[Flyboy2017]

Originally Posted by bmwakmg

Maybe this has already been discussed - So I am hearing the dealer can give a Purchase Agreement based on the VIN received (which we can get at 150 stage) - and then use that to claim credit for tax year 2022 in 2023 filing. Is that correct?

I don't think that is correct, but I'm certainly not an expert.

I believe the law and initial IRS guidance started of you had a binding contract in place prior to the law going into effect, which was in August, then you could claim the tax rebate next year under the old EV rebate rules.

A purchase order signed by a customer after the new law was signed would not be helpful.

If you didn't have a binding contract in place before the new law was signed, you may still be able to collect the tax rebate. The criteria for the new tax rebate gets .more narrow over the next few years. You shouldn't have any trouble as long as you take delivery before 2023. Starting in 2023 income and limits and other restrictions will take effect and making some people ineligible.

[TurtleBoy]

Originally Posted by bmwakmg

Maybe this has already been discussed - So I am hearing the dealer can give a Purchase Agreement based on the VIN received (which we can get at 150 stage) - and then use that to claim credit for tax year 2022 in 2023 filing. Is that correct?

As mentioned, that is not correct. Whoever you are hearing that from is misunderstanding the Transition rule which applies to vehicles ordered with a binding contract prior to the signing of the bill into law.

As an aside, a purchase agreement with a VIN likely will not meet the binding contract requirements of the Transition rule and previous/subsequent guidance.

[sdhotwn]

Originally Posted by Flyboy2017

If you didn't have a binding contract in place before the new law was signed, you may still be able to collect the tax rebate. The criteria for the new tax rebate gets .more narrow over the next few years. You shouldn't have any trouble as long as you take delivery before 2023. Starting in 2023 income and limits and other restrictions will take effect and making some people ineligible.

Everything I can find seems to indicate that you can still claim the credit if you have a binding contract (min 5% penalty, or other state law requirements) in place from prior to August 16th even if the vehicle is placed into service after 12/31/22. You just claim the 2023 credit, not the 2022 credit, but by the 2022 qualification rules. So it goes on your 2023 taxes, but the calculation and eligibility is determined by the rules that were in place on 8/15/22.

One of several government FAQ's that allude to that:
https://home.treasury.gov/system/fil...redit-FAQs.pdf

[Flyboy2017]

Originally Posted by sdhotwn

Everything I can find seems to indicate that you can still claim the credit if you have a binding contract (min 5% penalty, or other state law requirements) in place from prior to August 16th even if the vehicle is placed into service after 12/31/22. You just claim the 2023 credit, not the 2022 credit, but by the 2022 qualification rules. So it goes on your 2023 taxes, but the calculation and eligibility is determined by the rules that were in place on 8/15/22.

One of several government FAQ's that allude to that:
https://home.treasury.gov/system/files/136/EV-Tax-Credit-FAQs.pdf

That's correct. I don't think I said anything contradictory to that.

In fact I basically siad exactly what you did and then went on to say that the binding contract isn't even necessary if taking delivery in 2022. The binding contract signed prior to the law going into effect is only needed to claim the rebate if taking delivery next year.

[TurtleBoy]

Originally Posted by sdhotwn

Everything I can find seems to indicate that you can still claim the credit if you have a binding contract (min 5% penalty, or other state law requirements) in place from prior to August 16th even if the vehicle is placed into service after 12/31/22. You just claim the 2023 credit, not the 2022 credit, but by the 2022 qualification rules. So it goes on your 2023 taxes, but the calculation and eligibility is determined by the rules that were in place on 8/15/22.

One of several government FAQ's that allude to that:
https://home.treasury.gov/system/fil...redit-FAQs.pdf

That is correct. In practice though, very, very few people have a binding contract that would met the requirements since binding contracts are not generally used in auto sales prior to delivery, in some states they are illegal.

As an aside, your do not need to have a minimum 5% penalty in order too have a binding contract for the Transition rule. The 5% comes into play when there is a specific amount mentioned, then it must be at least 5%.

[sdhotwn]

Originally Posted by Flyboy2017

That's correct. I don't think I said anything contradictory to that.

In fact I basically siad exactly what you did and then went on to say that the binding contract isn't even necessary if taking delivery in 2022. The binding contract signed prior to the law going into effect is only needed to claim the rebate if taking delivery next year.

Don't think you said anything contradictory either. More emphasizing the situation around 2023 deliveries for anyone with a pre 8/16 contract. May not have been clear to some.

[bmwNewbie2022]

Looks like BMW X5 xDrive45e (PHEV) is included in the tax credit. The only reason it might not qualify would possibly be if the msrp including all the add-on is more than $80K.

https://afdc.energy.gov/laws/electri...for-tax-credit

[TurtleBoy]

Originally Posted by bmwNewbie2022

Looks like BMW X5 xDrive45e (PHEV) is included in the tax credit. The only reason it might not qualify would possibly be if the msrp including all the add-on is more than $80K.

That list is not valid for 2023.

[sdhotwn]

Originally Posted by TurtleBoy

That is correct. In practice though, very, very few people have a binding contract that would met the requirements since binding contracts are not generally used in auto sales prior to delivery, in some states they are illegal.

As an aside, your do not need to have a minimum 5% penalty in order too have a binding contract for the Transition rule. The 5% comes into play when there is a specific amount mentioned, then it must be at least 5%.

I think there's guidance that if the contract itself is not clear or the state doesn't have a specific definition then the non refundable portion must be "substantial" and prior consideration for that has been given precedent at 5%. My contract has a relatively small initial deposit, states clearly it is binding, and has a 5% penalty in addition if I fail to take delivery on the signed vehicle. So just one example of how it can be done.

[sdhotwn]

Originally Posted by bmwNewbie2022

Looks like BMW X5 xDrive45e (PHEV) is included in the tax credit. The only reason it might not qualify would possibly be if the msrp including all the add-on is more than $80K.

https://afdc.energy.gov/laws/electric-vehicles-for-tax-credit

Also household income limit which probably isn't that unusual to be an issue, especially for certain cities and coastal areas.

[TurtleBoy]

Originally Posted by sdhotwn

I think there's guidance that if the contract itself is not clear or the state doesn't have a specific definition then the non refundable portion must be "substantial" and prior consideration for that has been given precedent at 5%. My contract has a relatively small initial deposit, states clearly it is binding, and has a 5% penalty in addition if I fail to take delivery on the signed vehicle. So just one example of how it can be done.

No, that is close but not quite what the guidance says.

[Flyboy2017]

Originally Posted by sdhotwn

I think there's guidance that if the contract itself is not clear or the state doesn't have a specific definition then the non refundable portion must be "substantial" and prior consideration for that has been given precedent at 5%. My contract has a relatively small initial deposit, states clearly it is binding, and has a 5% penalty in addition if I fail to take delivery on the signed vehicle. So just one example of how it can be done.

I think you will be fine. I would claim the rebate. Keep a copy of your original contract just in case you get audited.

As mentioned below, the criteria can be different depending on your state.

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.

Source: https://www.irs.gov/businesses/plug-...30-and-irc-30d

[TurtleBoy]

Originally Posted by Flyboy2017

I think you will be fine. I would claim the rebate. Keep a copy of your original contract just in case you get audited.

As mentioned below, the criteria can be different depending on your state.

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.

Source: https://www.irs.gov/businesses/plug-...30-and-irc-30d

His timing and contract is very suspect, without many more details I would say it doesn’t qualify. Just the fact that he has a 5% penalty says something is off. No one expected the 5% threshold prior to the guidance.

[Flyboy2017]

Originally Posted by TurtleBoy

His timing and contract is very suspect, without many more details I would say it doesn’t qualify. Just the fact that he has a 5% penalty says something is off. No one expected the 5% threshold prior to the guidance.

I hear ya. I just think it's close enough I still might claim it unless further guidance comes out between now and then. The current guidance leaves room for more specific guidance to be released soon.

I am likely being overly optimistic because I don't want anyone who thought they would get the rebate when ordering last summer to miss out based on the current rebate requirements.

Just knowing that the IRS acknowledges what qualifies will vary depending on state regulations makes me optimistic they will not or cannot take the time to sort through everybody's contract to determine if they qualify in each locality... Unless of course one gets audited. Then all bets are off.

The IRS may rely on self reporting to assess whether a binding contract was in place or not. That's a risk people will need to assess based on their own comfort levels until more guidance comes out.

Both Fisker and Rivian were proactive and created buyer agreements they thought would probably qualify, but based on the document I posted it appears those contracts won't count.

The only 100% full proof way to qualify is to take delivery in 2022, which is becoming increasingly difficult in light of production scheduling changes.

I rarely get a accused of being too optimistic, so this is somewhat unusual for me

Im sure I'll get back to my realistic, less optimistic self, soon enough.

[sdhotwn]

Originally Posted by TurtleBoy

His timing and contract is very suspect, without many more details I would say it doesn’t qualify. Just the fact that he has a 5% penalty says something is off. No one expected the 5% threshold prior to the guidance.

Mine is setup specifically as written to be a binding contract, enforceable by Wisconsin contract law. It calls out the 5% clearly in the writing. Has additional signatory line for that. Was also drafted in that window (couple days prior to the 16th) when this all came about and before the law was signed in. It was part of what BMW and some dealers were doing in reaction to guidance received to try to meet the shifting requirements/expectations from the IRS as best they could. Sections off of it attached to give an idea.

[TurtleBoy]

Originally Posted by sdhotwn

Mine is setup specifically as written to be a binding contract, enforceable by Wisconsin contract law. It calls out the 5% clearly in the writing. Has additional signatory line for that. Was also drafted in that window (couple days prior to the 16th) when this all came about and before the law was signed in. It was part of what BMW and some dealers were doing in reaction to guidance received to try to meet the shifting requirements/expectations from the IRS as best they could. Sections off of it attached to give an idea.

Just to be clear, BMW definitely did not do this. The letter from BMWNA's CEO to the dealers a day prior to the signing specifically stated they had no guidance for dealers concerning what a binding contract was.

"The IRA includes a transition rule to address this group. It states that customers who enter into a “written binding contract to purchase” a qualified electric vehicle with their dealer prior to President Biden signing the IRA into law, would still have the ability to claim the credit – even if they take delivery of the vehicle after the signing of the law. This also means that customers with non-binding vehicle orders would lose their ability to claim the EV tax credit. We are working to understand the details of what constitutes a “written binding contract to purchase” and what is required to ensure that customers can qualify."

If you got this, you were very lucky and likely the only person in the country to do so because no one else at any manufacture or dealer was anticipating the 5%. Just look at how this forum and others lit up when the guidance came out.

[sdhotwn]

I was under the impression the guidance was out the week prior to the signing. Don't have a source for that. The snippets are right off my contract. I signed August 15th and requested it on I think the 13th or so. Lucky as heck I guess. I thought it was known and intentional not coincidental.

[TurtleBoy]

Originally Posted by sdhotwn

I was under the impression the guidance was out the week prior to the signing. Don't have a source for that. The snippets are right off my contract. I signed August 15th and requested it on I think the 13th or so. Lucky as heck I guess. I thought it was known and intentional not coincidental.

No, the IRS can't issue guidance until a bill becomes law. The guidance was issued after the bill was signed on the 16th.

[1stbimmer22]

Originally Posted by One Dicey

True, that’s why I’m going to ignore you guys now!

Below did not age well Link referenced below (https://afdc.energy.gov/laws/electri...for-tax-credit) already updated to show 2023 X5 45e.

Originally Posted by One Desi View Post
Please hit “Updated information for consumers as of August 16, 2022” (it’s a link and not the header by the way) on

https://www.irs.gov/businesses/irc-3...vehicle-credit

Read through the page and find a link that says “list of Model Year 2022 and early Model Year 2023 electric vehicles”. You’ll reach this page..

https://afdc.energy.gov/laws/electri...for-tax-credit

I’ve posted these links quite a few times but looks like some people want to live in their own world 🙂.. anyways, bye.. won’t respond anymore..

[Flyboy2017]

Originally Posted by 1stbimmer22

Below did not age well Link referenced below (https://afdc.energy.gov/laws/electric-vehicles-for-tax-credit) already updated to show 2023 X5 45e.

Originally Posted by One Desi View Post

Please hit “Updated information for consumers as of August 16, 2022” (it’s a link and not the header by the way) on



https://www.irs.gov/businesses/irc-3...vehicle-credit



Read through the page and find a link that says “list of Model Year 2022 and early Model Year 2023 electric vehicles”. You’ll reach this page..



https://afdc.energy.gov/laws/electri...for-tax-credit



I’ve posted these links quite a few times but looks like some people want to live in their own world 🙂.. anyways, bye.. won’t respond anymore..

2/3 of the links you just posted don't work.
The first link shows EVs assembled in North America, which isn't pertinent to the discussion.

As has been pointed out, starting in January, vehicles will have to meet specific battery and mineral sourcing requirements, which will prevent the X5 45e from qualifying.

Do you have any links or sources suggesting otherwise?

[TurtleBoy]

Originally Posted by Flyboy2017

2/3 of the links you just posted don't work.
The first link shows EVs assembled in North America, which isn't pertinent to the discussion.

As has been pointed out, starting in January, vehicles will have to meet specific battery and mineral sourcing requirements, which will prevent the X5 45e from qualifying.

Do you have any links or sources suggesting otherwise?

I think you are misunderstanding his post. It was in regards to the OP he was responding to that came on here and was trying to tell all of us that we were wrong and the 45e was not eligible for the tax credit starting August 16th. He was using that first one as "proof" since the 45e was not on it at that point.

[Flyboy2017]

Originally Posted by TurtleBoy

I think you are misunderstanding his post. It was in regards to the OP he was responding to that came on here and was trying to tell all of us that we were wrong and the 45e was not eligible for the tax credit starting August 16th. He was using that first one as "proof" since the 45e was not on it at that point.

Ah I see.