IRS Issues Guidance for Transfer of Clean Vehicle Credits and Updates FAQs
The IRS recently issued proposed regulations, Revenue Procedure 2023-33 and frequently asked questions (FAQs) for the transfer of new and previously owned clean vehicle credits from the taxpayer to an eligible entity for vehicles placed in service after Dec. 31, 2023.
The Inflation Reduction Act provides taxpayers with credits for qualified new and previously owned clean vehicles acquired and placed in service during the taxable year. Beginning Jan. 1, 2024, in certain situations, taxpayers will be able to transfer the new and previously owned clean vehicle credits to eligible entities.
The guidance clarifies how taxpayers can elect to transfer new and previously owned clean vehicle credits to dealers who are eligible to receive advance payments of either credit. The proposed regulations and revenue procedure also provide guidance for dealers to become eligible entities to receive advance payments of new or previously owned clean vehicle credits.
The proposed regulations also provide guidance for the recapturing of the credit.
The revenue procedure includes procedures for how a dealer would register with the IRS to be eligible to receive the credit transfers from taxpayers and provides details on the registration process through IRS Energy Credits Online.
It also provides 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. Finally, the revenue procedure provides new information for the timing and manner of submission of seller reports, as well as providing 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.
As a result of this guidance, the IRS updated the FAQs for the clean vehicle credits. Fact Sheet 2023-22 updates FAQs related to new, previously owned and qualified commercial clean vehicles.
The FAQs revisions are as follows:
- 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
These FAQs are being issued to provide general information to taxpayers and tax professionals as expeditiously as possible.