For those considering taking the plunge into the world of electric vehicles in 2024, there’s exciting news. The U.S. government has now clarified how car dealers can transfer tax credits for new and used EVs directly at the point of sale, ensuring you can benefit instantly from these incentives. But there’s a catch: dealers need to be registered. Let’s delve into what this means for you.
The Wait Is (Almost) Over
It’s been an intense wait, but car dealerships across the country now have definitive guidelines on how tax credits for EVs can be handed over right at the point of sale. Previously, there were doubts about how swiftly dealers would be reimbursed by the federal government after passing the EV tax credit on to the buyer at the point of sale. The latest guidance is good news for EV buyers, but there’s a new item for your car buying checklist.
First, a quick reminder of how we got here.
In late 2022, the Inflation Reduction Act was passed into law here in the United States. The IRA brought back the federal EV tax credit for automakers like Tesla and General Motors, but took it away from Hyundai, Kia, Audi, and many others.
Why did the EV tax credit get taken away? The new rules are complex, but in summary, an electric vehicle must be made in North America, and fall under new price caps, in order to qualify. There are also battery sourcing requirements.
For all of 2023, the EV tax credit is just that, a non-refundable tax credit. Starting January 1, 2024, the EV tax credit becomes redeemable at the point of sale. In other words, you can take your federal incentive as a cash discount when you buy your car at the dealership (or online, in the case of Tesla, Rivian, and Lucid).
But before you buy your EV, there’s something you must know. Chances are, you’ll need to get your point of contact at the car dealership a friendly nudge to get this new step completed.
Your Dealer Must Register, Or You’ll Miss Out
Until now, car dealers were nervous about how this EV incentive could play out in 2024. They remember the mess caused by poor planning during the Cash For Clunkers initiative years ago, and feared a repeat. That’s why dealers welcomed this week’s news that the IRS will reimburse them within 72 hours. At least, that’s the plan.
For dealers, this is a game-changer. As Juan Alarcon, president of Car Pros Automotive Group, jubilantly told Automotive News, “Three days is great news.” But, he quickly adds a note of caution, “if they can pull it off.”
For these instant credits to materialize for buyers, dealers have a role to play. Your dealer must be registered on a new platform, IRS Energy Credits Online, in order for you to receive a point-of-sale EV tax credit. Launching by late 2023, this platform will be the hub where dealers not only register but also electronically relay EV sales data to the IRS, receive payments for transferred credits, and file time-of-sale reports.
Once a credit is transferred at the point of sale, dealers have the option to slash the purchase price or hand cash over to the buyer. But remember, the amount has to be the full value of the available credit for the qualifying EV. Buyers will have to sign a statement under penalty of perjury that they understand the eligibility requirements for the EV tax credit, and will have to pay it back if they exceed the EV tax credit’s income limits for the year.
Finally, after a decade of asking for a point-of-sale tax credit, it’s happening on January 1, 2024. However, if you’re buying from a car dealership, you need to check if they’ve registered with the new ‘IRS Credits Online’ system once it’s available.
If you sense any confusion or uncertainty, you can email them this article for further information. Remember, your car dealer must be registered before you can receive the EV tax credit at the point of sale.
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