[gqxxflip]

Originally Posted by cruiseguys

Well that is great news it would seem. Income limits, price limits, etc wouldn’t apply for a vehicle purchased and delivered before Jan 1 2023, correct?

Correct. Pretty much what TB has said all along. Bill being signed into law today would just require vehicles be made in NA to qualify for tax credit.

Next up is whenever guidance is issued by the Secretary or until 12/31/22 whichever comes first for battery requirements to take effect (hoping it’s 12/31/22)

After that 1/1/23 is when income limits, price caps, and the rest take effect unless you’re one of those who’ve put down a minimum of 5% as non-refundable deposit to make a binding contract prior to bill being signed today then you can partake in transitionary rule.

[espressoo]

I think it's important to read the whole guideline and how each section relates to one another. It seems like the IRS definition of a binding contract is at least 5% deposit or down payment. So are people with pending orders now going to call the dealership and say take more of my money as a non-refundable deposit?

Transition Rule for Vehicles Purchased before August 16, 2022
If you entered into a written binding contract to purchase a new qualifying electric vehicle before August 16, 2022, but do not take possession of the vehicle until on or after August 16, 2022 (for example, because the vehicle has not been delivered), you may claim the EV credit based on the rules that were in effect before August 16, 2022. The final assembly requirement does not apply before August 16, 2022.

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.

[TurtleBoy]

Originally Posted by espressoo

I think it's important to read the whole guideline and how each section relates to one another. It seems like the IRS definition of a binding contract is at least 5% deposit or down payment. So are people with pending orders now going to call the dealership and say take more of my money as a non-refundable deposit? ]

That is what we have been talking about. They aren't going to do anything now, the deadline was yesterday.

[outsidepls]

Originally Posted by espressoo

I think it's important to read the whole guideline and how each section relates to one another. It seems like the IRS definition of a binding contract is at least 5% deposit or down payment. So are people with pending orders now going to call the dealership and say take more of my money as a non-refundable deposit?

Too late for that I'm afraid.

[gqxxflip]

Originally Posted by espressoo

So are people with pending orders now going to call the dealership and say take more of my money as a non-refundable deposit?

Nah. People needed to do that before Biden signed. Unless dealers do some sneaky stuff and back date the contract prior to today, which I doubt.

[zedex636]

So the way I am interpreting this is that any X5 45e (all are assembled in North America) that is paid for and delivered to a customer by 12/31/2022 is eligible for the EV credit of $7,500 under the old rules. No binding contract before 8/16/2022 needed and no need to wait for Secretary guidance.

Also, no MSRP or Gross Income requirements apply.

That is what TurtleBoy has been patiently repeating I think.

[TurtleBoy]

Originally Posted by zedex636

So the way I am interpreting this is that any X5 45e (all are assembled in North America) that is paid for and delivered to a customer by 12/31/2022 is eligible for the EV credit of $7,500 under the old rules. No binding contract before 8/16/2022 needed and no need to wait for Secretary guidance.

Also, no MSRP or Gross Income requirements apply.

That is what TurtleBoy has been patiently repeating I think.

That is correct with the caveat that if the Secretary issues the battery guidance prior to 12/31/22 then it could change. Given the wording in the guidance issued today I would think that is unlikely to happen.

My fingers can now type it without me having to think about it.

[espressoo]

Originally Posted by TurtleBoy

That is correct with the caveat that if the Secretary issues the battery guidance prior to 12/31/22 then it could change. Given the wording in the guidance issued today I would think that is unlikely to happen.

Is this statement considered a "binding contract"?

[TurtleBoy]

Originally Posted by espressoo

Is this statement considered a "binding contract"?

Only with a sizable deposit.

[Jd19]

I highly suggest printing the current IRS guidance to pdf for your records; the IRS updates and removes such guidance without notice sometimes.

https://www.irs.gov/credits-deductions/individuals/plug-in-electric-drive-vehicle-credit-section-30d

[Tall Paul]

If anyone needs the binding contract exemption, I would review your specific state contract law to support your position (many would not require a deposit but there would be a financial commitment). Even with the IRS “suggestions”, I don’t believe the IRS can overcome a valid contract under your states rules. Hopefully, most can get their car before 12/31.

[TurtleBoy]

Originally Posted by Tall Paul

If anyone needs the binding contract exemption, I would review your specific state contract law to support your position (many would not require a deposit but there would be a financial commitment). Even with the IRS “suggestions”, I don’t believe the IRS can overcome a valid contract under your states rules. Hopefully, most can get their car before 12/31.

I think they can add additional requirements but they can't ask for things that are against state law. For instance, in California it is not legal to have a binding contract on a vehicle prior to taking delivery (at least according to most, I don't have a citation for that) so they can't require a binding contract there.

I doubt there are any like this but lets say a state says that a binding contract for a vehicle can be entered into with a minimum $50 deposit. Under IRS rules that would not be considered binding since for tax purposes the limit of damages must be at least 5% of the contract price.

[icantchat]

Still confused about this. What if my car is now in transit and I have paid less than 5% of the price as deposit when I ordered it in July. Will it qualify for the tax credit or not?

[Jd19]

Originally Posted by icantchat

Still confused about this. What if my car is now in transit and I have paid less than 5% of the price as deposit when I ordered it in July. Will it qualify for the tax credit or not?

Yes it should qualify, here is an excerpt from the IRS website:

“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.”

[icantchat]

Originally Posted by Jd19

Yes it should qualify, here is excerpt from the IRS website:

“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.”

But the deposit I have paid is less than 5% of the price. Sounds like it doesn't meet the binding contract requirement based on the binding contract definition under IRS.

[Jd19]

Originally Posted by icantchat

But the deposit I have paid is less than 5% of the price. Sounds like it doesn't meet the binding contract requirement based on the binding contract definition under IRS.

Each state will have different rules for what constitutes a binding contract. Regardless, you do not need a binding contract if you qualify under the other option.

[rennsportny]

I put $1k nonrefundable deposit at a Texas dealership on August 1st for a week 38 build.

The dealer won't budge on a binding contract prior to delivery, a non refundable contract or provide any alternatives leading up to the IRA bill signing.

Then, there's the MSRP Caps of $80k for SUVs, my build came out to $82,270.

Based on the IRS bulletin, it doesn't seem like I'll qualify for the tax credit.

What are your thoughts?

[thebeedubya]

Originally Posted by zedex636

So the way I am interpreting this is that any X5 45e (all are assembled in North America) that is paid for and delivered to a customer by 12/31/2022 is eligible for the EV credit of $7,500 under the old rules. No binding contract before 8/16/2022 needed and no need to wait for Secretary guidance.

Also, no MSRP or Gross Income requirements apply.

That is what TurtleBoy has been patiently repeating I think.

I see it the same way and so does my accountant. I’m going to take it, as long as my truck gets here before 12/31. Personally I think the IRS will be soft of this ruling. For the 6 months between the start of the new tax year.

[TurtleBoy]

Originally Posted by icantchat

But the deposit I have paid is less than 5% of the price. Sounds like it doesn't meet the binding contract requirement based on the binding contract definition under IRS.

You will not need a binding contract since it will be delivered prior to the end of the year when the battery guidance is expected. The binding contract is only for those needing to use the Transition rule.

[TurtleBoy]

Originally Posted by Jd19

Each state will have different rules for what constitutes a binding contract. Regardless, you do not need a binding contract if you qualify under the other option.

Yes but just because a contract is binding by state rules it does not mean it means the requirements of the IRS in order to take advantage of the Transition rule.

[TurtleBoy]

Originally Posted by rennsportny

I put $1k nonrefundable deposit at a Texas dealership on August 1st for a week 38 build.

The dealer won't budge on a binding contract prior to delivery, a non refundable contract or provide any alternatives leading up to the IRA bill signing.

Then, there's the MSRP Caps of $80k for SUVs, my build came out to $82,270.

Based on the IRS bulletin, it doesn't seem like I'll qualify for the tax credit.

What are your thoughts?

If you take delivery prior to 12/31/22 and the Secretary does not issue the battery guidance prior to you taking delivery you will be fine. Nothing has changed in regards to the 45e being eligible for the credit.

[rennsportny]

Originally Posted by TurtleBoy

If you take delivery prior to 12/31/22 and the Secretary does not issue the battery guidance prior to you taking delivery you will be fine. Nothing has changed in regards to the 45e being eligible for the credit.

Thanks!

I emailed my dealer and asked to drop it under $80k MSRP, just in case and inquired about the deadline to get my refundable moolah back.

But, let's hope Pete doesn't issue anything. Otherwise, it'll be back to a regular car for us.