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Tesla Referral Program
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Kbra
Member
It's not much better in the US. There are still tons of prizes overdue and little to none customer support to the email box.
Pandamoanium
Member
State incomes and sales taxes differ but for me I'm looking at 4% sales and a flat 4.63% income tax. I never said it would be better purchasing it outright versus getting a discount. My whole point being missed is that if someone can get a considerable discount like 96% on the founders roadster, then they are paying roughly $54,417.00 for income taxes on top of anything required for the remaining vehicle purchase.
It is of course better off than a full 250K purchase outright. The extra 54K income tax is what I'm getting at. You're literally being taxed on the DISCOUNT. Now most of the people buying a Tesla can put this down, but you'd be surprised at how may people can't afford to do that.
I was under the impression (wrong) that the discount amount was just that, a discount. A number and value considered fair by the seller. Then I would be responsible for the remaining balance and all taxes and such.
I've been looking at a new 4C, If I were to get a smoking deal such as someone I know, going from 67K down to 52K, do I now have to pay income taxes on that discount?
Put together a spreadsheet of recommended Tesla Owner Advisors. Please feel free to submit your own recs to and referral future owners!
For future owners, OA emails are hidden for privacy reasons but if you hit "request intro" your info will automatically be sent to a referrer who can intro you directly to the OA.
Recommended Tesla OA (Owner Advisors)
For future owners, OA emails are hidden for privacy reasons but if you hit "request intro" your info will automatically be sent to a referrer who can intro you directly to the OA.
Recommended Tesla OA (Owner Advisors)
HankLloydRight
No Roads
You have a good point, and this is where it gets murky since I'm not a CPA (I just play one online
).I'm pretty sure the difference is that when a dealer just offers you a discount, they are just reducing their profit.. maybe even to $0 profit. Tesla does it also with "showroom discounts" when selling inventory cars. The final basis of the car (fair market value) is the price you paid after the discount.
The difference with the Tesla referral award is that they will (likely, my assumption) want to write off the discounts they are giving the winners as an expense to reduce their taxable income (to simplify it) and keep the basis at a full $250k. In order to claim that write-down as a tax deduction, they have to tell the IRS where that money is going.... and it's going to you, just in the form of a discount. In this case, the basis of the car is still the full price ($250k) that you are receiving which is why you have to pay the tax on the difference between what you actually paid and the discount you received.
I admit that I am not a CPA and this might not be how it actually plays out. But this is the best way I can explain it.
kvandivo
Member
Are Owner Advisors different than delivery specialists? We've been assigned a delivery specialist at one of the locations mentioned in the spreadsheet, but not the name mentioned there. If we could switch to someone that is "known good".....
Yes from what I recall, the delivery specialist just coordinates your delivery and makes sure everything goes smoothly. Probably not worth looking for a new one unless they really drop the ball there. A good OA helps a ton during the ordering processes if you've got a ton of questions or if you're looking for inventory or CPO deals.
Pandamoanium
Member
I think at the end of all of this, it is what you just said. If Tesla is going to send off a 1099-MISC and have an amount on it then for sure we can expect to pay more income taxes. I was just living in my dream world where the discount is just an adjusted price and no extra taxes on it. Talk about a huge burst in my special bubble.You have a good point, and this is where it gets murky since I'm not a CPA (I just play one online
I'm pretty sure the difference is that when a dealer just offers you a discount, they are just reducing their profit.. maybe even to $0 profit. Tesla does it also with "showroom discounts" when selling inventory cars. The final basis of the car (fair market value) is the price you paid after the discount.
The difference with the Tesla referral award is that they will (likely, my assumption) want to write off the discounts they are giving the winners as an expense to reduce their taxable income (to simplify it) and keep the basis at a full $250k. In order to claim that write-down as a tax deduction, they have to tell the IRS where that money is going.... and it's going to you, just in the form of a discount. In this case, the basis of the car is still the full price ($250k) that you are receiving which is why you have to pay the tax on the difference between what you actually paid and the discount you received.
I admit that I am not a CPA and this might not be how it actually plays out. But this is the best way I can explain it.
I suggest you call :
Tesla Roadside Assistance (877-79TESLA)
Select the option that includes help with your MyTesla account. Explain your issue and with a few transfers you should get the help you need. In my experience I have found Tesla to be very responsive to all my concerns when contacted via phone.
You have a good point, and this is where it gets murky since I'm not a CPA (I just play one online
I'm pretty sure the difference is that when a dealer just offers you a discount, they are just reducing their profit.. maybe even to $0 profit. Tesla does it also with "showroom discounts" when selling inventory cars. The final basis of the car (fair market value) is the price you paid after the discount.
The difference with the Tesla referral award is that they will (likely, my assumption) want to write off the discounts they are giving the winners as an expense to reduce their taxable income (to simplify it) and keep the basis at a full $250k. In order to claim that write-down as a tax deduction, they have to tell the IRS where that money is going.... and it's going to you, just in the form of a discount. In this case, the basis of the car is still the full price ($250k) that you are receiving which is why you have to pay the tax on the difference between what you actually paid and the discount you received.
I admit that I am not a CPA and this might not be how it actually plays out. But this is the best way I can explain it.
Hank and All-
I am a CPA in the US, I have a masters in taxation, I've worked in public accounting for several years and am the CFO for the largest law firm in the state. I don't say any of that to boast, but just to credential myself.
Tax law is sometimes vague, and none of what I'm about to offer should be construed as legal tax advice to anybody for any reason.
1a) Tesla has a legal requirement to issue 1099-MISC forms to US recipients of referral awards with a value greater than $600 in aggregate given to a single recipient. For example, if someone receives the referral award for one referral only during the year, no obligation is generated to issue a 1099. However, 2 referral prices total more than $600 in value, so, yes, 1099s would be required. The penalty to Tesla is $100/form, max of $500,000 for not issuing 1099s to recipients. My guess is that they pay the penalty and don't burden their customers or get bad PR for sending out forms. Very few owners (outside of enthusiasts like us) get more than one referral per year, so Tesla wouldn't have an overwhelming number of 1099s to issue if they decided to do so.
1b) Regardless if Tesla sends out 1099s to those they give referral awards, they can still deduct the costs of the referral awards (at their cost, not market value) from their financials and tax return.
2a) Hank is exactly correct in that even if recipients of awards never receive a 1099 from Tesla, recipients are legally obligated under Federal and most State tax law to claim the fair market value of the award (MSRP) on their income taxes. (For example, if I get the Radio Flyer, that's $499 of miscellaneous income I should report). Failing to report this income could result in a penalty of an additional 20% above and beyond the tax owed. You can avoid the tax obligation by declining receipt of the award if you desire. That is all income tax related.
2b) The reward of a discounted purchase price is taxable as income IF you purchase the product at below an "arm's length purchase price". Example, if I walk into a dealership and negotiate a 5% discount off of the sticker price, that is "arm's length" (typically a normal market price). However, if I get a 50% off discount because of a promotion that is given as an award and is not "arm's length" (not typical market price), the difference is taxable.
3) From a sales tax perspective, each state and city have their own differing rules as to whether or not the award or discounted purchase price would be subject to sales tax. Many yes, some no.
By and large Hank is exactly right, but it likely only matters for folks that earn more than $600 in prizes in any single year.
HankLloydRight
No Roads
Thanks @kdday ! I didn't know about the "arm's length" part before now. That really explains most of the missing pieces we were grappling with.
I guess in the end the exact meaning of "arm's length" is negotiable if someone is audited? Like a 20% discount is OK, but 25% isn't? And I suppose 25% off $250,000 is treated differently than 25% off $250.
I guess in the end the exact meaning of "arm's length" is negotiable if someone is audited? Like a 20% discount is OK, but 25% isn't? And I suppose 25% off $250,000 is treated differently than 25% off $250.
HankLloydRight
No Roads
It's also very very interesting to learn about the max $500,000 penalty for not filing 1099s. At some point, it's less expensive to not file than file for so many people.
Example: If it costs Tesla $5/form to prepare and mail out, if they have to send out more than 1000, it's cheaper to pay the fine and walk away. How many businesses do that as the normal course of business?
Example: If it costs Tesla $5/form to prepare and mail out, if they have to send out more than 1000, it's cheaper to pay the fine and walk away. How many businesses do that as the normal course of business?
I did call about the same issue, they said I have to wait, no direct contact with that department whatsoever.
I've been doing some more research (it's not all saved in my brain) and the penalties for "large business" are larger potentially in the $3M+ range. My guess is Tesla will issue 1099s to significant prize winners (free cars) and let everyone else deal with their own self-reporting for the simple prizes.
To your question, most companies I have seen always issue 1099s as they don't want to let that little piece open up Pandora's Box of further audit issues.
We'll see what Tesla does. If they were going to issue 1099s for simple prizes, they would have requested w9s already from us.
Pandamoanium
Member
Pandamoanium
Member
Thank you very much for this, I will of course make sure with my CPA when filing but this definitely helps with understanding some of it.
It probably has a limit to it, but I vaguely remember tax-free prizes if the recipient is obligated to spend additional money for it. Might be way off or making something out of thin air but I keep thinking about that. Is there anything like that?
For 2b, I think it's interesting because MSRP is dictated by Tesla. It makes me wonder if this is somehow differentiated from the available 1,000 founders series. This would easier if we were to get information from someone that actually received a free vehicle from Tesla.
Arm's length is less about the discount percentage or dollars as it is the circumstances surrounding the sale.
Arm's Length Transaction
No. The IRS wouldn't even laugh at someone if they tried that. They'd just give you a blank stare.
They want the tax on the value actually awarded, irrespective of the funny money between actual price paid and true market value.
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