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This will likely not affect Solterra because it's already ineligible on account of its country of manufacture. Only EVs built in North America will be affected, and then only if their battery sourcing would keep them from getting the full $7,500.
IDK - the vibe I'm getting from this is that until there are new rules, old rules apply..But I'm not a tax professional either.
 

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Dave, if I recall clearly, the requirement for North American manufacture was effective immediately with the new tax credit program which was why folks were scrambling to understand what the definition of "binding contract" is in the context of the legislation. This is separate from the battery/materials aspects referenced in the OP of this thread.
 

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I am not a tax professional, however I still plan to file for the credit based on my purchase order with a date prior to August. It’s signed by all parties and see what happens. Very well could owe the money back.
 

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In my opinion, if an audit determines you incorrectly filed & received the credit, you will definitely owe the IRS the $7,500 and likely a penalty plus interest.

My opinion is that anyone who claims a tax year 2022 electric car credit will be flagged as a high audit risk due to the contentious IRA change. I have never claimed an electric car on my taxes, but I suspect you need to list on your return which electric car you are claiming for the credit. Unless there is some miracle, the Solterra absolutely does not qualify without a strong and legally binding purchase contract.

Totally sucks, but that is the reality as I see it.
 

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I suspect the points you made in the above posting are all highly probable, as the tax law changes are currently being interpreted. A change in interpretation may give more hope, but I just don’t see any signifi changes happening… It would be nice if we got an extension, just doubtful…
 

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I'm not trying to scare you (it was slightly fun to look this up) -- just trying to provide information for whatever decision you make on your taxes. Doing a very quick search on IRS audit penalties for underpayment, I found this on IRS.gov:

  • Generally, interest accrues on any unpaid tax from the due date of the return until the date of payment in full. The interest rate is determined quarterly and is the federal short-term rate plus 3 percent. Interest compounds daily. Visit Newsroom Search for the current quarterly interest rate on underpayments.
  • In addition, if you file a return but don't pay all tax owed on time, you'll generally have to pay a late payment penalty. The failure-to-pay penalty is one-half of one percent for each month, or part of a month, up to a maximum of 25%, of the amount of tax that remains unpaid from the due date of the return until the tax is paid in full. The one-half of one percent rate increases to one percent if the tax remains unpaid 10 days after the IRS issues a notice of intent to levy property. If you file your return by its due date and request an installment agreement, the one-half of one percent rate decreases to one-quarter of one percent for any month in which an installment agreement is in effect. Be aware that the IRS applies payments to the tax first, then any penalty, then to interest. Any penalty amount that appears on your bill is generally the total amount of the penalty up to the date of the notice, not the penalty amount charged each month. See Topic No. 202 for information about payment options.

Let's assume you electronically file in April and get the $7500 tax credit soon after. Woohoo! Excellent! I don't know the audit chances, but let's just assume you get a letter in August that says you have been flagged for an audit. You go to your audit in October and the less-than-friend IRS agent says with a frowny face:

1. Nice try.
2. You owe the IRS that $7500 you tried to claim: $7,500
3. It gets better. You owe the IRS interest for your underpayment, which for 4th quarter 2022 is 6% compounded daily. There is a formula to calculate daily interest compounding, but I don't want to look it up and let's keep it simple. $7500 * 6% / 12 months * 6 months = $225 (the actual amount will be larger)
4. And to make your day even better, you owe the IRS a failure-to-pay penalty of 0.5% for each month. $7500 * 0.5% * 6 months = $225
5. You might get a satisfaction survey in the mail, please rate your not-so-friendly IRS agent 0 stars because our bosses don't like it when the tax payers like us.

So assuming the IRS rules that the Solterra does not qualify for the tax credit, anyone who tries to claim it and gets caught will owe the original $7500 plus at least $450 in interest and penalties.
 

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The "old" 2022 credit from prior to Inflation Reduction Act all comes down to the binding contract though I am not a tax accointant. The Solterra has been certified by the IRS as eligible. Form 8936 requires a VIN and a placed in service date. The IRA states in the transition language that if there is a binding contract prior to the date of the enactment, but "placed in service on or after the date of enactment of this enactment of this Act" can claim a placed service date prior to the date of enactment". I am taking delivery this week (2023) and I am going to claim the $7,500 credit on my 2022 tax return. I am not a tax professional, but I know I am right.
 

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I feel for all of you guys (and gals) south of the 49th parallel.
We northerners have had a stable $5,000 off the vehicle (federally) at the time of purchase since - forever.
No income tax requirements, no waiting, no muss, no fuss.
New owners have seen an additional $8,000 (Quebec) or $4,000 (British Columbia) taken off on the provincial level just as simply - if applicable. (Sorry if I missed other provinces).
It's been so easy.
While I understand your government's spirit behind the new regulations, it's painful hearing how it has led to angst for many new (and prospective) owners trying to conform to - and qualify for - under the new incentives
This is not a condemnation of any part of it - just a heartfelt 'Sorry to hear you have to go through all of this' post. We dodged the bullet - and there isn't anything we can do to help you do the same - short of a bunch of you moving to Canada. (That's not a bad thing)
Happy 2023 - I hope it works out for all of you.
And if you do decide to move to Canada, we have lots of outdoors for you to drive your new Solterra 🚗
 

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Yes, and the law stipulates that if you have a binding contract prior to the law being implemented, you can claim a placed in service date of 8/15/ 2022 even if the actual placed in service date is after the implementation of the law. It is spelled out in the law.
 

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@Phisby…

Theres no need to try to convince us what the tax credit rules and regulations are, or how they will be interpreted…

Its the IRS you need to convince as your interpretation being correct.

Even many tax accountants aren’t in full agreement as to what the changes fully mean.

In any case, I wish you good luck…
 

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"I am not a tax professional, but I know I'm right." These types of statements are those made by people who flee the US after owing thousands of dollars in back taxes.

As others have pointed out, that CAN'T be true, because not even tax professionals agree on what "right" is. If it were that easy / obvious, we wouldn't NEED tax professionals. Go ahead and try it, but be prepared for the possibility that an audit would show otherwise.
 

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Yes, and the law stipulates that if you have a binding contract prior to the law being implemented, you can claim a placed in service date of 8/15/ 2022 even if the actual placed in service date is after the implementation of the law. It is spelled out in the law.
"taxpayer may elect (at such time, and in such form and manner, as the Secretary of the Treasury, or the Secretary’s delegate, may prescribe) to treat such vehicle as having been placed in service on the day before the date of enactment of this Act"

I'm seeing a little bit of gray area there. I really hope you're right, but I'm also hoping for more clarification before filing time. And perhaps a specific change to the form to deal with this situation.
 

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Form 8936 can be accurately and honestly completed with the information I have from official primary sources, the Inflation Reduction Act, a May contract with my New York dealer that is a "binding contract", and the IRS website that lists the 2023 Solterra as eligible for the 2022 credit in the amount of $7,500. The weak link in this may be the binding-ness of the contract. It states on the face in its terms that it is "binding". Others may not have contracts that state this (and IRS regulations may come into play) but I have a legal basis for the assertion. But, CTValley, you do you. Your attempt to undermine my sharing by suggesting that I am a "type" of person, is pretty lame.
 

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Form 8936 can be accurately and honestly completed with the information I have from official primary sources, the Inflation Reduction Act, a May contract with my New York dealer that is a "binding contract", and the IRS website that lists the 2023 Solterra as eligible for the 2022 credit in the amount of $7,500. The weak link in this may be the binding-ness of the contract. It states on the face in its terms that it is "binding". Others may not have contracts that state this (and IRS regulations may come into play) but I have a legal basis for the assertion. But, CTValley, you do you. Your attempt to undermine my sharing by suggesting that I am a "type" of person, is pretty lame.
Apologies, I am a person that makes a type of statement. Still lame.
 

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I had not seen the "can claim a placed service date prior to the date of enactment" documented yet - can you put a link to a government site where that is called out?

At the IRS site: Credits for New Electric Vehicles Purchased in 2022 or Before | Internal Revenue Service
I was surprised to see the "and before January 1, 2023" wording since the other sources of info did not have a time limit (but I will have to check again).

Purchase date vs. delivery date

If you entered a written binding contract to buy a vehicle before August 16, 2022, but took possession on or after August 16, 2022, and before January 1, 2023, you may claim the credit based on the prior rules and disregard the assembly requirement.
 
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