IRS Fails To Stop Electric Car Tax Credit Cheats


Is your car eligible for a $7,500 green tax break? Maybe. Maybe not. In a new audit report, the Treasury Inspector General for Tax Administration found that millions of dollars in potentially erroneous plug-in tax credits are being claimed for ineligible vehicles on income tax returns—to the tune of $82 million from tax years 2013 through 2017.

“[T]he IRS is allowing individuals to inappropriately reduce their tax liabilities, resulting in the loss of millions in revenue,” says the TIGTA report: Millions of Dollars in Potentially Erroneous Qualified Plug-In Electric Drive Motor Vehicle Credits Continue to Be Claimed Using Ineligible Vehicles. “If controls were in place or the returns had been reviewed, potentially, claims totaling $81.7 million may have been disallowed.”

What’s galling is that back in 2011 the IRS watchdog identified the problem and offered solutions, as Forbes’ Janet Novack reported in “Electric Car Shocker: 20% Of Plug-In And Hybrid Tax Credits Wrongly Claimed.”

It turns out the IRS has been continuing to allow erroneous claims of the plug-in credit as “many of the deficiencies identified still exist,” according to the report. In about 7% of cases that TIGTA investigated, the taxpayers (individuals or leasing companies) were not entitled to credits claimed.

How does the tax break work? For vehicles acquired after December 31, 2009, the credit is worth up to $7,500—that’s a dollar-for-dollar reduction of your tax liability. The idea behind the credit was to encourage individuals and businesses to trade in their gas guzzlers and go green. It applies to 100% electric vehicles as well as plug-in hybrids (cars, SUVs, and trucks can all qualify). The U.S. Department of Energy keeps an official list of eligible vehicles, along with a link to state tax breaks too….Read more>>