Electric Car Tax Credit troubles

klaus · Feb 10, 2011

I know this isn't directly related to the Ford Focus Electric, but I thought this forum could still benefit:

The President's push for 1 million electric cars by 2015 is a lofty goal that needed some help. That's why the governement is offering tax breaks as part of the strategy. They've offered incentives to help drum up interest in electric vehicles - incentives for converting a vehicle to a plug in car, or a $7500 tax credit for purchasing a plug-in "electric drive motor vehicle".

The treasury department says that $163.9 million in credits were provided to tax payers for purchases of electric vehicles. Here's the best part: over $33 million of those were claimed in error!

Nissan and Chevy are just starting to mass produce vehicles, and Ford is coming out with the Ford Focus later this year. The treasury department found taxpayers claiming for cars that didn't fit the bill, including Dodge Durango, Hummer H3, and electric golf carts to name a few. There were even 29 prisoners that claimed the credit even though they were behind bars for the duration of 2009!

Apparently some IRS employees had been making the claims and have been referred to the Office of Investigations for further review.

To avoid more electric car tax claim issues the IRS will be making changes to manuals and software to make sure people can't and don't claim vehicles that fail to qualify.

http://news.yahoo.com/s/ap/20110203/ap_on_bi_ge/us_electric_cars_tax_credits

kirayam · Sep 28, 2011

The state and the government as well is really offering tax reduction to electric cars and even to hybrid cars. They're pushing this program so that car owners will buy more energy efficient and eco-friendly type of cars like the Ford Focus Electric

toffty · Oct 3, 2011

I wish the fed and state would stop giving tax reductions. They're pointless for the people who this is suppose to spur into buying these cars. Most middle income families do not owe enough taxes to get the full reduction. It's a travesty.

I really wish these reductions would turn into a cash back check sent from the fed/state after you purchase a car.

redEV · Oct 5, 2011

toffty said:
I wish the fed and state would stop giving tax reductions. They're pointless for the people who this is suppose to spur into buying these cars. Most middle income families do not owe enough taxes to get the full reduction. It's a travesty.

I really wish these reductions would turn into a cash back check sent from the fed/state after you purchase a car.

Your statement may be true for some but not all 'middle class' families as the Fed Tax Credit can be rolled into a lease (purchase not required) but to get the state rebate as well some states (in my case IL) DOES require a purchase, leases don't qualify so yes unless to have at least $7,500 of tax liability you would not benefit from it. What is interesting though is that the Fed is a 'tax credit' while the IL rebate is an actual 'cash back' (you get a check). Just looking at the tax tables; a single taxpayer would need to make $45,500 to have $7,500 of tax liability (not including any other deductions) -- I would think that would be considered 'middle class' unless you're looking at some other income levels ??

http://www.money-zine.com/Financial-Planning/Tax-Shelter/Federal-Income-Tax-Rates/

Gatorman82 · Jul 30, 2012

toffty said:
I wish the fed and state would stop giving tax reductions. They're pointless for the people who this is suppose to spur into buying these cars. Most middle income families do not owe enough taxes to get the full reduction. It's a travesty.

I really wish these reductions would turn into a cash back check sent from the fed/state after you purchase a car.

That is a good point. Even though I will be able to benefit from the full $7500, I'm having to cover it for 7-8 months until I file my tax return....

However, the State of Maryland is offering a tax credit on the sales tax. I think that works well because it means ANYONE can benefit from it, and it will be less effective as the cost of the cars come down. I also hope to get the check soon....

redEV · Aug 3, 2012

This is an old thread but thought I would add something as we've had lots of discussions on the other EV forums, Nissan LEAF in my case ... the bottom line is that the majority of all of these EV's aren't cheap to buy, have somewhat limited range and the majority of driver's out there have no idea what they're all about as well as most new technology is going to more expensive as well --- by offering these incentives at the very least it sparks some interest among prospective car buyers to try them.

It's just like when they did the 'cash for clunkers' deal a few years back, some people complained that all we were doing was getting older cars (albeit less fuel efficient) off the road and some of these could have been sold to those who could only afford used cars and instead they were crushed! The idea behind that incentive was to stimulate new car sales in the auto industry, by having people trade in for more fuel efficiency and lower emission cars, was it successful, somewhat (it got me to trade in a 12 year old minivan!) but at least it stimulated interest by people who may have otherwise waited things out.

In the case of the state level incentives ... these all differ greatly; it took almost 8 full months for me to see anything from IL but they did finally come through. They will also offer the same deal for the FFE (10% MSRP rebate up to $4K) but it's unlikely that they'll offer it for the upcoming C-Max Energi or even the new Prius plug-in because neither of these are extended range EV's (the Volt uses a generator when it runs out of electricity, not a regular gas power plant like the C-Max Energi and PiP - the Volt is included in the IL EPA rebate program) so a potential buyer has to do a lot of research and be in a position to pay a lot up front and wait to file a tax return or get a rebate check; I would agree many simply can't do that.

Now the last point --- although I doubt that it will pass, the Fed Gov (Obama administration) is considering raising the current $7,500 fed tax credit to $10K and changing it to simply be applied back to the new car dealer (similar to the old cash for clunker deal mentioned above) at the time of purchase (not sure about leases but as the old applied the new could as well); this way it wouldn't matter the income level (would also help retiree's or others in low tax brackets) or tax liability of the new owner. Taking $10K off brings the price down to closer to the average of most new car purchases but without educated dealers, etc. don't know if it would help stimulate enough EV sales.