The automotive industry is witnessing a shift towards cleaner and greener transportation, driven in part by tax incentives designed to encourage the adoption of electric vehicles (EVs) and fuel cell vehicles (FCVs). For sellers, including manufacturers and dealers, understanding the reporting requirements under the Internal Revenue Code (IRC) Sections 30D and 25E is crucial to make sure buyers can take advantage of the associated tax credits. In this article, we’ll delve into the essential information dealers need to provide at the time of sale and report to the IRS to facilitate the eligibility of vehicles for these tax credits.

Eligibility Criteria Under IRC 30D and 25E

Sellers of electric vehicles and fuel cell vehicles can facilitate tax credits for buyers under IRC Sections 30D and 25E, respectively. Section 30D covers new vehicles, while Section 25E addresses previously owned (used) vehicles. This includes not only traditional dealerships but also manufacturers selling directly to consumers.

Required Information for Buyers at the Time of Sale

To enable buyers to claim the tax credits, sellers must provide specific information at the time of sale. This includes the seller/dealer’s name and taxpayer ID number, the buyer’s name and taxpayer ID number, maximum credit allowable under IRC 30D or 25E, vehicle identification number (VIN), battery capacity, date of sale, sale price, and, for new vehicles, verification that the buyer is the original user.

Reporting to the IRS

Sellers are also required to report information about qualifying clean vehicle sales to the IRS. The deadline for this submission is January 15 of the year following the purchase, with the first reports due by January 15, 2024. The reporting process involves registering the business for clean vehicle credits and subsequently submitting time-of-sale reports directly to the IRS.

Declaration of Accuracy

Each report submitted to the IRS must include a declaration of accuracy, signed by a representative with binding authority from the selling business. This declaration, made under penalties of perjury, asserts that the submitted report is true, correct, and complete. Adhering to this requirement ensures the integrity of the reported information and compliance with IRS regulations.

Referencing Revenue Procedure 2022-42

Sellers should refer to Revenue Procedure 2022-42, titled  “Submission of Information to IRS by Qualified Manufacturers of Clean Vehicles, Previously-Owned Clean Vehicles, and Commercial Clean Vehicles; Submission of Information to IRS by Sellers of Clean Vehicles and Previously-Owned Clean Vehicles.” This document provides comprehensive details and guidelines for the submission of information to the IRS, offering a valuable resource for businesses navigating the reporting process.

For dealerships involved in the sale of electric vehicles and fuel cell vehicles, compliance with reporting requirements under IRC Sections 30D and 25E is not only a legal obligation but also a crucial step in supporting buyers in claiming valuable tax credits. By providing accurate information at the time of sale and adhering to IRS reporting guidelines, dealers can contribute to the growth of the clean transportation sector while ensuring a smooth and transparent process for both buyers and regulatory authorities.