Tax Byte

The IRS guidance drop, which addresses the mechanics of transferring clean vehicle credits from a taxpayer to an eligible entity for vehicles placed in service after Dec. 31, 2023, includes the following: 

• Proposed regulations (REG-113064-23);
• Revenue Procedure 2023-33; and 
• Fact Sheet 2023-22 (FAQs)

Generally, the proposed regulations and revenue procedure provide guidance on how dealers can become eligible entities to receive advance payments of new or previously owned clean vehicle credits, while the proposed regulations address the recapturing of the credit.

Specifically, the guidance package provides:

• clarity regarding the federal income tax treatment of the transferred credit and advance payment for the buyer and the dealer;
• procedures for how a dealer would register with the IRS to be eligible to receive the credit transfers from taxpayers;
• details on the registration process through IRS Energy Credits Online;
• procedures for the revocation and suspension of a registration if a dealer fails to comply with the program’s requirements, and for the establishment of an advanced payment program to eligible entities;
• new information for the timing and manner of submission of seller reports; and
• updated information on submission of written agreements by manufacturers to the IRS to be considered qualified manufacturers and on the method of submission of monthly reports by qualified manufacturers.

Accordingly, the IRS has updated the FAQs for the clean vehicle credits, which includes the following revisions:

• Topic A: Eligibility Rules for the New Clean Vehicle Credit: Updated Questions 1, 2, 4 and 7; added Question 12
• Topic B: Income and Price Limitations for the New Clean Vehicle Credit: Updated Questions 1, 3, 7, 8, 9, 10, and 11
• Topic C: When the New Requirements Apply to the New Clean Vehicle Credit: Updated Question 2
• Topic D: Eligibility Rules for the Previously Owned Clean Vehicles Credit: Updated Questions 1, 2, 3, 7, 9; added Questions 11, 12
• Topic E: Income and Price Limitations for Previously Owned Clean Vehicles: Updated Question 2
• Topic F: Claiming the Previously Owned Clean Vehicles Credit: Updated Questions 2, 3
• Topic G: Qualified Commercial Clean Vehicles Credit: Updated Question 4
• Topic H: Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit: Added Questions 1 through 21
• Topic I: Registering a Dealer/Seller for Seller Reporting and Clean Vehicle Tax Credit Transfers: Added Questions 1 through 17
• Topic J: Seller Report Information for Buyers of New and Previously Owned Clean Vehicle Tax Credits Beginning in 2024: Added Questions 1 through 2

Note: These FAQs supersede earlier FAQs that were posted in FS-2023-08 on March 31, 2023.