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Tax Byte

with Jessica L. Jeane, J.D.

IRS Outlines Reporting Procedures for Clean Vehicle Credits

Jessica L. Jeane, J.D.

Jessica L. Jeane, J.D.

VP, Tax Policy & Strategic Partnerships

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The IRS has provided guidance on reporting procedures that manufacturers and sellers must follow for vehicles to become eligible for certain clean vehicle credits under the Inflation Reduction Act (IRA) (P.L. 117-169). The new guidance applies to clean vehicle credits under §30D, the credit for qualified commercial clean vehicles under §45W, and the credit for previously owned clean vehicles under §25E.

So Fresh and So Clean

While Outkast’s hook in So Fresh, So Clean might not have been the first thing to come to mind when reading about clean vehicle tax incentives, I’m not afraid to admit that it was for me. Maybe you’ll catch yourself singing it next time, too. Though that canary yellow ’79 Seville likely won’t be qualifying here, neither will those Monte Carlos and El Dorados, fellas. Tough but fair.

Generally, a maximum credit of $7,500 is available for a qualifying new, clean vehicle placed in service after December 31, 2022, and a business credit of up to $4,000 is available for qualified commercial clean vehicles placed in service after December 31, 2022. Additionally, a credit of up to $4,000 is available for the purchase of qualifying clean vehicles after December 31, 2022.

Written Agreement, Reports

A few of the key reporting procedures outlined in Rev. Proc. 2022-42, released on December 12, are as follows:
  • A manufacturer can become “qualified” by entering into a written agreement with the IRS;
  • Qualified manufacturers must submit frequent written reports to the IRS;
  • Sellers must also send specific information reports to the taxpayer and the IRS; and
  • All reports by manufacturers and sellers must be signed under the penalty of perjury.
Notably, this revenue procedure does not include guidance concerning the critical minerals and battery components requirements under §30D.  Don’t worry. The IRS is expected to issue proposed regulations on the matter in the near future. Additionally, key guidance is still needed for determining whether a vehicle qualifies.

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