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Clean vehicle credits can help car buyers pay less at the dealership

The IRS reminds taxpayers in Tax Tip 2023-123 that new starting January 1, 2024 Taxpayers who buy a qualifying new or used clean vehicle may be able to transfer their tax credits to the dealer in exchange for a financial benefit – such as a lower cost – The IRS then goes onto explain the benefits.

Taxpayers who buy a qualifying new or used clean vehicle may be able to transfer their tax credits to the dealer in exchange for a financial benefit – such as a lower cost – starting Jan. 1, 2024.

Benefits of transferring the credit
Taxpayers can now claim tax credits for new and used clean vehicles they buy during the tax year and, starting Jan. 1, 2024, can transfer that credit to the dealership. This means that the taxpayer who is buying the vehicle can exchange their credit for a financial benefit such as reduced final cost. The financial benefit is equal to the amount of the credit, whether in cash, a partial payment or a down payment.

New information about the clean vehicle credit
The IRS recently issued proposed regulations, Revenue Procedure 2023-33 and frequently asked questions that cover:

  • How taxpayers can transfer clean vehicle credits to eligible dealers.
  • How dealers can register with IRS Energy Credits Online to receive advance payments.
  • How dealers can lose their registration if they don’t comply with the program’s requirements.
  • New details on the timing and submission of seller reports.
  • Updated information for manufacturers on becoming qualified and how qualified manufacturers can submit monthly reports.

Dealers and sellers register by December 1
Dealers and sellers of clean vehicles should register their organizations immediately using the Energy Credits Online tool. The IRS strongly urges sellers of clean vehicles to register by Dec. 1, 2023, to receive advance payments starting Jan. 1, 2024.

For updated clean vehicle credit frequently asked questions related to new, previously owned and qualified commercial clean vehicles, see Fact Sheet 2023-22.

 

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