New IRS portal for clean car tax credit to cut price at point of sale
The IRS launched an online portal for sellers and dealers of energy efficient cars to get advance payment of the tax credits within 72 hours of a sale, essentially cutting the price of the vehicles.
Financial advisors and tax professionals should take note of the credit that could help their clients who own auto dealerships or may want an electric or hybrid vehicle. Beginning next year, buyers or sellers of certain qualifying cars can receive a clean vehicle credit of $7,500 for a new automobile or $4,000 for a used one at the point of sale rather than when filling out their annual returns, according to guidance released last week by the IRS and the Treasury Department.
The seller or licensed dealer must register for the new portal to complete the whole process online. The IRS released frequently asked questions and other guidance on the tax credit last month as part of the ongoing rollout of energy efficiency incentives for consumers under the Inflation Reduction Act.
"This special online tool is designed to help dealers and sellers navigate this important new clean vehicle credit and help taxpayers at tax time," IRS Commissioner Danny Werfel said in a statement.
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The law brought $370 billion in tax credits, loans, grants and other incentives aimed at encouraging less usage of fossil fuels to fight climate change. In September, the IRS released information for home builders and real estate developers on how to tap into the energy efficiency home credit.
"For the first time, the Inflation Reduction Act allows consumers to reduce the up-front cost of a clean vehicle, expanding consumer choice and helping car dealers grow their businesses," Chief Implementation Officer for the Inflation Reduction Act Laurel Blatchford said in a statement. "The IRS has focused on streamlining this process for car dealers as part of its commitment to improving service and helping taxpayers claim credits they are eligible for. With the opening of Energy Credits Online, Treasury is ramping up its outreach to car dealers to ensure they are aware of this new opportunity to bring in new customers."
