IRS Provides Solution for Dealership Error That Affected EV Owners' Tax Returns

      Cadillac

      A few weeks ago, we reported that the IRS was rejecting certain tax returns of EV owners due to a widespread error by dealerships. Some auto retailers failed to report EV sales to the federal government within the designated timeframe, putting tax credits of up to $7,500 at risk and leaving buyers' tax returns in uncertainty. However, frustrated buyers facing issues with the Clean Vehicle Tax Credit have received positive news from the National Automobile Dealers Association: The IRS has now facilitated a process for dealers to retroactively report 2024 EV sales to eligible clients, as noted by NPR.

      Last year, the IRS established a new portal that enabled dealers to report EV sales eligible for point-of-sale tax credits, simplifying the verification of buyers' tax returns to a straightforward point-and-click procedure. Unfortunately, some transactions encountered problems, primarily related to buyers' IRS form 15400. This form notifies the IRS that the vehicle was eligible for the credit during the purchase and indicates whether the buyer claimed the rebate at the time of purchase (an option not available under the previous system) or intended to claim it when filing their taxes (the standard practice prior to 2024).

      In many instances, dealers did not report these sales within the federally mandated three-day timeframe, leaving buyers in a difficult position when their 2024 returns were rejected due to the inconsistencies.

      To address these issues, the IRS has implemented two measures. First, it has eliminated the three-day reporting requirement, enabling dealers to retroactively report eligible sales. Second, it is working on registering dealers who had not enrolled in the portal initially, setting the stage for their customers to correctly claim their credits.

      While these measures are appreciated, they do not assist customers dealing with unreliable dealerships. Even with the reporting window now open indefinitely, dealers still need to register for the portal and report their customers’ purchases, and the IRS is not equipped to enforce compliance from uncooperative dealerships. In cases where customers were misled, whether intentionally or not, there isn't much recourse available.

      If you're having trouble with your EV credit paperwork, remember that you can always contact the IRS for help at (800-829-1040). There's no better place to find answers than directly from the source!

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