[Rubasu]

I received this email from Subaru today concerning the Federal Tax Credit:


"Dear William,

As a Solterra customer, we want to provide you with an update, particularly given the passage of the Inflation Reduction Act (IRA) by the U.S. Congress last week.

This bill includes significant changes to the $7,500 EV tax credit. Immediately upon the President’s enactment of this legislation (expected soon), EVs assembled outside of North America, including the Solterra, will no longer qualify for the tax credit.

The Act includes a transition period that may provide a limited-time opportunity for Solterra customers to qualify for the current $7,500 tax credit. More specifically, customers who have “entered into a written binding contract to purchase” prior to the date of enactment may still qualify for the $7,500 tax credit. As the President is expected to sign the bill into law soon, we wanted to share this information with you. Please be sure to consult with your tax advisor before making any decisions based on this new law or the availability of the tax credit.

We will provide an update when we receive more information regarding the applicability of the $7,500 tax credit.

In addition, you may be aware we have not yet been able to deliver any Solterra vehicles to Subaru retailers because of a recall involving the wheel’s lug bolt. Please know every effort is being made to resolve this issue as quickly as possible, but at the same time we will not sell a car that doesn’t meet Subaru standards. We are committed to providing a safe and reliable vehicle. Nothing is more important to us.

We apologize for the delays we have encountered with the Solterra, but we’re determined to provide a Subaru-level vehicle to you.

As soon as we have new information available about the lug bolt issue, we will share it with you."


Thank you for your patience,
Your Friends at Subaru

 

[n6nl]

A big nothingburger, but at least they are aware of the issue.

 

[JayEM]

A big nothingburger, but at least they are aware of the issue.

That's hardly reassuring!

 

[massolterra]

Huh, I didn't get any such letter and have been bugging my dealership about it but they didn't have any info. I don't have a VIN yet but the last update from a month ago was still that my vehicle should be arriving at port September 14th...

I did sign a purchase and sale agreement so I'm hoping that constitutes a written binding contract even though the dealership has told me that I could get my deposit back if we decided to not purchase it (given that they will have no problem moving it).

 

[Kenfused]

Got the email today. Glad to have received something, even if there is no concrete info.

 

[StevenH]

I'm glad SOA has the stated intention of updating us on the tax credit and lug bolt issue as information comes available. The important thing is they get us a car with Subaru quality. That starts with a reliable and safe remedy to the lug bolt problem before the first customer touches a Solterra, however long that takes.

 

[BoxerPwr]

I know some companies are putting together binding contracts so that the current tax credit will apply when the IRA becomes law. I wonder if Subaru will do the same.

 

[JayEM]

I know some companies are putting together binding contracts so that the current tax credit will apply when the IRA becomes law. I wonder if Subaru will do the same.

Too late now, the bill will be signed into law today.

 

[StevenH]

Too late now, the bill will be signed into law today.

Almost. At 3:30 pm Eastern, the Solterra gets disqualified unless there's a binding contract to purchase, or unless there are waivers.

UPDATE: Oops, you're right. The binding contract has to be in place the day before the date of enactment. Too late for that.

 

[JayEM]

Almost. At 3:30 pm Eastern, the Solterra gets disqualified unless there's a binding contract to purchase, or unless there are waivers.

No, the "binding contract" would have to be DATED BEFORE 8/16. So once business closed yesterday, it was too late - absent waivers, exceptions and/or extensions.

 

[StevenH]

No, the "binding contract" would have to be DATED BEFORE 8/16. So once business closed yesterday, it was too late - absent waivers, exceptions and/or extensions.

Yep. I caught that and updated it in my post before you responded.

 

[Ahello]

Truly unfortunate - Dealers will not enter into a binding contract when they dont have the vehicle on the lot. The 500$ deposit and order confirmation does not qualify as a binding contract. While I am not happy, I do understand that a dealer would not enter into a binding contract when they do not have the item they are trying to sell, as a binding contract binds BOTH parties to fulfill their obligation. Oh well, yet another Federal Government attempt to help, turns out to be good media but a farce for those of us doing the right thing.

 

[FelineFreddie]

I disagree with the statement one must have the vehicle on the lot before entering into a binding contract.

Non-existing products are sold every day that are done by enactment of binding contracts, which are required by producers before manufacturing the item(s) described in the contract. Conditions and exceptions are common, and many in the legal profession will tell you a non-refundable deposit constitutes a binding contract.

Think about it… if the item has to pre-exist before a binding contract can be constituted, then there could never be a binding contract for any type of service, since the servicing hasn’t been performed yet.

In the end, it really doesn’t matter how any of us define a binding contract. It’s how the Treasury Department/IRS define it for tax rebate purposes.

 

[Ahello]

I disagree with the statement one must have the vehicle on the lot before entering into a binding contract.

Non-existing products are sold every day that are done by enactment of binding contracts, which are required by producers before manufacturing the item(s) described in the contract. Conditions and exceptions are common, and many in the legal profession will tell you a non-refundable deposit constitutes a binding contract.

Think about it… if the item has to pre-exist before a binding contract can be constituted, then there could never be a binding contract for any type of service, since the servicing hasn’t been performed yet.

In the end, it really doesn’t matter how any of us define a binding contract. It’s how the Treasury Department/IRS define it for tax rebate purposes.

Valid points Mr Feline, and apparently some car manufacturers are getting creative and doing binding contracts - some even just giving their customers 7500$ credits, but Subaru will not budge. - I guess all of the new IRS employees will be busy this coming tax season scrutinizing claims and determining how to interpret the tax codes

 

[massolterra]

My dealership just called me. Literally at 3:29pm, moments before the bill signing ceremony is set to begin, to tell me they heard back from SoA saying that there is some precedent suggesting a non-refundable deposit of 5% of the vehicle's price would be needed to constitute a written binding contract. I told him, this is why I called as soon as the initial bill text was released, because we would have needed to make any changes yesterday. I've already got $1,250 down on it (1k to the dealership, 250 to SoA) and a signed purchase and sale that says it is binding once the dealership signs it (they did in May), even though it omits the VIN since that's unavailable...I guess we'll have to wait and see.

 

[FelineFreddie]

What I’m am anticipating is a more liberal interpretation of “binding contract” by the Treasury Department, based on the fact that only one senator (of the 50 that voted for the bill) insisted on ZERO changes to the legislation or a “nay” vote…. and no legislation. To pass the bill, a single person out of ~320 million practically had total control over content.

But, since, as they say, “the devil is in the details”, (and this may end up being just wishful thinking on my part), the Treasury Department has latitude in determining how to interpret what constitutes a binding contract… there will be pressure exerted by the EV industry (and the eco-climate proponents) not to immediately 100% chop off the EV industry at the knees.

While the Treasury Department/IRS can’t modify the actual effective dates, they may be amenable to more flexible rules (which they do determine) on the tax rebate issue.

I have no more information than anyone else on this topic, so like everyone else, it’s a wait and see thing.

 

[teknickal]

Huh, I didn't get any such letter and have been bugging my dealership about it but they didn't have any info. I don't have a VIN yet but the last update from a month ago was still that my vehicle should be arriving at port September 14th...

I did sign a purchase and sale agreement so I'm hoping that constitutes a written binding contract even though the dealership has told me that I could get my deposit back if we decided to not purchase it (given that they will have no problem moving it).

I haven't received anything either, wouldn't have known about the letter if I hadn't seen it posted by others. Judging by your name, are you a fellow Masshole? If so I'm assuming it's because Subaru New England has a distribution channel separate from SoA.

 

[massolterra]

I haven't received anything either, wouldn't have known about the letter if I hadn't seen it posted by others. Judging by your name, are you a fellow Masshole? If so I'm assuming it's because Subaru New England has a distribution channel separate from SoA.

Yup...and huh, I did not know that about Subaru New England... makes sense why I didn't get the letter either.

 

[FelineFreddie]

I found this on the IRS.gov website referring to what determines a binding contract as it relates to the new tax credit legislation…. Also, note the last paragraph… Future Guidance.

If the IRS sticks to the literal text as written below, we’re all pretty much screwed…

Vehicles Purchased and Delivered between August 16, 2022 and December 31, 2022
If you purchase and take possession of a qualifying electric vehicle after August 16, 2022 and before January 1, 2023, aside from the final assembly requirement, the rules in effect before the enactment of the Inflation Reduction Act for the EV credit apply (including those involving the manufacturing caps on vehicles sold). If you entered into a written binding contract to purchase a new qualifying vehicle before August 16, 2022, see the rule above.

What Is a Written Binding Contract?
In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.

Future Guidance
To reduce carbon emissions and invest in the energy security of the United States, the Inflation Reduction Act of 2022 significantly changes the eligibility rules for tax credits available for clean vehicles beginning in 2023. The Internal Revenue Service and the Department of the Treasury will post information and request comments from the public on various existing and new tax credit incentives in the coming weeks and months. Please look for updates on IRS.gov and other announcements from the Administration

 

[Rubasu]

According to an article in Consumer Reports that was released tonight (Aug. 15, 2022) the Solterra and the bZ4x will not qualify for any Federal Tax breaks UNLESS manufacturing is moved to the USA. It's my understanding that Toyota is manufacturing both vehicles in Japan.
EVs Qualifying for New Electric Tax Credit - Consumer Reports