Transferring clean vehicle credits: IRS update | MTRS Insight

This month, the IRS unveiled proposed rules for transferring clean vehicle credits after Dec. 31, 2023, an important step for eco-friendly car owners and dealers.

A new way to get clean vehicle credits As a part of the Inflation Reduction Act, taxpayers now have the incentive to acquire qualifying clean vehicles—both newand previously owned. Under certain conditions, these taxpayers will be able to transfer their clean vehicle credits starting January 1, 2024.

Here's what you need to know:

• ?Taxpayers can transfer their clean vehicle credits to dealers who can accept advance payments, according to the IRS.
• ?To take part in this program, dealers need to register through IRS Energy Credits Online.

What's the main benefit for taxpayers? Credit can be transferred to a dealer and the dealer can immediately lower the price.

Pitfalls to look out for: It's important for taxpayers to be careful. Credits might not be allowed if you claim the credit at the dealership but then resell or return the car.

There's a lot of info from the IRS here:

• ?A press release (IR-2023-186) available at: www.irs.gov/newsroom/irs-issues-guidance-for-the-transfer-of-clean-vehicle-credits-and-updates-frequently-asked-questions
• ?Revenue Procedure 2023-33 available at: www.irs.gov/pub/irs-drop/rp-23-33.pdf
• ?93 pages of proposed regulations (Prop. Treas. Regs. §§1.125E-1 through 1.125E-3 and 1.30D-5) available at: https://go.spidell.com/e/837113/2023-22353-pdf/5vztqq/1707740373?h=x12qOonGyR2Gd-p1zl5exjsD4ABHZmxxw_R4oNGLJ1g
• ?Updated FAQs available at: www.irs.gov/pub/taxpros/fs-2023-22.pdf

Our tax landscape is getting more eco-friendly thanks to the IRS's latest measures. These guidelines can help taxpayers and dealers make greener decisions.