[cruzer666]

Originally Posted by paulbazoV2

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

The complaint process is anonymous.

[Raille]

Updated on website today:

What Is a Written Binding Contract?
In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.

https://www.irs.gov/businesses/plug-...30-and-irc-30d

I'm still unsure if we need to up our payment to 5%, but the downpayment language makes me think our purchase orders qualify. Enough so I think I'd gamble.

[scLA]

Originally Posted by Raille

Updated on website today:

What Is a Written Binding Contract?
In general, a written contract is binding if it is enforceable under State law and does not limit damages to a specified amount (for example, by use of a liquidated damages provision or the forfeiture of a deposit). While the enforceability of a contract under State law is a facts-and-circumstances determination to be made under relevant State law, if a customer has made a significant non-refundable deposit or down payment, it is an indication of a binding contract. For tax purposes in general, a contract provision that limits damages to an amount equal to at least 5 percent of the total contract price is not treated as limiting damages to a specified amount. For example, if a customer has made a non-refundable deposit or down payment of 5 percent of the total contract price, it is an indication of a binding contract. A contract is binding even if subject to a condition, as long as the condition is not within the control of either party. A contract will continue to be binding if the parties make insubstantial changes in its terms and conditions.

https://www.irs.gov/businesses/plug-...30-and-irc-30d

I'm still unsure if we need to up our payment to 5%, but the downpayment language makes me think our purchase orders qualify. Enough so I think I'd gamble.

I see the IRS page was updated today but what changed in the language?

[Raille]

down payment, which while the dates stand, we may be able to get a post dated update to our deposits. The language softened slightly to basically allow outs for states like California. It also implies we should have had this prior to the law change, but there are some tweaks that imply we might be able to go for it.

I'm hopeful, but I would definitely work with your CA and see what BMW has to say if you are unsure.

[bavarianride]

Originally Posted by slazLA

I see the IRS page was updated today but what changed in the language?

I think the 5% is now stated as % of contract price.

[bavarianride]

Originally Posted by Raille

down payment, which while the dates stand, we may be able to get a post dated update to our deposits. The language softened slightly to basically allow outs for states like California. It also implies we should have had this prior to the law change, but there are some tweaks that imply we might be able to go for it.

I'm hopeful, but I would definitely work with your CA and see what BMW has to say if you are unsure.

I don't think the language is softened, it still means either the taxpayer has a contract recognized as binding per state's legislation, or at least 5% damage even if the contract is non-binding.

And the 5% damage needs to be pre-enactment, so post dated update likely will not work.

[scLA]

Originally Posted by bavarianride

I don't think the language is softened, it still means either the taxpayer has a contract recognized as binding per state's legislation, or at least 5% damage even if the contract is non-binding.

And the 5% damage needs to be pre-enactment, so post dated update likely will not work.

I'm not seeing how the language is any better either.

That being said, I'm still not convinced you can't have a binding contract that includes a refundable deposit. You can be bound to the terms of the contract, and the contract have termination provisions, which many contracts do.

I'm not a lawyer so please don't take this as legal advice. I suggest speaking to a lawyer directly about this matter.

[Raille]

Originally Posted by slazLA

I'm not seeing how the language is any better either.

That being said, I'm still not convinced you can't have a binding contract that includes a refundable deposit. You can be bound to the terms of the contract, and the contract have termination provisions, which many contracts do.

I'm not a lawyer so please don't take this as legal advice. I suggest speaking to a lawyer directly about this matter.

To me the "In general" creates the hope for exceptions to the rule. This already existed though and some have disputed this extensively. I think the language changes mostly provided a broader way to allow for the non-refundable portion by terminology. A deposit and down-payment may play out differently in your state.

I'm also going from a devil's advocate standpoint. I am looking at a lot of this from how much of the rule can be disputed and the cost/benefit from the IRS pursuing disputes. I'm an auditor so I'm thinking in terms of odds of being challenged, since explicit interpretation has not been provided yet just educated guessing .

[techwhiz1]

Originally Posted by slazLA

I'm not seeing how the language is any better either.

That being said, I'm still not convinced you can't have a binding contract that includes a refundable deposit. You can be bound to the terms of the contract, and the contract have termination provisions, which many contracts do.

I'm not a lawyer so please don't take this as legal advice. I suggest speaking to a lawyer directly about this matter.

In general a binding contract of any kind would have the ability through penalties to force or compel specified performance. What is the remedy for breach? If I can break the contract and there is no penalty, then it isn't binding.

[TurtleBoy]

Originally Posted by slazLA

I see the IRS page was updated today but what changed in the language?

Nothing was changed in regards to the Binding Contract language, that is as originally issued.

[bavarianride]

Originally Posted by slazLA

That being said, I'm still not convinced you can't have a binding contract that includes a refundable deposit. You can be bound to the terms of the contract, and the contract have termination provisions, which many contracts do.

I am not a lawyer, but if I were in this situation(of holding a non-binding order sheet per CA legislation), I would first focus on IRS's at least 5% damage as an indication of binding.

E.g. if I pay at least 5% of deposit/down payment, and my paperwork clearly states those as non-refundable, I will click yes on the box that ask for bidding contract in turbotax.

If I don't have such document and/or if the deposit/down payment is less than 5%, I will click no on bidding contract.

[TurtleBoy]

Originally Posted by slazLA

That being said, I'm still not convinced you can't have a binding contract that includes a refundable deposit. You can be bound to the terms of the contract, and the contract have termination provisions, which many contracts do. .

You are correct, a non-refundable deposit is not needed to have a binding contact. However it would depend on the language of the agreement as to whether or not it would be binding. For all practical purposes though, it would be highly unlikely that the wording of the contract made it binding yet a refundable deposit was associated with it. I would venture to say that has never happened in regards to purchasing a vehicle.

[Technic]

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, calling tomorrow.

[OUGrad05]

Originally Posted by paulbazoV2

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

[Technic]

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 just finished the call with Meredith, as well... other than asking for my contact information so they can reach back with specific details about the "written binding contract" terms, their single question in particular was about the deposit in my "written binding contract", and whether it is still in my order or if I ever have tried to get it back.

They expect to have specific guidance from IRS management by next week or so.

IMO, keep reporting these IRA issues as it seems to be working.

[bavarianride]

Originally Posted by Technic

.... their single question in particular was about the deposit in my "written binding contract", and whether it is still in my order or if I ever have tried to get it back.

Correct, we(several coworkers and I) came up with this interpretation on 8/17.

We expected that IRS will singularly first focus on 5% non-refundable damage to determine safe harbor rule is met or not.

For tax purpose, IRS will ignore your state's legislation of binding or otherwise once u can prove at least 5% damage.

Originally Posted by bavarianride

My interpretation is that it is a binding contract when damage is clearly stated/written(and signed to acknowledge) as at least 5%.

[Technic]

Originally Posted by bavarianride

Correct, we(several coworkers and I) came up with this interpretation on 8/17.

We expected that IRS will singularly first focus on 5% non-refundable damage to determine safe harbor rule is met or not.

For tax purpose, IRS will ignore your state's legislation of binding or otherwise once u can prove at least 5% damage.

Dude, don't respond to my posts. I can't stand your BS.

[bavarianride]

Originally Posted by Technic

Dude, don't respond to my posts. I can't stand your BS.

No problem, acknowledged.

[TurtleBoy]

Originally Posted by Technic

Dude, don't respond to my posts. I can't stand your BS.

Highly recommend the Ignore function. Unfortunately you still have to see the crap he makes up when people quote him.

[cruzer666]

Originally Posted by TurtleBoy

Highly recommend the Ignore function. Unfortunately you still have to see the crap he makes up when people quote him.

Ignore worked great for me, first time I used the function. I haven't seen anyone as obnoxious on any thread, ever.

It is one thing to make your point and a whole other thing to post the same thing on many threads. It is not inappropriate by any means, just obnoxious.

[watwywen]

Originally Posted by Technic

I just finished the call with Meredith, as well... other than asking for my contact information so they can reach back with specific details about the "written binding contract" terms, their single question in particular was about the deposit in my "written binding contract", and whether it is still in my order or if I ever have tried to get it back.

They expect to have specific guidance from IRS management by next week or so.

IMO, keep reporting these IRA issues as it seems to be working.

Did Meredith ask about %? 5% has never been a practice when placing orders in auto industry and it is just a lousy job from their side to blind apply a prior rule from a different industry, where brokers are also not so much heavily involved I guess.

[Technic]

Originally Posted by watwywen

Did Meredith ask about %? 5% has never been a practice when placing orders in auto industry and it is just a lousy job from their side to blind apply a prior rule from a different industry, where brokers are also not so much heavily involved I guess.

Nothing about how much deposit was placed, only about me asking for the deposit back.

Either they want to know about the consequences of the transition rule (customers cancelling orders because of the uncertainty of the tax credit next year) or trying to know what kind of deposit was placed (refundable, or not).

Regardless, the IRS is listening and something is coming to deal with this mess.