IRS Payment Hold Triggers Dealer Alarm as EV Credit Program Concludes | Carscoops

      EV dealers are warning that delays in IRS payments are jeopardizing sales and leaving them financially strained just days before the tax credit expires.

      Typically, dealerships wait only a few days to receive reimbursements for EV tax credits from the IRS. However, as the federal EV tax credit draws to a close, the waiting periods have extended to weeks. The White House has stated that all eligible dealer-paid credits will be reimbursed.

      This week signifies the conclusion of the federal EV tax credit, an event anticipated to impact both buyer expenses and dealership finances. Nonetheless, many dealers have felt the financial pressure weeks ahead of time due to setbacks in the IRS’s approval process, which have delayed reimbursements and caused some to withhold vehicle deliveries until payment is received.

      The majority of eligible used and new EV buyers receive the tax credit as an upfront rebate at the time of sale, usually funded directly by car dealerships after obtaining online approval from the IRS. It is then the responsibility of the IRS to reimburse the dealers.

      Several dealers who spoke to CNBC reported that prior to this month, this reimbursement process typically took just a few days. In contrast, many have now been left waiting for over two weeks without payment from the IRS. For those selling numerous EVs, this can significantly impact their finances.

      Jesse Lore, the founder of Green Wave Electric Vehicles in New Hampshire, mentioned that his dealership is short approximately $100,000 after providing the rebate at sale but has not yet received reimbursement from the IRS. He also noted that around a dozen applications submitted to the IRS since September 15 are still pending.

      "I know for a fact there are dealers who are saying, ‘We’re not doing this anymore. We’re not getting paid,’" Lore informed CNBC. "Others are telling customers, ‘We’re holding the cars, and you can’t take the car home until we receive full payment.’"

      Gary Pretzfeld, co-owner of AutoTrust USA in Florida, shared that he has paid out between $80,000 and $90,000 in rebates and is still awaiting funds from the IRS. A representative from the National Automobile Dealers Association acknowledged the delays.

      "Anecdotally, we’ve heard from some dealers that applications submitted recently have been pending since last week," the spokesperson stated. "NADA has been and continues to communicate with the IRS and the Department of Treasury regarding the portal, and they have been cooperative."

      The cause of the slowdown remains uncertain. Some dealers attribute it to the IRS being overwhelmed with paperwork due to reduced staffing and increased EV sales. Others speculate it could be a deliberate tactic by the previous administration to hinder EV sales.

      An official from the White House reassured that all valid EV tax credits applied for before the September 30 cutoff would be honored and paid. Until that occurs, many dealers will be experiencing significant anxiety.