Author Topic: IRS EV tax credit problems  (Read 4542 times)

Richard230

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IRS EV tax credit problems
« on: February 04, 2011, 06:23:26 PM »
According to a short blurb from the AP in my newspaper today: "A Treasury Department inspector general report says that nearly 13,000 taxpayers erroneously claimed about $33 million in credits for plug-in electric and alternative vehicles during the first six months of 2010. The  inspector general says about 20% of the $163.9 million in credits were claimed in error. The report did  not indicate whether or not the taxpayers made the claims out of confusion or purposely took advantage of incentives for which they were not qualified."

Unfortunately, the report did not indicate what mistakes were made in taking the credit. I sure would like to know how so many people managed to screw up their EV credit tax forms. It does seem odd though that so many people have apparently taken this credit. I had no idea so many plug-in vehicles had been sold in 2009, or are there that many people who will just fake the purchase and hope that they don't get caught? That might put the rest of us who actually bought an EV on the IRS hot seat.  Meanwhile........

This is all very timely for me, as I just had my 2010 income tax return prepared today. As it turns out, my tax preparer spent as much time trying to figure out how to interpret the IRS claim instructions and trying to get the IRS computer program to properly enter the 10% credit for the purchase of my GPR-S as she did to prepare the rest of my return. Not only was the IRS form computer program not allowing her to enter the credits where it made logical sense in accordance to the instructions, but Electric Motorsport is not in the IRS database as an EV manufacturer and had to be entered under the category of "other". (I didn't ask if Brammo was in their database, but it probably is as Brammo is a lot more organized than EMS and doesn't try to pretend that they don't actually make electric motorcycles.)

Anyway, she finally was able to fight the program and get the form (hopefully) filled out correctly, but I sure hope I don't get audited because I took this credit.  Completing the IRS EV credit form should be simple, but it apparently is a lot more complicated than it needs to be.
current bikes: 2014 14.2 kWh Zero S, 2011 Royal Enfield Bullet 500 Classic, 2009 BMW F650GS, 2007 BMW R1200R, 2005 Triumph T-100 Bonneville, 2002 Yamaha FZ1 and a 1978 Honda Kick 'N Go Senior.

Kelly Olsen

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Re: IRS EV tax credit problems
« Reply #1 on: February 04, 2011, 07:00:34 PM »
That is really weird. How could that many people get it wrong? Either your car plugs into a wall or it doesn't. But there were probably very few, if any, real plug in cars sold last year except for the NEV's (electric cars that go under 25 MPH.)

And speaking as a former elected politician I can tell you that most government workers do not think it is their job to make anything clear or easy for the public.

Richard230

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Re: IRS EV tax credit problems
« Reply #2 on: February 05, 2011, 04:48:48 PM »
I don't know if this is going to help anyone or not, but here is how my low-cost "tax preparer" (not an accountant) filled out my IRS form 8910 "Alternative Motor Vehicle Credit" claim form.;

 Part 1 "Tentative Credit", Line 1: 2010 GPR-S Electric Motor Sport (a slight error in the company name).  Line 2", date vehicle placed in service: 01/01/2010 (a slight error there too - the date should have been 01/10/2010). Line 8, "maximum plug-in conversion credit amount allowable": $4000 (conversion?)  Line 10, "Tentative credit": $880.

Part II "Credit for Business/Investment Use Part of Vehicle": 0%

Part 111, "Credit for Personal Use Part of Vehicle", Line 16: $880. Line 17: $880. Line 21: $880 (enter on Line 53 of Form 1040)

Now this was a "slam bang thank you ma'am" return. I signed the form without even seeing my return and it got prepared and mailed off within 4 hours. I got my copy dropped off during the late afternoon, so I didn't get a chance to comment on my return before it hit the mail. Still, the credit form was filled out better than the one last year (for my 2008 GPR-S purchase) and I haven't been called on the carpet that one  - yet. So I am making no guarantees that any of this is the correct way to fill out the credit form. And you get what you pay for.   ::)
current bikes: 2014 14.2 kWh Zero S, 2011 Royal Enfield Bullet 500 Classic, 2009 BMW F650GS, 2007 BMW R1200R, 2005 Triumph T-100 Bonneville, 2002 Yamaha FZ1 and a 1978 Honda Kick 'N Go Senior.

protomech

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Re: IRS EV tax credit problems
« Reply #3 on: February 07, 2011, 03:29:05 PM »
http://www.usatoday.com/money/perfi/taxes/2011-02-03-erroneous-electric-vehcile-tax-credits_N.htm

The article links to a pdf report breaking out the discrepancies.

9621 individuals claimed $27.1 million for ineligible vehicles. The IRS has a list of eligible plug-in hybrids, electric vehicles, and "alternative" vehicles (?), anything not on the list was flagged. In some cases these may be legitimate claims that were filed improperly, for example claiming a closed-loop hybrid with an eligible credit as a plug-in hybrid.
129 individuals claimed $2.1 million in multiple credits for a single vehicle.
14 individuals claimed $1.4 million for > 5 vehicles each, the suggestion was that these may be instances of vehicles purchased for small business operations being claimed under a personal tax credit.

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Richard230

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Re: IRS EV tax credit problems
« Reply #4 on: February 07, 2011, 05:56:41 PM »
It looks like my tax preparer used the wrong form. She used the form for a conversion and not the one for a new DOT approved EV.
current bikes: 2014 14.2 kWh Zero S, 2011 Royal Enfield Bullet 500 Classic, 2009 BMW F650GS, 2007 BMW R1200R, 2005 Triumph T-100 Bonneville, 2002 Yamaha FZ1 and a 1978 Honda Kick 'N Go Senior.

Richard230

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Re: IRS EV tax credit problems
« Reply #5 on: February 08, 2011, 09:52:01 PM »
Thanks to Protomech referencing the IRS report (and me reading it) I determined that my tax preparer used the wrong IRS form for the credit for the purchase of a factory-built DOT plug-in vehicle. The form 8910 mentioned above is for the conversion of a IC vehicle to electric. The form to use for the purchase of a new plug-in motorcycle is form 8834. This credit reimburses you for 10% of the cost of your new electric motorcycle, up to a maximum of $2,500. To qualify, the motorcycle must be road legal, registered with the state and placed in service during 2010 (or your tax year), and have a battery pack of 2.5 kW or greater if the vehicle has two or three wheels. This other qualification has got me stumped: "The vehicle must also be a vehicle with 2 or 3 wheels that, according to the manufacturer, has a loaded weight of less than 14,000 pounds"! That is one heavy two-wheeled vehicle! I wonder what they were thinking?

These comments were provided by me from reading the IRS instructions for form 8834. Since I have no accounting or tax preparation experience, don't take my word for any of this information. But at least it should get you going in the right direction. Have fun filling out the form. It is really a relatively easy form to complete. Anyone that bought a Brammo Enertia last year should be sure to take this credit on their IRS tax return.
current bikes: 2014 14.2 kWh Zero S, 2011 Royal Enfield Bullet 500 Classic, 2009 BMW F650GS, 2007 BMW R1200R, 2005 Triumph T-100 Bonneville, 2002 Yamaha FZ1 and a 1978 Honda Kick 'N Go Senior.

Brammofan

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Re: IRS EV tax credit problems
« Reply #6 on: February 10, 2011, 09:20:29 AM »
If anyone needs that form, it is located at:
http://www.irs.gov/pub/irs-pdf/f8834.pdf

Also, I've attached it for your PENULTIMATE convenience. If Congress passes those reforms that change this tax credit into a tax rebate to be received at the time of purchase, that would the ULTIMATE in convenience.
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Brammofan

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Re: IRS EV tax credit problems
« Reply #7 on: February 10, 2011, 09:26:18 AM »
Also, for your records, you should have the letter from the Department of the Treasury to Brammo, certifying the Enertia as an eligible vehicle:

http://www.brammo.com/documents/irs-tax-credit-approval.pdf
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Kelly Olsen

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Re: IRS EV tax credit problems
« Reply #8 on: February 10, 2011, 05:50:58 PM »
Also, I've attached it for your PENULTIMATE convenience. If Congress passes those reforms that change this tax credit into a tax rebate to be received at the time of purchase, that would the ULTIMATE in convenience.

I'm with you on that one. Congress mainly passes tax breaks in the form of credits or deductions because they write the rules for people that are wealthy and want to keep every penny and not have to pay taxes. If they made it a rebate then everybody would be eligible and they don't like the idea that money would go back to the unwashed masses that make less than $200,000 a year.

Here is an example that burns my tail. The two people that own the Los Angeles Dodgers (who are dueling in court over their divorce and ownership of the team) had a 2008 personal income together of 108 million dollars. Because of all their deductions, depreciation and credits, they paid zero income taxes. So a truck driver, teacher or whatever that made $45,000 in that same year paid more in taxes than two wealthy people that made 108 million dollars. An equitable system?

I vote for the rebate.

« Last Edit: February 10, 2011, 05:53:37 PM by Kelly »

webman

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Re: IRS EV tax credit problems
« Reply #9 on: February 10, 2011, 10:14:48 PM »
Kelly:

I'm with you on the rebate.  And don't get me started about the damn tax code that rewards wealth over work....

eric aka webman
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Phantom

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Re: IRS EV tax credit problems
« Reply #10 on: February 11, 2011, 03:17:05 PM »
The letter from the Dept. of the Treasury is helpful. I am filing for my credit now for the 2010 tax year as I put my Enertia in service in 2010.


Richard230

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Re: IRS EV tax credit problems
« Reply #11 on: March 30, 2011, 09:41:24 AM »
For whatever it is worth, in spite of my tax preparer using the wrong EV tax credit form and my inability to locate a Treasury Department approval letter for the EMS GPR-S, I still got the entire 10% credit for the purchase of my GPR-S that I requested in my tax return. Now hopefully, I don't get audited.   :o   The state may be out of money, but the Federal government just keeps on printing the stuff.   ;D
current bikes: 2014 14.2 kWh Zero S, 2011 Royal Enfield Bullet 500 Classic, 2009 BMW F650GS, 2007 BMW R1200R, 2005 Triumph T-100 Bonneville, 2002 Yamaha FZ1 and a 1978 Honda Kick 'N Go Senior.