as in effect on the day before
the date of enactment of this Act), and
(2) placed such vehicle in service on or after the date of
enactment of this Act,

such taxpayer may elect (at such time, and in such form and manner, as
the Secretary of the Treasury, or the Secretary's delegate, may
prescribe) to treat such vehicle as having been placed in service on the
day before the date of enactment of this Act.

As established elsewhere in new 30D, the "in service" date is the trigger for whether the new rule or the old rule applies. The statute DOES NOT contain any language stating that the Transition Rule applies only to taxpayers that took possession in 2022. The statute controls. The guidance does not. If this is challenged in court, the guidance will likely (and should) be treated merely as an argument by the IRS on how the statute should apply. It IS NOT legal authority.

The authority given to the IRS here is not to decide whether a taxpayer is eligible for the credit. it is ONLY to decide the timing and procedure for a taxpayer to apply for and receive the credit. The IRS and the Secretary of the Treasury are given no authority to control the scope or applicability of the Transition Rule. The statute itself does that.

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[Jac]

I understand what the guidance page says. However, the guidance is not the authoritative document. The statute is. The guidance is merely the IRS' interpretation of the statute. It is possible for the guidance to be incorrect. And if the guidance is incorrect, then the statute will override it.

The Transition Rule says:
Transition Rule.--Solely for purposes of the application of
section 30D of the Internal Revenue Code of 1986, in the case of a
taxpayer that--

(1) after December 31, 2021, and before the date of
enactment of this Act, purchased, or entered into a written
binding contract to purchase, a new qualified plug-in electric
drive motor vehicle (as defined in section 30D(d)(1) of the
Internal Revenue Code of 1986, as in effect on the day before
the date of enactment of this Act), and
(2) placed such vehicle in service on or after the date of
enactment of this Act,

such taxpayer may elect (at such time, and in such form and manner, as
the Secretary of the Treasury, or the Secretary's delegate, may
prescribe) to treat such vehicle as having been placed in service on the
day before the date of enactment of this Act.

As established elsewhere in new 30D, the "in service" date is the trigger for whether the new rule or the old rule applies. The statute DOES NOT contain any language stating that the Transition Rule applies only to taxpayers that took possession in 2022. The statute controls. The guidance does not. If this is challenged in court, the guidance will be treated merely as an argument by the IRS on how the statute should apply. It IS NOT legal authority.

The authority given tot he IRS here is not to decide whether a taxpayer is eligible for the credit. it is ONLY to decide the timing and procedure for a taxpayer to apply for and receive the credit. The IRS and the Secretary of the Treasury are given no authority to control the scope or applicability of the Transition Rule. The statute itself does that.

Just confirming —- you are saying my signed BPA will entitle me to receive a $7500 federal tax credit for my 2024 or even 2025 tax return —- whatever year in the future my R1S is finally delivered (put in service)?

 

[astonius]

I understand what the guidance page says. However, the guidance is not the authoritative document. The statute is. The guidance is merely the IRS' interpretation of the statute. It is possible for the guidance to be incorrect. And if the guidance is incorrect, then the statute will override it.

The Transition Rule says:
Transition Rule.--Solely for purposes of the application of
section 30D of the Internal Revenue Code of 1986, in the case of a
taxpayer that--

(1) after December 31, 2021, and before the date of
enactment of this Act, purchased, or entered into a written
binding contract to purchase, a new qualified plug-in electric
drive motor vehicle (as defined in section 30D(d)(1) of the
Internal Revenue Code of 1986, as in effect on the day before
the date of enactment of this Act), and
(2) placed such vehicle in service on or after the date of
enactment of this Act,

such taxpayer may elect (at such time, and in such form and manner, as
the Secretary of the Treasury, or the Secretary's delegate, may
prescribe) to treat such vehicle as having been placed in service on the
day before the date of enactment of this Act.

As established elsewhere in new 30D, the "in service" date is the trigger for whether the new rule or the old rule applies. The statute DOES NOT contain any language stating that the Transition Rule applies only to taxpayers that took possession in 2022. The statute controls. The guidance does not. If this is challenged in court, the guidance will likely (and should) be treated merely as an argument by the IRS on how the statute should apply. It IS NOT legal authority.

The authority given to the IRS here is not to decide whether a taxpayer is eligible for the credit. it is ONLY to decide the timing and procedure for a taxpayer to apply for and receive the credit. The IRS and the Secretary of the Treasury are given no authority to control the scope or applicability of the Transition Rule. The statute itself does that.

The IRS interpretation of the statute is really all that matters, unless you want to fight them on it. Why would they go out of their way to put a limit on the possession window in their written guidance if that wasn't their intent when it comes to enforcement?

 

[BullWink181]

Just confirming —- you are saying my signed BPA will entitle me to receive a $7500 federal tax credit for my 2024 or even 2025 tax return —- whatever year in the future my R1S is finally delivered (put in service)?

I'm not saying anything specific to YOUR situation. I'm also not saying anything about on what year tax return you can take the credit. As said above, the IRA does give the IRS authority to determine the means and procedure for a taxpayer to take the credit. So that might be up in the air. Maybe you can take it in subsequent years. Maybe you'll have to amend your 2022 year. I don't know if there are deadlines on amending tax returns, but maybe that'll be an additional factor to weigh.

I'm just saying that, on its face, the statute doesn't appear to prohibit you from receiving the credit if you receive a vehicle in 2024 or 2025 as a result of a binding written contract you signed before the IRA was signed. There is no end date. I'm not the one making the decisions. I'm explaining what the statute says. The fact that the statute says something odd doesn't mean it's invalid.

 

[BullWink181]

The IRS interpretation of the statute is really all that matters, unless you want to fight them on it. Why would they go out of their way to put a limit on the possession window in their written guidance if that wasn't their intent when it comes to enforcement?

That may be the case. And putting an end date may very well be the IRS' intention for enforcement. All I'm saying is that the IRS guidance does not supersede the statutory language. And I see nothing in the statute actually giving the IRS the authority to put an end date on the application and use of the BPA or other binding written contracts.

 

[SANZC02]

That may be the case. And putting an end date may very well be the IRS' intention for enforcement. All I'm saying is that the IRS guidance does not supersede the statutory language. And I see nothing in the statute actually giving the IRS the authority to put an end date on the application and use of the BPA or other binding written contracts.

Curious about your take on 2 aspects of the binding contract.

1) Has no limited to loss. - The Rivian agreement has a limit of $100 of the $1000 dollar deposit.

2) Has a significant non-refundable deposit. - The Rivian deposit has only $100 of the $1000 deposit that is non-refundable if you signed the agreement. If you assume 75k for the purchase, the deposit is only 1.3% and only .13% is actually at risk. Does anyone think that would meet the significant non-refundable verbiage?

 

[BullWink181]

Curious about your take on 2 aspects of the binding contract.

1) Has no limited to loss. - The Rivian agreement has a limit of $100 of the $1000 dollar deposit.

2) Has a significant non-refundable deposit. - The Rivian deposit has only $100 of the $1000 deposit that is non-refundable if you signed the agreement. If you assume 75k for the purchase, the deposit is only 1.3% and only .13% is actually at risk. Does anyone think that would meet the significant non-refundable verbiage?

Well the issue re: $100 becoming non-refundable is addressed. I admit it isn't a perfect argument. But the BPA doesn't say that is a limit on the loss/penalty for breach. It says that it is just consideration for making the contract binding. Based purely on the words in the contract, one could argue that if you cancel your reservation, you get the $900 back, but Rivian could still technically sue you if you don't buy the vehicle. I don't see anything in the contract that restricts their right to do that, if they choose to. I don't how how that would turn out. I'm just giving one possible angle to argue.

The language re: significant non-refundable deposit also isn't totally controlling. The guidance merely says that a non-refundable deposit of 5% or more is indicative of a binding contract. But by deferring to state law on the matter, they kind of leave it up in the air. The guidance doesn't say that a 5% non-refundable deposit is mandatory. The IRS is just saying that is one factor that indicates a binding contract. I think you're right that the money we've put down probably doesn't satisfy that factor. I also don't think that is the end of the analysis.

Again, by no means is this legal advice, because I don't know any of you or the laws in the states where you live. Just trying to give some more context for the framework and types of analyses that will probably apply when folks start relying on the Transition Rule to get their BPAs honored.

 

[racekarl]

On a semi-related note: WHEN on 8/16/2022 did the IRA take effect? I signed my BPA in the morning on 8/16/2022 BEFORE it was signed into law. My gut tells me that it became retroactive to midnight on 8/16/2022 and that I am out of luck under any circumstances.

 

[uthatch]

All this arguing about what constitutes a valid BPA when it's likely moot anyhow. I know some want to argue 2023 guidance hasn't been published, but it has, and there's zero mention of BPA with a fat chance of that changing.

Yeah, my hopes aren't very high either and I believe this thread is swimming in semantics. I did submit my Rivian contract to my accountant and he's going to research it further. But I don't expect to get the credit.

 

[Dark-Fx]

Just confirming —- you are saying my signed BPA will entitle me to receive a $7500 federal tax credit for my 2024 or even 2025 tax return —- whatever year in the future my R1S is finally delivered (put in service)?

My assumption is that all of the phase-out rules are still going to apply to people with BPAs under the old section 30D. I'm guessing Rivian will hit the 200k milestone sometime in late 2025, early 2026.

 

[Dark-Fx]

So I figured I'd go check the instructions in Form 8936 and see what was mentioned for the Transition rule.
https://www.irs.gov/instructions/i8936#en_US_2022_publink1000111676

Line 3
Enter 08/15/2022 if you qualify and elect to apply the transition rule discussed below.

Transition rule.

If you purchased, or entered into a written binding contract to purchase, a qualified plug-in electric drive motor vehicle after 2021 and before August 16, 2022, you may elect to treat such vehicle as having been placed in service on August 15, 2022, the day before the enactment date of the Inflation Reduction Act of 2022.

Obviously this is a Form to file for the 2022 tax year, but my assumption is we'll see this same language on 2023's form. I take back my assumption about the 30D phaseout since this categorically would place everyone's purchases within what was eligible during 2022 Q3.

If the IRS doesn't change the form, tax year 2023 will absolutely still work in the same manner.

Which Revision To Use
Use the January 2023 revision of Form 8936 for tax years beginning in 2022 or later, until a later revision is issued. Use prior revisions of the form for earlier tax years. All revisions are available at IRS.gov/Form8936.

 

[JerseyGreens]

It's been stated time and time again...for those of us with signed BPAs prior to 8/16/2022 and taking delivery in 2023...we will have to wait until the IRS releases further guidance in CY 2023.

Ultimately, the door is not closed for us to get these credits. I don't care what people keep linking to the IRS guidance - THERE WILL ultimately be updated guidance released which addresses this confusion...

@pvanderj - thank you for joining this thread and bringing some much needed LAW into the conversation.

 

[bseiden]

It's been stated time and time again...for those of us with signed BPAs prior to 8/16/2022 and taking delivery in 2023...we will have to wait until the IRS releases further guidance in CY 2023.

Ultimately, the door is not closed for us to get these credits. I don't care what people keep linking to the IRS guidance - THERE WILL ultimately be updated guidance released which addresses this confusion...

@pvanderj - thank you for joining this thread and bringing some much needed LAW into the conversation.

Hi All,
I have been following this very closely. I took Delivery of the R1T in february, and want to claim on my 2022 taxes since the law says that I can consider it as having been placed into service on August 18th, 2022. Am I Crazy? I have an email into Turbo Tax to see what they say.

Either way just looking to see if other are thinking of doing this.

Thanks!

 

[CO-rayman]

Did you mean on your 2022 return? I'm in a very similar situation (and LA Silver!) and that's what I'm planning to do.

That's a good question but I am assuming 2023 since I took possession in 2023. But, I did ask my CPA and haven't heard back.


Love the silver, much better looking in person.

 

[Dark-Fx]

Hi All,
I have been following this very closely. I took Delivery of the R1T in february, and want to claim on my 2022 taxes since the law says that I can consider it as having been placed into service on August 18th, 2022. Am I Crazy? I have an email into Turbo Tax to see what they say.

Either way just looking to see if other are thinking of doing this.

Thanks!

You are crazy. The "in service" thing is specifically to make it qualify under the old tax law. It's not about which tax year it is eligible under.

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