Will my SE still quality for tax credit

As consumers, we like getting discounts on things; makes us happy. But eventually, EVs will have to be able to stand on their own two feet without these large incentives. Given that Hyundai & Kia dealers have been marking up the Ionic 5 and EV6 $10k-15k over MSRP, perhaps that time is at hand? And, in the transition period, is it such a bad thing to link what remains of an incentive to domestic production/jobs? That, and targeting the lower end of the market with used EV incentives... maybe the new system really is for the best.

 

I see your point, but have you considered…

 

You have some interesting points for sure.

I think that the mark-up days are past us. The combination of the change in the tax incentives and the change in the economy, car prices have fallen for the first time since covid. And IMHO, this trend will continue.

There is NOTHING bad about incentivizing US production. In fact, this is IMHO the best part of this new law. America used to be the world's manufacturer and we have let that slip, so anything that can make us more competitive will be great.

I disagree that it is a good idea to target the low end of the market. An EV is not an entry level vehicle (yet). There is no infrastructure to support wide spread use or support low income vehicular needs (which are often extremely different that mid or low income use/needs). Consumer goods almost always start with the high end of the market and then trickle down as adoption and consumption increases and funds the lower price options. But not to get too far afield into macro economics.... lol

There is NO good govt system that is complicated. Complicated govt systems = more govt employees to manage, more abuse and much more corruption. Over history, the best and most successful plans are the simplest. Like the old EV law. It did DRIVE significant adoption. I was part of a group of 300 car enthusiasts that leased 500e's or i3's in one month due to the incentives. We were all people that would never have considered an EV without the "deal" - now again, I don't support the incentives as its my tax money paying for these, but since I am contributing to this fund, I am also pulling from it! =)

 

It does appear that new SE's on cars.com are selling at MSRP.

 

I’ve been tracking the used market. There’s not as big a reduction in price that one might hope for (buying used rather than new), but I think we’ve seen the supply chain issues result in a few features being eliminated on new builds, so the 2022 and older 2023 models seem better equipped.

 

I just purchased mine last week @MSRP. This was on the lot, not ordered. I was happy (and hell bent) on finding one without ADM which was easier than I had thought it was going to be. It was harder to find one with adaptive cruise control which was a must for me.

The market has shifted for sure!

 

As someone who has repeatedly advised folks to consult with a tax professional, I finally had the occasion to reach out to the CPA firm that prepares my tax returns to seek their input. Their e-mailed response appears in the screenshot below.

In a word — yikes!

Flip side — if I want to be aggressive in claiming the tax credit, it appears that I have a willing partner in my CPA firm, though I’m getting the sense that their aggressive interpretation may come from a lack of knowledge of/familiarity with the statute.

 

well they make more $$ when you are audited, so it is in their best interest! lol

 

I guess I don't understand the "yikes!"

1) At minimum, that guidance from a CPA is good cover if the IRS does question your claiming of the credit.

2) I don't think that's aggressive interpretation from the CPA; that's reasonable interpretation. You placed an order, you had every intent of purchasing based on the credit available at the time of the order. The changing law has not affected your buying decision... isn't not like you raced out to go buy an EV to sneak a credit by anyone.

The IRS gets a bad rap, but they're not a bunch of sadists out there to rake you over the coals for fun; they're out to get folks who are cheating the system. I don't think they're going to be aggressively pursuing normal folks in normal EV purchasing situations like you or I, doing our best to adhere to the law and pay what we owe, but stuck in limbo over imprecise contract law definitions sprung on them after the fact. We're doing a lot of hand-wringing in here, but at the end of the day it's going to be a big nothingburger. Follow the advice of the CPA, and you'll be fine.

This is very cynical.
I get that it's a joke, but my dad was a CPA... trust me, they don't want audits any more than their clients do.

 

We will agree to disagree. They are a horrible organization with a good mandate that is taken out of context and too far by incentives they give agents. You know that IRS agents get judges on how much they collect from people? I take it you dont own a small business? IRS is all over small business owners, who are clean, but it costs $1000's-10,000's to prep an audit and show that they did nothing wrong. If you think they are only after "cheats" I have a bridge to sell ya.....

Yes, clearly you dont get that its a joke! lol

 

The overwhelming majority of debate on this post, I’d argue, is centered on the “binding legal contract to purchase” language. The fact that my firm’s advice on this topic didn’t even bother to delve into those intricacies of that transition language, and was offered on an unqualified basis (that is to say “lacking in nuance;” I’m not disparaging the abilities of my CPA firm) despite not asking a single question about my sales agreement is the reason for my “yikes.”

I dunno — they say that there are no worse patients than doctors. As someone with over 20 years of experience of fighting with federal regulators regarding the substance and the procedural basis of how regulations are adopted, that probably makes me a terrible client for a tax/law firm.

That said, I didn’t mean to fan any flames here about whether “this agency is bad,” or “this profession is self-serving.” This reply might be more confirmation that the professionals we consult are also still learning how any of this is going to work out.

 

Could also mean, based on their experience with the IRS and audits, that the intricacies of that transition language isn't something one is likely to be targeted for audits over and/or that the common-sense explanation would likely be a sufficient response.

I mean, CPAs aren't tax attorneys; they're not going to get deep in the weeds on legalese nuance... but they do have a lot of experiential street smarts when it comes to what the IRS looks for, what they get upset about, and what satisfies them.

You should be prepared, either way (and clearly you are). But the agreeable CPA guidance is a card in your pocket, for sure.

Oh, definitely! But it's also basically a one-time thing, which may lower the temperature a bit across the board.

 

Right! My screenshot above didn’t really hint about what my actual question was. In fact, I was actually seeking to tap into some of those very “street smarts.” My question was whether they have any intel (e.g., an IRS bulletin or advisory, anything really) about whether the EV tax credit might be something that will get extra scrutiny this year. (Kinda like what Tifosi shared in Post #300 in this thread.)

Either way, an aside — while I thought I pivoted to looking at the used SE market, this week I made the mistake of tracking the SE that I ordered and now I’m all over the effing place. Best guess, it’s going to show up at my dealer in early/mid-December, and I still don’t have an effing clue what I’m going to do when it shows up.

 

Look at the penalty rules and how to get out of penalties.

As for what Tifosi wrote disparaging the hard working professionals trying to do their best while severely understaffed with outdated technology, ignorance is bliss.

 

The Small Business / Self-Employed Division is not the same as the Wage & Investment Division, but it will take awhile for IRS to upgrade their COBOL systems.

 

I thought you were joking about the COBOL, but:

https://www.irs.gov/irm/part2/irm_02-005-003
https://www.meritalk.com/articles/irs-looks-for-security-tools-for-cobol-apps/

 

SBSE, W&I, Appeals, etc. are all working under the same craptastic conditions. There are a few lazy folks and a few bad/terrible apples, but almost all of the folks are hard working people that are proudly serving their country.

Let's agree that we are allowed to disagree on how to interpret a statute or regulation, without shytting on the people charged with enforcing the law.

 

Nope, I was dead serious...

Thank you for the many years at the Service!

 

Like with most govt organizations, the people working are almost always good honest people trying to do a good job. The issue is the leadership, politicization and well, bureaucracy. I think we can all agree that the vast majority of workers are good people! I am sorry if my flippant comment painted a different picture.

 

I stopped by my MINI dealer this afternoon to cancel my order. In speaking to the sales manager on duty, I got the impression that they’re still (i.e., on November 22, 2022) telling their customers that as long as their MINI SE orders were in before the IRA of 2022 was signed, they should be golden as far as claiming the tax credit is concerned.

(He also mentioned that it’s not legal for car dealers in my state to execute binding contracts until the car has actually arrived on their lot.)

I gather there’s gonna be a whole lot of new MINI SE owners that purchased through my local dealer who will be wholly unprepared for the Transition Period statutory language discussion when the IRS comes-a-knocking’.