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Taxpayers received $74 million in questionable EV tax credits says Treasury Dept.

Proflig8tor

Member
Jun 23, 2019
93
135
Marietta, GA
CREDIT - Autoblog.com

Millions in EV tax credits may have been ineligible, watchdog finds

Federal investigators found 16,510 tax returns that may be ineligible

A new report from a U.S. Treasury Department watchdog group says taxpayers may have improperly claimed nearly $74 million in federal electric vehicle tax credits for purchasing vehicles not eligible for the credits.

The finding comes from a Sept. 30 report from the Treasury Inspector General for Tax Administration (or TIGTA, if you love government-bureaucracy acronyms), as reported by Bloomberg. Investigators found that the IRS lacks an effective process to identify and prevent erroneous claims for the EV credit, which tops out at $7,500 and is intended to offset the cost of purchasing a plug-in electric vehicle.

The watchdog agency analyzed EV tax credits for the 2014 through 2018 processing years. It found 16,510 tax returns that resulted in roughly $73.8 million in potentially erroneous EV tax credits. That’s out of a total of roughly $1.4 billion in tax credits from 239,422 taxpayers over the five-year period. It redacted details about how exactly taxpayers were improperly claiming the credits.

It said IRS examiners “are generally not reviewing questionable claims for the Plug-In Credit during examination when IRS filtering does not identify the credit,” and it made four recommendations, which are also partly redacted to the public, including using VIN numbers provided by taxpayers and submitted by leasing agencies to verify eligibility. The IRS agreed to implement the changes and said it would launch a program to recover improperly awarded tax credits.

Congress first enacted the EV tax credits in 2008 and amended them as part of the 2009 economic stimulus package to include plug-in electric vehicles purchased after Dec. 31, 2009. They apply to each automaker up to the first 200,000 qualifying EVs sold.

So far, only General Motors and Tesla have passed the 200,000 sales mark, with 211,652 and 369,305 electric vehicles sold to date, according to the IRS. That triggers a phase-out that drops the tax credit to $3,750 for two quarters, then $1,875 for another six months until EV tax credits are no longer available. Tesla reached the 200,000 mark in the third quarter of 2018 and will no longer be eligible for any amount of credit starting in January, while GM hit it in the fourth quarter of 2018. President Trump has proposed scrapping the EV credit altogether, although automakers support extending the credit beyond the 200,000-vehicle threshold.

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The M3 sold better than any other EV, so it seems appropriate to put this here.

Appears we will be targeted for audits; oh joy.
 

boaterva

Supporting Member
Supporting Member
Apr 2, 2016
7,575
3,817
Northern Virginia, USA
How are they citing ‘improper’? People don’t own the VINs? Seems like a semi-easy thing to verify. Leases don’t count....

edit: from the summary looks like IRS didn’t verify anything. Lovely....
 
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vickh

Active Member
Dec 16, 2018
3,153
709
az
should be an ez letter audit to pass if you're legitimate, if Tesla provides a vin database is with the IRS with accurate delivery dates.

My case I took delivery on 6/29 but AZ didn't register till 7/2
 
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vickh

Active Member
Dec 16, 2018
3,153
709
az
Yeah, lol, I’d assumed (!) the IRS was checking the VINs. My bad.

I don’t expect an audit. Unless you did use a VIN that isn’t yours.

I wonder if now Tesla or the states will provide a vin database to the IRS with accurate delivery dates.

My case I took delivery on 6/29 but AZ didn't register till 7/2. Thankfully I do have a temp tag from 6/2 and a 6/29 dated check.
 
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boaterva

Supporting Member
Supporting Member
Apr 2, 2016
7,575
3,817
Northern Virginia, USA
I wonder if now Tesla or the state will provide a vin database is with the IRS with accurate delivery dates.

My case I took delivery on 6/29 but AZ didn't register till 7/2
Good point. Not sure that they will care THAT much as long as you are the actual owner. It’s the real scammers I bet they are after.
 

Proflig8tor

Member
Jun 23, 2019
93
135
Marietta, GA
Going through the formal report from source material now. I am not an attorney (and unqualified to try to understand this redacted report) but the most concerning part to we, legitimate credit takers, is that the manufacturer **MAY** not have reported VINs on our purchases correctly.

Since Fiscal Year 2012, the IRS started requiring taxpayers to include the vehicle’s VIN on Form 8936 to claim the Plug-In Credit. However, leasing entities, such as vehicle manufacturers did not always follow this requirement. Instead, they filed a Form 8936 indicating the total credit amount without listing each individual VIN. ***************************************2************************************ *********2*********** However, we identified 21,613 VINs the IRS requested during examination and matched the VIN list to the population of individual taxpayers who claimed the Plug-In Credit for PYs 2014 through 2018. We matched the data to determine if *****2***** ***********************************2***************************************** ***********************************2****************************************** ***********************************2****************************************** These taxpayers were not entitled to these credits. Although we were only able to match a small population, our match indicates a potentially large problem

 

Eno Deb

Active Member
Aug 17, 2018
2,625
3,371
SF Bay Area
Appears we will be targeted for audits; oh joy.
I highly doubt it. The IRS is understaffed. They only audit about 0.5% of tax returns and have bigger fish to fry than $75 million over 4 years. They'll probably try to implement some simple automatic checks (like a cross check with a VIN database).
 

Proflig8tor

Member
Jun 23, 2019
93
135
Marietta, GA
Vickh,

Agree - It should be easy to show the purchase agreement. Some of us are simply afraid of anything smacking of prosecution for noncompliance. I am very solidly in the "comply and avoid trouble" camp.
 

Big Dog

Active Member
Mar 7, 2016
1,654
1,784
Irvine, CA
Americans: De-fund the IRS! I hate paying taxes!

Also Americans: Why is the IRS doing such a terrible job?

Like all federal compliance agencies, they only have limited resources.

But my read is that perhaps a bunch of individual taxpayers took the credit even when they leased the car (where the leasing company is supposed to get the credit, not the individual).

For those of us model 3 purchasers, the VIN was required on the form, so likely not any issue.
 

Eno Deb

Active Member
Aug 17, 2018
2,625
3,371
SF Bay Area
My coworker double dipped. He leased a car and they took the credit but gave him a discount on the monthly payment to offset it. When we did his taxes, he also took the $7,500 credit. H&R block didn't care and they covers $10k of protection so he doesn't care either.
Their guarantee covers math errors on their end, but not wrong information provided by the filer (like claiming to be eligible for a tax credit when they aren't).
 

OCR1

Active Member
Jan 28, 2018
3,765
4,280
Southern California
I wonder how many people will try to claim a $7,500 tax credit on their 2019 tax returns when they are really only eligible for $3,750 or $1,875. TurboTax most likely won’t catch that error.
 

vickh

Active Member
Dec 16, 2018
3,153
709
az
Like all federal compliance agencies, they only have limited resources.

But my read is that perhaps a bunch of individual taxpayers took the credit even when they leased the car (where the leasing company is supposed to get the credit, not the individual).

For those of us model 3 purchasers, the VIN was required on the form, so likely not any issue.
I wonder how many people will try to claim a $7,500 tax credit on their 2019 tax returns when they are really only eligible for $3,750 or $1,875. TurboTax most likely won’t catch that error.

It all depends whether IRS cross checks manufacturer VIN vs delivery dates. esp for the $3,750 vs $1,875 since the 7.5K ended in 2018 for Tesla. TurboTax etc won't have VIN databases.

It's even more confusing with Tesla's long return policy

Now that it's a known issue there will be some checks , not sure if they'll be specific enough though
 
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sperkin

Member
Mar 23, 2017
934
1,042
Los Angeles, CA
Their guarantee covers math errors on their end, but not wrong information provided by the filer (like claiming to be eligible for a tax credit when they aren't).

I'm just stating what happened, and I don't care what happens to him. Not my car and not my tax return. This was his Model S and he did it twice already (one previous owned and one on his new one after turning that in). This is probably what this article found too. Both the owner and leasing company are filing for the incentive and there's no system to double check or some falls through the crack.

I won't do this personally because I don't want to pay later with interest if I get caught. Just saying some people just don't care.
 

mspohr

Well-Known Member
Jul 27, 2014
10,068
12,655
California
I highly doubt it. The IRS is understaffed. They only audit about 0.5% of tax returns and have bigger fish to fry than $75 million over 4 years. They'll probably try to implement some simple automatic checks (like a cross check with a VIN database).
This could be part of an effort to harass EVs owners (and potential owners). Wouldn't put it past our current administration's war on EVs and the environment to start this campaign.
 

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