Anyone Else Place Last-Minute EV Orders to Lock In $7,500 Tax Credit?

[MachEZRt1]

Also converted my Fisker Ocean to binding.

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[kennethjk]

If someone can back out and not take the car and suffer only a lost deposit, is it truly binding?

need a lawyer to add their 2 cents. I am sure the IRS will.

 

[Nklem]

I ordered an Ioniq 5 AWD limited Friday. It
Comes in in 3 Weeks. My dealers last 2022. So glad I did. The bill will be signed this week.

 

[RickMachE]

What is it exactly mean to enter into a binding contract? How was that accomplished?

A simple Google search tells you that a binding contract is any agreement that is legally enforceable. A normal car order is not legally enforceable. You cannot make them sell you the car, they cannot make you buy it. They can keep your deposit if it's non-refundable (most are refundable). Therefore, an order would have to be converted to a binding contract, i.e. a sales agreement, where the dealership promises to deliver a car and the customer promises to buy it, and cannot back out. A non-refundable deposit is also not a binding contract. Lawyers, and tax professionals, are going to have an income bonanza with this.

 

[Nklem]

A simple Google search tells you that a binding contract is any agreement that is legally enforceable. A normal car order is not legally enforceable. You cannot make them sell you the car, they cannot make you buy it. They can keep your deposit if it's non-refundable (most are refundable). Therefore, an order would have to be converted to a binding contract, i.e. a sales agreement, where the dealership promises to deliver a car and the customer promises to buy it, and cannot back out. A non-refundable deposit is also not a binding contract. Lawyers, and tax professionals, are going to have an income bonanza with this.

Correct. I had to sign a sale agreement (attached). Hyundai corporate sent correspondence on Thursday to the dealers showing them they had to do this to maintain the rebate before the Bill is signed.

 

[Cm12]

No, you can't claim a tax credit if you don't yet own the vehicle.

That is true under current not but not the soon to be enacted IRA. That’s the problem.

 

[Regulus7]

So it seems we have gone back and forth on the key issue here - namely claiming the $7500 tax credit for 2022 taxes. I agree that the form requires a VIN and date it was placed into service. So as it stands now that form would not allow you to take the $7500 credit on a fisker that you pay $250 deposit as that car would not be delivered until maybe 2024…. Then again the language of the bill says you can claim the credit with a binding order. So basically it’s a $250 gamble to order the fisker and claim the credit in 2022 if they IRS changes the form slightly to accomodate “binding contracts”. So what are the odds of that? In any case I suppose is the fisker worth the gamble? 350 mile range for the “ultra” at $50k. I don’t think you can order the “pear” yet. The elite one is $70k and yoh get the solar roof which is kinda cool.

My Mach e options expires in 2026…. I wonder if the fisker would actually get delivered in 2024…. Maybe 2025. And I bet by then the price would be like $20k more!!

 

[Cm12]

If some one can back out and not take the car and suffer on a lost deposit, is it truly binding?

need a lawyer to add their 2 cents. I am sure the IRS will.

“Binding” is just another word for “enforceable” contract. Offer + acceptance + consideration (money) = contract. The lost deposit is a form of liquidated damages if you back out. Because of poor wording in the IRA, you can back out after you claim the tax credit if you have a contract for a car that won’t be delivered for 2+ years so long as the contract was already signed. So if you do that, you should inform the IRS and properly return the tax rebate, but there is absolutely no way the IRS has the resources to monitor that. They’re not gonna audit the average person’s 2022 tax returns in 2023 or beyond so it really encourages tax fraud. The IRS will try to figure out a form addendum that allows the credit to be taken without a VIN number since many of us won’t have one in 2022. This is a significant change versus the current law.

 

[MachTee]

Correct. I had to sign a sale agreement (attached). Hyundai corporate sent correspondence on Thursday to the dealers showing them they had to do this to maintain the rebate before the Bill is signed.

This form looks very similar to all the car deals I've ever signed. I placed an order for a GV60 and signed this very similar order form. In the signature box, it states that "this order shall not become binding until accepted by dealer". Yes the sales manager and I signed it. The question is, is it enough for the IRS in case they come knocking on your door? Originally I wanted the Advanced trim but no VIN is available. Dealer informed me that he has a Performance VIN, due to arrive in 2-3 weeks. I opted for it and wrote a new order with the VIN written on it. I'm still not sure if this will satisfy the IRS in the event of an audit.

 

[Regulus7]

I just paid $250 for an ocean deposit.

That will be 3 EVs tax credit ! Cha Ching!!!

That solar roof is a nice gimmick and the California mode seems cool.

 

[voxel]

That isn’t how it works! The tax credit will apply to the year in which you actually pay for and take delivery of the vehicle, not the year you order the car. By placing a firm binding order now, I’m simply able to use the existing $7,500 tax credit whenever I actually purchase the EV.

I’m not sure that’s how it works. The transition rule explicitly states that the car will be placed into service before the enactment/signing of the act (i.e Aug 14th 2022 for a car delivered in Feb 10th 2024). The reason for that is because the old tax credit is valid then. I didn’t read that you could use the tax credit in the 2023 or 2024 tax year.

 

[voxel]

Hahaha! How could anyone claim a tax credit for a year when the vehicle hasn’t even been built, paid for, or delivered?! By the end of 2022, I doubt we’ll even have VIN numbers for 2023 EVs we order today! And IRS Form 8936 requires a VIN number.

The bill isn’t suggesting that we’ll all be required to take the tax credit in 2022. That would be nonsensical. Rather, my read is that the bill is using the day prior to the President signing the bill as a “trigger date” for purposes of determining eligibility for the existing $7,500 tax credit. Here's the relevant language:

Anyone having a written binding contract to purchase prior to the date the President signs the bill, "may elect (at such time, and in such form and manner, as the Secretary of the Treasury, or the Secretary’s delegate, may prescribe) to treat such vehicle as having been placed in service on the day before the date of enactment of this Act."

So the IRS will need to promulgate regulations regarding how this will work. One thing is certain: If you don't secure a written binding purchase contract before the President signs the bill, you have zero chance of securing the $7,500 tax credit unless both the purchaser and the vehicle happen to qualify.

In 2024, you basically submit an adjustment to your 2022 taxes after you’ve taken delivery of your Rivian or Fisker. The spirit of this transition rule is for cars almost being sold just before next weeks signing and most will have VINs for the 2022 tax year. It’s Rivians and Fiskers that might be delivered in 2023 that will require 2022 tax readjustment at a later date.

 

[ARK]

Because Ford isn't accepting new orders for the F150 Lightning (except from existing reservation holders), I reserved a 2023 Rivian R1T and immediately converted my reservation to a binding order. That makes $100 of my $1,000 deposit non-refundable ($900 of my deposit remains fully refundable).

Technically, I don’t know how valid these ‘binding orders’ are. Probably the IRS won’t be too strict on challenging them because so many people are doing it, but for it to be a binding order, there needs to be much more at stake than $100 of a deposit.

Like if someone signs a binding order today for a $90,000 EV and the manufacturer cuts the price to $78,000 next year, if it’s a ‘binding order’, the manufacturer should be able to sue the buyer for $12,000 if they back out and have to sell that same vehicle to someone else at the new lower price of $78,000. Because that’s what binding means, you are locked in for better or worse, whether that $90,000 EV sees a price drop to $70,000 or a price increase to $110,000.

Losing a $100 deposit on the other hand and that’s it, no other consequence possible? That’s not a binding order, that’s just a non-binding reservation with a partial deposit lost if the person ordering backs out. Literally how Tesla has run their non-binding ordering this entire time.

Form over substance, but I still think it is unlikely to be challenged by the IRS.

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