7500 Tax Credit?

[Tomato]

Typical for them to just pass a bill with ambiguities and let the taxpayers figure it out. The IRS is probably confused too. Don't be surprised if they deny/approve your Form 8936 anyway and you'll end up going back and forth with them on it.

Back when the old law was passed, many filers got denied because some IRS agents did not completely understand the law either. They initially denied my Cadillac ELR even though it was fully qualified for the max amount.

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[electric9925]

Typical for them to just pass a bill with ambiguities and let the taxpayers figure it out. The IRS is probably confused too. Don't be surprised if they deny/approve your Form 8936 anyway and you'll end up going back and forth with them on it.

Back when the old law was passed, many filers got denied because some IRS agents did not completely understand the law either. They initially denied my Cadillac ELR even though it was fully qualified for the max amount.

Did your accountant just file it again? Or is there a special process of appealing? I’m just figuring there’s a good chance for us in the binding contract scenario we’ll have to go back and forth a lot.

 

[jfn12587]

The definition of the binding contract is in another area of the IRS document base, and was not specific to this scenario. That is, it's always been 5% of total value, and hasn't changed/won't change.

My beef with the guidance as written is that it translates into:

if (binding_agreement.Date < 8/16/22)
{
if (delivery.Date >= 8/16/22 && delivery.Date < 1/1/23)
{ // apply old rules }
}
else
{ // apply new rules }

The problem is the existence of the 'else'; if it's implicit, then pre-8/16 agreements with '23 deliveries are treated as fall-through, and are subject to the new rules. If it's explicit, then those deliveries are effectively no-ops. One would think 'else' clauses are explicit in law text.

Anyway, the amendment to limit deliveries to EOY '23 is new, and was no doubt introduced now that the tax season is starting. It does make sense, as you wouldn't want to honor ancient history, it's just that the entire situation is frustrating: a manufacturer that can't deliver cars according to their own timeline (or delivers some twice as fast as others), a law that's being rewritten repeatedly and retroactively.. (For my next rant, I'll get back to charging.)

My interpretation is that the guidance is specifically for Tax Year 2022, and therefore they only updated the guidance with the transition rule applying until Jan 1. You wouldn't be claiming a vehicle purchased in 2023 on your 2022 taxes, after all.

Form 8936 for claiming the credit specifically asks you to input the date the vehicle was placed in service. There's a bulletin (https://www.irs.gov/irb/2022-43_IRB) by the IRS which states:

Section 13401(l) of the IRA provides a transition rule for a taxpayer who purchased or entered into a written binding contract to purchase a new qualified plug-in electric drive motor vehicle (as defined in § 30D(d)(1) of the Code, as in effect on the day before the date of enactment of the IRA (August 15, 2022)) after December 31, 2021 and before the date of enactment of the IRA (August 16, 2022), and placed such vehicle in service on or after the date of enactment of the IRA. The transition rule provides that such a taxpayer may elect (at such time, and in such form and manner as the Secretary may prescribe) to treat such vehicle as having been placed in service on the day before the date of enactment of the IRA.​

​

I suspect that in 2023 you'll likewise be able to claim the credit if you had an existing binding contract.

I am not a tax professional or lawyer. Talk to your accountant.

 

[WasserGKuehlt]

My interpretation is that the guidance is specifically for Tax Year 2022, and therefore they only updated the guidance with the transition rule applying until Jan 1. You wouldn't be claiming a vehicle purchased in 2023 on your 2022 taxes, after all.

Form 8936 for claiming the credit specifically asks you to input the date the vehicle was placed in service. There's a bulletin (https://www.irs.gov/irb/2022-43_IRB) by the IRS which states:

Section 13401(l) of the IRA provides a transition rule [...]​

​

I suspect that in 2023 you'll likewise be able to claim the credit if you had an existing binding contract.

I am not a tax professional or lawyer. Talk to your accountant.

Thanks for clarifying (and welcome to the realm of non-lurkers ;-)). The paragraph you quoted was indeed the original transitioning clause of the law itself, and I assumed that the newer, year-specific guidance overruled it. (Especially since it distinguished between purchase and delivery dates, respectively.)

 

[Tomato]

As @jfn12587 mentioned, you wouldn't be claiming this credit for 2022 filing if you haven't received the car in 2022. Unless there's a new bulletin in 2023 before the tax filing deadline (4/18/23) addressing this; for 2022 tax filing, IRS will use the in 12/31/22 as the last in service date for you to receive the credit.

For personal tax filing, you can't claim anything outside of the current calendar year as credit or deduction unless it's to amend past year tax return. The only exception is your IRA contribution which can be done up to the tax filing deadline and still be applicable for that tax year. Example: IRA contribution done on 4/15/23 can be used as deduction on 2022 return. But that's for retirement, I doubt the government will make that same ruling for what is basically a toy for most of us.

There will be more threads with outcome from early tax filers. We can only hope that IRS should have something more concrete as tax deadline of 4/18/23 approaches.

 

[WasserGKuehlt]

As @jfn12587 mentioned, you wouldn't be claiming this credit for 2022 filing if you haven't received the car in 2022. Unless there's a new bulletin in 2023 before the tax filing deadline (4/18/23) addressing this; for 2022 tax filing, IRS will use the in 12/31/22 as the last in service date for you to receive the credit.

I understand that, and wasn't expecting to. As mentioned (repeatedly, here and elsewhere), the understanding was that binding agreements that predate the signing-into-law date would be grandfathered. It was self-implied that taking possession in CY 2022 was not a requirement. Then someone else, earlier in this thread, shared the links to the 2022-and-before IRS guidance for credits, and 2023 respectively. My only wonderment was that the guidance appeared to close the grandfathering clause, and @jfn12587 explained that (away). We'll see.

I doubt the government will make that same ruling for what is basically a toy for most of us.

Absolutely, and in fact I'd be surprised for that credit to be extended to 2023 deliveries. It'd even make sense not to, speaking as a taxpayer.

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