[TurtleBoy]

Originally Posted by techwhiz1

I believe you are incorrect.
The equal protection clause of the 14th amendment would be an argument that a benefit offered to one tax payer is impossible to collect by another tax payer with the only problem is that state law won't allow a binding contract.

Also IRS guidance after the fact is irrelevant. The guidance can be applicable moving forward but the constitution also shields us from behavior before a law or guidance.

You can't make something illegal today and prosecute someone for that behavior yesterday. The IRS is also bound by the constitution.

Retroactive tax changes are constitutional. They are done by legislation.

[pjbm4]

Originally Posted by slazLA

I know I'm preaching to the choir, but this was seriously one of the most rushed processes I can remember. In the IRS's defense, they were put in a bind here by the language Congress approved. Why in the world did Congress need to say "written binding agreement" and not just "written agreement" or "ordered before bill enactment date" in the Transition Rule. The language was not well thought out (or maybe it was if the their goal was to limit number of the people getting the credit…).

So the IRS is in a bind trying to enforce the language of the bill Congress passed, but I agree issuing guidance when it was too late to do anything about it is infuriating.

Manchin has never been a fan of EV rebates so I am sure his lawyers conjured the language.

[bavarianride]

Originally Posted by pjbm4

Manchin has never been a fan of EV rebates so I am sure his lawyers conjured the language.

Honestly IRA can simply say transactions must be completed by Aug 15 or else ineligible, but the legislators just align IRA with existing clean energy terminologies and such, that looks like an olive branch to those in the know.

[bavarianride]

Originally Posted by slazLA

So the IRS is in a bind trying to enforce the language of the bill Congress passed, but I agree issuing guidance when it was too late to do anything about it is infuriating.

My friends told me that in the last few months they have gotten calls from local BMW(and Audi and Rivian too?) CAs to pay some down payments(not sure >=5% or not) and sign a purchase agreement, and some of them did pay up and sign.

So many knew about this pending change, and did something about it.

A CPA friend said he and other CPAs are advising clients to follow IRS's 5% guidance, i.e. anything less than 5%(including unlimited damage) will likely trigger audit.

[pharding]

Originally Posted by bavarianride

My friends told me that in the last few months they have gotten calls from local BMW(and Audi and Rivian too?) CAs to pay some down payments(not sure >=5% or not) and sign a purchase agreement, and some of them did pay up and sign.

So many knew about this pending change, and did something about it.

A CPA friend said he and other CPAs are advising clients to follow IRS's 5% guidance, i.e. anything less than 5%(including unlimited damage) will likely trigger audit.

This whole sorry ass situation is grossly unfair. If this becomes an issue after next June or whenever when my i4 m50 or Fisker Ocean Extreme finally arrives, I'll fight it out with the IRS if need be. Once before I had an absurd issue with the IRS, I wouldn't agree to the nonsense, idiotic "interpretation" and I got my congressman involved. He made the problem go away.

[bavarianride]

Originally Posted by pharding

This whole sorry ass situation is grossly unfair. If this becomes an issue after next June or whenever when my i4 m50 or Fisker Ocean Extreme finally arrives, I'll fight it out with the IRS if need be. Once before I had an absurd issue with the IRS, I wouldn't agree to the nonsense, idiotic "interpretation" and I got my congressman involved. He made the problem go away.

Wow so did you spend a lot time to get the "interpretation" resolved? Did u pay tax CPA/attorney to fight for u?

My CPA friend said fighting IRS on $7500 is likely bad ROI on time and energy. It is not like audits on Section 1603's 30% credit of big projects, those clients are willing to fight for the ROI.

I guess one needs to decide if $7500 is worth one's time and energy.

[techwhiz1]

Originally Posted by TurtleBoy

Retroactive tax changes are constitutional. They are done by legislation.

Retroactive laws are done by legislation and are illegal.

Tax changes during the tax year are absolutely legal. Changes done after the filing deadline has passed are not.

[techwhiz1]

Originally Posted by pharding

This whole sorry ass situation is grossly unfair. If this becomes an issue after next June or whenever when my i4 m50 or Fisker Ocean Extreme finally arrives, I'll fight it out with the IRS if need be. Once before I had an absurd issue with the IRS, I wouldn't agree to the nonsense, idiotic "interpretation" and I got my congressman involved. He made the problem go away.

You and I are buying the same vehicles.
The exception is I paid the $5k to be first with the Fisker because we need the delivery due to commute distance and gas prices.

Anyway, I agree. I'll file and wait for the audit.
They may audit me anyway due to stock trades. Who knows. My state doesn't allow dealer deposit more than 2.5% and even then dealers won't take them since they aren't binding. There are no binding contracts except the co tract.of sale where I live.

So my filing for the credit alone based on a California address may trigger an audit.

I'll fight for the $7500 for my M50. The fisker is safe. I gave up $5k non refundable.

[TurtleBoy]

Originally Posted by techwhiz1

Retroactive laws are done by legislation and are illegal.

Tax changes during the tax year are absolutely legal. Changes done after the filing deadline has passed are not.

Only retroactive criminal laws passed by legislation are unconstitutional. Legislation also changes the tax code and retroactive changes are constitutional. In the large majority of times that retroactivity is to the beginning of the current tax year but retroactive tax changes applying to previous years has also been found to be constitutional, hence the Carlton standard.

[bavarianride]

Originally Posted by techwhiz1

So my filing for the credit alone based on a California address may trigger an audit.

It really depends on how 1040 questions are set up, you may not even get to the screen to claim the credit.

A hypothetical question flow:

1. Did u purchase a qualified EV in tax year 2022? yes ....
2. Was your purchase transaction completed before Aug 16, 2022? no ....
3. Were u a CA resident during tax year 2022? yes ....
4. Did u pay any refundable deposit before Aug 16, 2022 for this purchase? yes ....

"Sorry you do not qualify for 2022 IRC 30D credit since you do not have a binding contract per 2013-29".

[techwhiz1]

Originally Posted by TurtleBoy

Only retroactive criminal laws passed by legislation are unconstitutional. Legislation also changes the tax code and retroactive changes are constitutional. In the large majority of times that retroactivity is to the beginning of the current tax year but retroactive tax changes applying to previous years has also been found to be constitutional, hence the Carlton standard.

My bad.

"As early as the 1930s, the Supreme Court has found retroactive tax laws constitutional and subject to a standard that depends upon whether “retroactive application is so harsh and oppressive as to transgress the constitutional limitation.” Welch v. Henry, 305 U.S. 134, 147 (1938)."

Also there is a test.
"A tax is not necessarily in violation of the due process clause because retroactive. In each case, it is necessary to consider the nature of the tax and the circumstances in which it is laid before it can be said that its retroactive application is so harsh and oppressive as to transgress the constitutional limitation. P. 305 U. S. 146."

To prevent long drawn out legal challenges; they normally don't reach back to previous years.

[pharding]

As noted earlier in this thread, I wrote the IRS and I complained about the impossible situation. To their credit I received an email response from a real person in that department. They asked that I call them back to discuss the situation with them. I shall do so tomorrow.

[WER2XU]

Originally Posted by pharding

As noted earlier in this thread, I wrote the IRS and I complained about the impossible situation. To their credit I received an email response from a real person in that department. They asked that I call them back to discuss the situation with them. I shall do so tomorrow.

I got the same today...so it seems like they are listening.

[OUGrad05]

Originally Posted by WER2XU

I got the same today...so it seems like they are listening.

Same here, I will be calling tomorrow

[WER2XU]

Just spoke with Meridith from the IRS...they are aware, they appreciate all our submissions, and the case is being worked. I think this was just a call to let us know they heard.

[pharding]

Originally Posted by WER2XU

Just spoke with Meridith from the IRS...they are aware, they appreciate all our submissions, and the case is being worked. I think this was just a call to let us know they heard.

I spoke with the same person. She did mention that the IRS received numerous protests about this issue. It has been escalated to higher levels in the IRS. She said that she would get back to me discuss this further.

Kudos to those of us that used the IRS online form to protest this random ruling by the IRS. I encourage everyone to use that form to protest this arbitrary, IRS ruling.

[Raille]

That's all encouraging. At this point I'm glad I'm not in production and can kind of wait and see if the credit will be a possibility.

[OUGrad05]

Originally Posted by WER2XU

Just spoke with Meridith from the IRS...they are aware, they appreciate all our submissions, and the case is being worked. I think this was just a call to let us know they heard.

Same here. She was very polite and helpful. I thanked her for the time and consideration and told her I'd look forward to a future discussion.

[cruzer666]

Originally Posted by WER2XU

Just spoke with Meridith from the IRS...they are aware, they appreciate all our submissions, and the case is being worked. I think this was just a call to let us know they heard.

+1, same person, I'll call when I'm back in the states. The hope is they'll extend the credit as is by end of year.

[scLA]

Originally Posted by cruzer666

+1, same person, I'll call when I'm back in the states. The hope is they'll extend the credit as is by end of year.

Same person for me too. I spoke to her and she said she'll report back when she hears more from higher-ups. Who knows if anything will actually change (again, IRS is limited by what IRA says) but there's strength in numbers with us all reaching out so nice work everyone!

[bavarianride]

Originally Posted by slazLA

Same person for me too. I spoke to her and she said she'll report back when she hears more from higher-ups. Who knows if anything will actually change (again, IRS is limited by what IRA says) but there's strength in numbers with us all reaching out so nice work everyone!

It feels that IRS already makes some concession by quoting 5% safe harbor from 2013-29,

E.g. if CVC 11736(c) allows a non-binding brokering(service) agreement to have at least 5% damage(e.g. non-refundable damage), IRS will interpret that as "binding" for tax purpose.

So IRS does show "leniency" towards the strict IRA language.

[paulbazoV2]

Originally Posted by bavarianride

It feels that IRS already makes some concession by quoting 5% safe harbor from 2013-29,

E.g. if CVC 11736(c) allows a non-binding brokering(service) agreement to have at least 5% damage(e.g. non-refundable damage), IRS will interpret that as "binding" for tax purpose.

So IRS does show "leniency" towards the strict IRA language.

They are building a list of persons to audit and everyone calling or complaining are on it