Caution on the tax credit

[elpwr]

I've spent a good bit of time researching the tax credit issue, and a word of caution. Here is what I have learned and believe to be true:

Just because the car has never been titled does not mean that it is eligible for the tax credit. There are quite a few of the GM PEP (product evaluation program) cars available now with very low miles that have never been titled. But it appears GM has taken the tax credit on these. And many dealers have taken tax credits on untitled extremely low mile cars that are currently for sale.

Also, the IRS is currently keeping a database on all cars that have received the tax credit. If you attempt to file for the credit on a car that has already received it, it will be rejected.

I am in Florida but a dealer cannot sell and ship me a new one. It must first be titled and registered in California, Oregon or Maryland. I'm looking at several of the super low mile ones currently available but I'm going to approach this realistically - they probably aren't going to be eligible for the tax credit.
When I pressed the dealers hard on the credit eligibility, their response is " we can't be certain that the car is eligible for the credit". Several have told me this.

An eBay seller of the PEP cars in Michigan ( who is no longer a authorized Chevy dealer) has assured me they are eligible for the credit. But I think that is very questionable.

 

[sTeeve]

I've spent a good bit of time researching the tax credit issue, and a word of caution. Here is what I have learned and believe to be true:

Just because the car has never been titled does not mean that it is eligible for the tax credit. There are quite a few of the GM PEP (product evaluation program) cars available now with very low miles that have never been titled. But it appears GM has taken the tax credit on these. And many dealers have taken tax credits on untitled extremely low mile cars that are currently for sale.

Also, the IRS is currently keeping a database on all cars that have received the tax credit. If you attempt to file for the credit on a car that has already received it, it will be rejected.

I am in Florida but a dealer cannot sell and ship me a new one. It must first be titled and registered in California, Oregon or Maryland. I'm looking at several of the super low mile ones currently available but I'm going to approach this realistically - they probably aren't going to be eligible for the tax credit.
When I pressed the dealers hard on the credit eligibility, their response is " we can't be certain that the car is eligible for the credit". Several have told me this.

An eBay seller of the PEP cars in Michigan ( who is no longer a authorized Chevy dealer) has assured me they are eligible for the credit. But I think that is very questionable.

I did the best due diligence I could muster before I purchased my Spark EV from the MI seller. My state (Georgia) gave it the green light for the state tax credit. My research on the federal tax credit showed no claim on the car's VIN, as far as I could find.

I can't say that I'm right or wrong. All I can offer is what my sources gave me. FWIW, I hope you're wrong.

-Bob K.

p.s. where can we find IRS database information on these cars?

 

[14Volt]

On the IRS form:
"If you are the seller of a qualified plug-in electric drive motor vehicle... to a tax-exempt organization, governmental unit, or a foreign person or entity, and the use of that vehicle is described in section 50(b)(3) or (4), you can claim the credit, but only if you clearly disclose in writing to the purchaser the amount of the tentative credit allowable for the vehicle (from line 11 of Form 8936). Treat all vehicles eligible for this exception as business/investment property. If you elect to claim the credit, you must reduce cost of goods sold by the amount you entered on line 11 for that vehicle."

Sounds like the manufacturer cannot claim the credit under ordinary circumstances. The car I recently bought was a GM program vehicle with 100 miles. Paid near MSRP ($26K total drive off), so that credit had better be available or heads will be rolling come tax time.

 

[elpwr]

I spent several hours researching this, made several phone calls, and spoke to a friend who is an IRS employee. And I still could not come up with any definitive answers. It was very frustrating. The purpose of my post was just to give everyone a heads up here.
.
The tax credit can make a major impact on the decision to buy a low mile untitled car or a new current car. The price difference between the two is often less than $7500, probably making a new 15 the better choice. But only if you live in California Oregon or Maryland and would be eligible for the full credit.

Outside of those states, we have no choice but to buy a used one. There are some workarounds to obtain a new car outside of the three states, but they are cumbersome and expensive.

 

[sprockkets]

Here's the rub, who here pays $7500 in income tax? If you don't, you won't get that back. You are better off leasing or finding a used one for $7500 or less.

What sucks is I pay very little income tax but get killed with self employment tax. And that ev credit covers none of it!

 

[Carney]

Here's the rub, who here pays $7500 in income tax? If you don't, you won't get that back. You are better off leasing or finding a used one for $7500 or less.

What sucks is I pay very little income tax but get killed with self employment tax. And that ev credit covers none of it!

But even with leasing, how can you be sure that the dealer will be able to claim the credit and that your lease terms will be based on the MSRP minus $7,500 amount?

 

[KingUltra]

Here's the rub, who here pays $7500 in income tax? If you don't, you won't get that back. You are better off leasing or finding a used one for $7500 or less.

What sucks is I pay very little income tax but get killed with self employment tax. And that ev credit covers none of it!

But even with leasing, how can you be sure that the dealer will be able to claim the credit and that your lease terms will be based on the MSRP minus $7,500 amount?

I think GM or whoever Bank is claiming the $7500 tax credit. Everyone I know who leased one got it. Haven't seen anyone in the forums neither who had it revoked later.

 

[mickeybiosense]

On a lease the leasing company claims the tax credit for $7500. You have to negotiate the $7500 off the MSRP and work the lease into the final price.

 

[sTeeve]

Update: I scored both federal and state (Georgia) tax credits on my 2015 taxable income for my purchase of a new 2014 Chevy Spark EV from a Chevy dealer in Mi (see this link: http://www.mychevysparkev.com/forum/viewtopic.php?f=3&t=4143)

 

[elpwr]

I "scored" the $7500 too. At least initially on my tax return. But the IRS has 3 (or more) years to decide to audit the return. I'm hoping filing for the credit doesn't trigger an audit.

 

[sTeeve]

I "scored" the $7500 too. At least initially on my tax return. But the IRS has 3 (or more) years to decide to audit the return. I'm hoping filing for the credit doesn't trigger an audit.

3 yrs. Oy!