EV Tax Credit Troubles for Some Buyers as Dealers Miss Reporting Deadline
The federal electric vehicle (EV) tax credit, worth up to $7,500, underwent significant changes in 2024. While the updates were intended to make the credit more accessible, some buyers are finding their tax returns rejected because their dealerships failed to correctly report vehicle sales to the IRS.
A line of unsold electric vehicles sits on a dealership lot. (David Zalubowski/AP)
The changes, implemented after the Inflation Reduction Act, allowed buyers to receive the credit as an up-front rebate, significantly simplifying the process for many.
However, the IRS required dealerships to register in a new online portal and use it to report sales. While over 14,000 dealerships complied, some 3,000 did not, including the Santa Fe, New Mexico, dealership where Kristina Meier purchased her plug-in electric minivan in September. Meier, who had diligently researched the requirements, was confident she had followed all the rules.
“I’d read the IRS website,” she said. She even confirmed with the finance representative that the dealership would report the sale to the IRS, as required, and received what she believed to be the correct documentation.
However, when Meier attempted to claim the credit, her tax return was rejected. Despite her due diligence, the dealer’s failure to use the new reporting system meant she couldn’t access the credit.
Steven Barber, a certified public accountant, noted that the IRS and the National Automobile Dealers Association (NADA) had worked to inform dealers of the changes, but that some dealerships still struggled. “Our dealers are not having any issues with it, but it doesn’t surprise me that other dealers are having issues.”
In Meier’s case, the dealership, Lithia Chrysler Dodge Jeep Ram Fiat of Santa Fe, acknowledged the mistake, stating that employees had used outdated paperwork loaded into their computer systems.
Michael Garza, the general manager, said, “It was the wrong form. We’re working to get it resolved for the customer.”
The problem is that the IRS required sales to be reported within three days, meaning it may now be too late to correct the error. Meier’s dealership has since gained access to the portal, but the date of the sale made it impossible to submit the information.
While the vast majority of EV purchases were properly reported, it remains unclear how many buyers have faced a similar predicament. Over one million new EVs were sold last year, but many transactions did not qualify for the credit in the first place. Alison Flores, manager of the Tax Institute at H&R Block, noted that they are seeing more EV credits rejected than anticipated.
Customers are seeking various solutions, including working with the Taxpayer Advocate Service, contacting their representatives, filing paper returns with explanations, and considering legal action. Meanwhile, Flores recommends filing tax returns promptly to address any issues quickly. She also urges prospective EV buyers to secure the discount as an up-front rebate.
Despite her frustration, Meier has no regrets about her purchase. As she noted, “We love the car.”
