[Squeak825]

IRS Guidance:

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

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.

If your didn't put down at least 5% as a non-refundable deposit, you do not have a binding contract.

[TurtleBoy]

Originally Posted by Squeak825

IRS Guidance:
If your didn't put down at least 5% as a non-refundable deposit, you do not have a binding contract.

I don't think anyone has gotten a written binding contract since it says the damages can't be limited to a specified amount unless that amount is at least 5%. This is bad in my opinion as folks haven't been putting down non-refundable 5% deposits.

[scLA]

Originally Posted by TurtleBoy

I don't think anyone has gotten a written binding contract since it says the damages can't be limited to a specified amount unless that amount is at least 5%. This is bad in my opinion as folks haven't been putting down non-refundable 5% deposits.

Wow. This is not great... I am curious how one would deal with the fact that "binding contracts" for car orders are NOT ALLOWED in California. I get what the IRS is saying. Less than 5% deposit, may not be a binding contract. Capping damages at just the small deposit amount, may not be a binding contract. But what if entering into a binding contract is simply not allowed in my state. Then what??

[Squeak825]

Originally Posted by slazLA

Wow. This is not great... I am curious how one would deal with the fact that "binding contracts" for car orders are NOT ALLOWED in California. I get what the IRS is saying. Less than 5% deposit, may not be a binding contract. Capping damages at just the small deposit amount, may not be a binding contract. But what if entering into a binding contract is simply not allowed in my state. Then what??

Then nothing, really. You can't do it.

[TurtleBoy]

Originally Posted by slazLA

Wow. This is not great... I am curious how one would deal with the fact that "binding contracts" for car orders are NOT ALLOWED in California. I get what the IRS is saying. Less than 5% deposit, may not be a binding contract. Capping damages at just the small deposit amount, may not be a binding contract. But what if entering into a binding contract is simply not allowed in my state. Then what??

Short of arguing that the IRS is requiring something illegal in your state probably not much that can be done.

[scLA]

Originally Posted by Squeak825

Then nothing, really. You can't do it.

Can the IRS make credits available to residents of some states and not others? I'm not a lawyer but I think there's an interesting legal argument here about putting in a requirement that people do something to qualify for a tax benefit when that something is in violation of state law.

[techwhiz1]

Originally Posted by slazLA

Can the IRS make credits available to residents of some states and not others? I'm not a lawyer but I think there's an interesting legal argument here about putting in a requirement that people do something to qualify for a tax benefit when that something is in violation of state law.

No it can't. The 14th amendment requires equality of taxation and therefore credits for all citizens in like circumstances. The equal protection clause.

So my argument to the IRS requiring what is not obtainable is flawed at it's core and not enforceable. The documentation that I have VIR and term sheet is enough.

I'll argue that if I'm audited. I'm not a lawyer.

[scLA]

Originally Posted by techwhiz1

No it can't. The 14th amendment requires equality of taxation and therefore credits for all citizens in like circumstances. The equal protection clause.

So my argument to the IRS requiring what is not obtainable is flawed at it's core and not enforceable. The documentation that I have VIR and term sheet is enough.

I'll argue that if I'm audited. I'm not a lawyer.

What's the "term sheet" that you have?

[TurtleBoy]

Originally Posted by techwhiz1

No it can't. The 14th amendment requires equality of taxation and therefore credits for all citizens in like circumstances. The equal protection clause.

So my argument to the IRS requiring what is not obtainable is flawed at it's core and not enforceable. The documentation that I have VIR and term sheet is enough.

I'll argue that if I'm audited. I'm not a lawyer.

Can you give the California code concerning binding contracts not being allowed in the state? It would be interesting to see the wording on that versus the guidance.

[scLA]

Originally Posted by TurtleBoy

Can you give the California code concerning binding contracts not being allowed in the state? It would be interesting to see the wording on that versus the guidance.

This relates to car brokers so not 100% the same, but I believe there's similar language for dealers. Basically a sale is not final until the car is delivered.

https://codes.findlaw.com/ca/vehicle...ect-11736.html

[bavarianride]

Originally Posted by techwhiz1

No it can't. The 14th amendment requires equality of taxation and therefore credits for all citizens in like circumstances. The equal protection clause.

So my argument to the IRS requiring what is not obtainable is flawed at it's core and not enforceable. The documentation that I have VIR and term sheet is enough.

I'll argue that if I'm audited. I'm not a lawyer.

My take is that CA has fully refundable deposit, hence there is no binding contract till the car is delivered.

In that context, the IRA applies immediately to all CA residents, equally.

[techwhiz1]

Originally Posted by slazLA

What's the "term sheet" that you have?

Finance term for the loan with down payment and interest rate. Cost of the car with tax and license.

[techwhiz1]

Originally Posted by slazLA

This relates to car brokers so not 100% the same, but I believe there's similar language for dealers. Basically a sale is not final until the car is delivered.

https://codes.findlaw.com/ca/vehicle-code/veh-sect-11736.html

It also relates dealers because dealers act as brokers until they have a car.

When they are taking an order for your car to subit to BMW, they are acting as a broker.

They are broker/dealers.

It's pretty much moot now since the window is closed. We have the documents we have.

We will 8dividually need to evaluate if we are taking the credit and argue the California statute.

[bavarianride]

Originally Posted by techwhiz1

We will 8dividually need to evaluate if we are taking the credit and argue the California statute.

Assuming IRA enactment is immediate, 2022 1040 may ask for a purchase date. If that date is after IRA enactment, then it may ask for which state.

So my guess is that IRS will not allow any $7500, and one needs to argue for $7500 to be refunded after tax is paid in full.

[bavarianride]

Originally Posted by techwhiz1

They are broker/dealers.

That seems to be stretching it a bit.

A broker buys from a dealer, who in turn buys from BMWNA.

A broker-customer relationship is very different from a dealer-customer relationship.

[bavarianride]

Originally Posted by slazLA

This relates to car brokers so not 100% the same, but I believe there's similar language for dealers. Basically a sale is not final until the car is delivered.

https://codes.findlaw.com/ca/vehicle...ect-11736.html

This is a great article, so a CA dealer cannot accept more than 2.5% as deposit, while the IRA requires a minimum of 5%.

Those 2 numbers already excludes any pre-purchase agreement from CA as eligible per IRA, binding or otherwise.

[bavarianride]

I think BMWNA needs to retool Spartanburg for US-spec i4 and future EV productions.

[TurtleBoy]

Originally Posted by slazLA

This relates to car brokers so not 100% the same, but I believe there's similar language for dealers. Basically a sale is not final until the car is delivered.

https://codes.findlaw.com/ca/vehicle...ect-11736.html

I have seen that one already but that doesn't prohibit binding contracts from what I can see. The deposit wouldn't exclude it since you can have a binding contract with unspecific/unlimited damages and meet the Transition rule requirements.

[WABIM66]

How does NA pricing compare to other countries, and how many of those buyers are offered like tax incentives or rebates? IMO those who previously benefitted it was nice while it lasted. Doubt Mackensen will offer any additional pricing incentive with such high demand that we will see any significant surplus of these first editions on their lots, at least through MY24-25 or potential US built releases. It would be nice to have corporate control costs at or near MSRP but that's also a stretch.

[WER2XU]

Please go here and let the IRS know the process is broken.
https://apps.irs.gov/app/sams

[Hank Moody]

Originally Posted by mtech8

So even if a car is built and delivered in 2022. With the signing of the new bill. It no longer qualifies for the tax credit? Did the binding contract need to be signed yesterday or is today still valid?

The "written binding contract" rule only applies to cars delivered after 2022. The old rules apply to cars delivered through 12/31/22 irrespective of contract terms.

[Hank Moody]

Originally Posted by TurtleBoy

Can you give the California code concerning binding contracts not being allowed in the state? It would be interesting to see the wording on that versus the guidance.

Personally, I believe the US Treasury will issue regulations softening the rules, but here's the actual language from CVC 11736(c) cited above:

It is unlawful for any dealer licensed under this article to do any of the following when brokering a retail sale:

(c) Fail to refund any purchase money, including purchase deposits, upon demand by a consumer at any time prior to the consumer's signing of a vehicle purchase agreement with a selling dealer and taking delivery of the vehicle described in the brokering agreement.