Update 8/16 from IRS: 2022 purchases are eligible under old tax credit

[electruck]

That's not true, and Elektrek *is* correct.

The changes to the EV tax rebate structure go into effect Jan 1 2023.

So any purchase completed by Dec 31 2022 follows the old structure.

Keep reading for the exceptions, (2) and (3) in particular:

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[McMoo]

That's not true, and Elektrek *is* correct.

The changes to the EV tax rebate structure go into effect Jan 1 2023.

So any purchase completed by Dec 31 2022 follows the old structure.

“Except as provided in paragraphs…” which specifically make things effective as of the date it is signed into law. That is how so many tax laws work, there’s the law then a bunch of exceptions.

 

[SASSquatch]

That's not true, and Elektrek *is* correct.

The changes to the EV tax rebate structure go into effect Jan 1 2023.

So any purchase completed by Dec 31 2022 follows the old structure.

In the immortal words of Adam Sandler's Waterboy, "No Colonel Sanders, You're Wrong!"

In this instance I really wish I *was* wrong, though.

 

[SASSquatch]

In the immortal words of Adam Sandler's Waterboy, "No Colonel Sanders, You're Wrong!"

In this instance I really wish I *was* wrong, though.

In this section, it stipulates that as long as you have a binding contract to purchase dated BEFORE the DAY the legislation is enacted, you can treat the vehicle as having been put in service PRIOR to the enactment of the legislation and claim the $7,500 credit via the previous qualifications.

Someone correct me if I am wrong, but nowhere does it stipulate you have to place the vehicle in service by December 31st, 2022. So, if you have an OC R1T/R1S, sign a binding agreement before the President signs, and don't end up taking delivery until the 1H of 2023, you can still claim the $7,500 credit under the old qualifications.

 

[Aag12]

For what it's worth I am trying to buy my R1T earlier than I originally intended. I have a guide and told him to wait until I really need a truck later this year. I couldn't reach him so late in the day tofay but did talk to the chat rep. He mentioned rivian is 'working to help interested pre-order customer obtain a written, binding, contract to purchase and secure ev tax credit eligibility before new restrictions take effect'

I don't trust rivian so going to try to get my Pba locked in asap! But hope they address this regardless.

 

[jollyroger]

According to this post from Reddit, Rivian will "probably?" meet the battery requirement.
“Unofficial” 2023 U.S. Federal Clean Vehicle Tax Credit : electricvehicles (reddit.com)

Does anyone know where this is coming from? It seems a little too magical for my taste

 

[Deacon]

Does anyone know where this is coming from? It seems a little too magical for my taste

This link was in an article that I saw in "Electrek". We can hope.

 

[sevengroove]

Update 8/16 (updated OP)
From IRS' guidance today on the new EV credit, confirming Electrek's take:

Vehicles Purchased and Delivered between August 16, 2022 and December 31, 2022
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 the EV credit apply (including those involving the manufacturing caps on vehicles sold). If you entered into a written binding contract to purchase a new qualifying vehicle before August 16, 2022, see the rule above.

New Final Assembly Requirement
If you are interested in claiming the tax credit available under section 30D (EV credit) for purchasing a new electric vehicle after August 16, 2022 (which is the date that the Inflation Reduction Act of 2022 was enacted), a tax credit is generally available only for qualifying electric vehicles for which final assembly occurred in North America (final assembly requirement).

 

[lostpacket]

Probably important to check the definition of binding contract too.

I am not sure I am qualified to decipher the nuance here. (all credit to @hiimisaac for finding this)

Apparently the non-refundable part of Rivian's binding contract was a "consideration" (maybe someone could post the full wording of the recent Rivian contract?) and the contract should be enforceable but it's a little hard to say for sure.


https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-and-irc-30d

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.

 

[CaptainX]

And yet, from what I've been seeing, some states do not even allow "binding contracts" for new automobile purchases. California and Massachusetts are two that have been mentioned. What do residents of these states do? Have their vehicle delivered to a state which allows those contracts? Sign an unenforceable "binding contract"? Get passed over for the IRS tax credit? - Perhaps the IRS will grant an exception for those affected? Very muddy water indeed.

 

[hiimisaac]

Probably important to check the definition of binding contract too.

I am not sure I am qualified to decipher the nuance here. (all credit to @hiimisaac for finding this)

Apparently the non-refundable part of Rivian's binding contract was a "consideration" (maybe someone could post the full wording of the recent Rivian contract?) and the contract should be enforceable but it's a little hard to say for sure.


https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-and-irc-30d

Yeah, this is really just a bunch of confusing legal mumbo jumbo so let me preface this: I am not a lawyer; for any actual tax advice and legal matters, consult your accountant and legal counsel, respectively.

That being said, from how I saw it worded was this:

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).

This, to me, means that if you're in a contract that's technically enforceable by law, which I assume our Rivian contract is (as stated in the first few lines: )

As of the date of this Agreement (“Order Date”), you agree that you shall purchase the Vehicle from Rivian, LLC, or its affiliate (“we,” “us” or “our”), pursuant to the terms and conditions of this Agreement. You hereby create a binding contract with Rivian obligating you to purchase the Vehicle. Immediately prior to taking delivery of the Vehicle you will be required to sign a dealership-specific Rivian Motor Vehicle Purchase Agreement that contains further terms and conditions.

.

The following sentence states:

As part of the consideration you provided to Rivian for this Order, one hundred dollars of the deposit amount you submitted with your preorder/reservation becomes non-refundable.

According to the quote from the IRS about what a written contract is, it's not limited to a specific amount and is only dictated by what the state is able to enforce. Now, it does not state that it has to be enforced, just that the contract is enforceable.

AGAIN, IANAL.

 

[McMoo]

Yeah, this is really just a bunch of confusing legal mumbo jumbo so let me preface this: I am not a lawyer; for any actual tax advice and legal matters, consult your accountant and legal counsel, respectively.

That being said, from how I saw it worded was this:


This, to me, means that if you're in a contract that's technically enforceable by law, which I assume our Rivian contract is (as stated in the first few lines: )
.

The following sentence states:


According to the quote from the IRS about what a written contract is, it's not limited to a specific amount and is only dictated by what the state is able to enforce. Now, it does not state that it has to be enforced, just that the contract is enforceable.

AGAIN, IANAL.

This is not legal or tax advice. I don’t see that the Rivian contract has any limited amount of damages to a certain amount. It doesn’t have a performance clause to make you go through with a purchase but the only damage limitation is on Rivian’s side where the purchaser limits Rivian liability and not the other way around. The 5% is only a safe harbor and not a requirement from my reading.

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.

 

[COdogman]

I understand why everyone is trying to pin this down, but we need to keep in mind there are still many possible outcomes after today. Just spitballing here:

1. Rivian’s $100 penalty BPA is sufficient to secure the old tax credit.
2. Rivian’s BPA is sufficient to secure the old credit, but they put a new expiration date on it.
3. Rivian’s BPA ends up NOT being sufficient to secure the old tax credit based on guidance from the IRS or states.
4. Rivian’s BPA is not sufficient to secure the old credit, but Rivian finds a way to fix that.
5. The Treasury Dept issues the auto industry waivers to allow them more time to adhere to the battery sourcing requirements, making the new credit available to most (for now). Obviously that would still not make high earners or those with max packs happy.

There are probably even more possibilities. We just don’t know the answers to all these questions yet.

 

[tate16t]

Also updated as of yesterday:

https://electrek.co/2022/08/16/ev-tax-credit-list-of-cars-eligible-7500-inflation-reduction-act/

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