Clean Vehicle webinar –February 13, 2024 So, again, I want to welcome you. We're so glad you're joining us today for our webinar. So before we move on with our session, let's just make sure that you're in the right place. Today's webinar is entitled Inflation Reduction Act: New and Used Clean Vehicles, Dealer Registration, Time-of-Sale Reporting, Advanced Payment Registration, and Permission Management. Now, the webinar is scheduled for about 75 minutes from the top of the hour. I think I said 60 minutes earlier, but we want to give a little more time for the Q& A, which we know many of you will have. So let me introduce our presenter. We're very fortunate today to have my colleague Roy Chaney. Roy is a Senior Stakeholder Liaison with the Communications and Liaison Division of IRS. Roy services the greater Los Angeles area. He has a Bachelor of Science degree in Business Administration from the University of San Francisco. And Roy brings over 33 years of IRS experience to the Stakeholder Liaison role by way of prior positions in customer service, in exam/collection offer in compromise, and field collection. And also joining us today to answer your questions will be Laura Schmitz. Laura is a subject matter expert on all areas involved with the Clean Vehicle Credits. So with that, Roy, I'm going to turn the microphone over to you to begin the presentation. And the floor is all yours, Roy. All right. Thanks, Rich. So in today's agenda, we will review some disclaimers, the IRA overview, the time-of-sale reports, the Clean Vehicle Credit under Internal Revenue Code 30D, the Clean Vehicle Credit under Internal Revenue Code 25E, transfer elections and advanced payments, other considerations, and then following up with IRS resources, questions and answers, and then the closing. So under the disclaimers, this deck provides an overview of certain Inflation Reduction Act tax provisions for general informational purposes only and is not itself a tax guidance. The content in this presentation is based on a revenue procedure and a notice of proposed rulemaking and other tax guidance on IRS.gov. This presentation relies on simplifications and generalizations to convey high-level points about IRA tax provisions. Treasury and the IRS will carefully consider feedback submitted during the public comment period for proposed and temporarily regulations before issuing final rules. So please refer to the guidance issued by the IRS for detailed information on the rules associated with the IRA tax provisions. So, now, let's share an IRA clean vehicle overview. So in discussing the overview, the Inflation Reduction Act, or IRA, makes the largest investment in clean energy in the United States history, and much of that investment is delivered via tax incentives. Eligible buyers may be able to claim a tax credit of up to $7,500 for purchasing a new clean vehicle and up to $4,000 for a previously-owned clean vehicle. And information about eligible vehicles is available at FuelEconomy.gov. And for vehicles placed in service January 1, 2024 or later, dealers must register with the IRS Energy Credits Online and use the tool to electronically submit time-of-sale reports. Continuing with the overview, an initial user authorized to represent the dealership should promptly register. Buyers will not be able to claim a clean vehicle tax credit if the dealer has not registered and does not successfully submit a time-of-sale report to the IRS Energy Credits Online. IRS Energy Credits Online will accept or reject submitted time-of-sale reports from the registered dealer in real time, including checking the VIN for each time-of-sale report against a list of eligible VINs manufacturers will provide the IRS. Buyers and dealers should receive online confirmation of a successfully submitted time-of-sale report before the final sale. Now, continuing again with more of the overview, as of January 1, 2024, buyers can choose to transfer a Clean Vehicle Credit to a registered dealer in exchange for an equivalent reduction in the purchase price of the vehicle. That means eligible buyers can get money upfront for buying a clean vehicle rather than having to wait to claim the credit on their tax return the next year. The transfer is treated as a down payment, reducing the amount financed or final cash price, not a reduction of the negotiated purchase price. When a buyer transfers a tax credit, registered dealers must provide certain disclosures and receive attestations from the buyer. Continuing with more overview, the IRS will pay registered dealers electronically, typically within 72 hours after the 48-hour void period, for elected transfer clean vehicle tax credits. Register dealers are not required to verify a buyer's income. Register dealers are required to inform buyers of income requirements since the buyer is responsible for repaying the full amount of any transferred credit when they file their tax return if they exceed the income limitations for the tax credit. Now, let me share information on the time-of-sale report for 2023. So for vehicles placed in service within calendar year 2023, sellers must file reports within 15 days after the end of the calendar year, for example, January 15 of 2024. Now, the IRS extended the due date sellers must provide these reports until February 15 of 2024. You may submit copies of your seller reports provided to eligible buyers via fax to the fax number 855-755-7437. So continuing with vehicles placed in service within calendar year of 2023, sellers or dealers may also submit individual seller report copies of the Form 15400 or equivalent forms containing all required data the seller or dealer used in calendar year 2023. Sellers or dealers that used reasonable alternatives to Form 15400 in providing the required seller reports to buyers do not need to prepare the information in the Form 15400 format. So, now, let's talk about the time-of-sale reports for 2024 and later. So vehicles placed in service in the calendar year 2024 and after, the sellers must submit all reports through IRS Energy Credits Online within three calendar days of the date of sale. And they must also provide the buyer with a copy of the accepted seller report submitted to IRS Energy Credits Online within three calendar days of the date of submission. So continuing with the time-of-sale reports for 2024 and later, vehicles placed in service within calendar year 2024 and after continued IRS Energy Credits Online provides real-time confirmation of a vehicle's eligibility using VINs provided by manufacturers, and the IRS strongly recommends this submission occurs prior to finalizing a sale and when the buyer places the vehicle in service. Dealers and sellers may submit the seller report to IRS Energy Credits Online within three calendar days of the time-of-sale. Rich, I'll hand it over to you to share some answers on a couple of common questions. Well, thank you, Roy. Yeah, we do have a couple of early questions that have come in, so I'd like to tee these up for our subject matter expert, Laura. So the first question, Laura, one of the attendees is asking, is there a list of vehicles that qualify for the new Clean Vehicle Credit? Hi, thank you, Rich and Roy. Yes, there is a list of the mixed models. The Department of Energy hosts a purchaser-friendly version of the IRS list of eligible clean vehicles, including the battery-electric, plug-in hybrid, and the fuel cell vehicles that qualifying manufacturers have indicated to the IRS meet the requirements to claim new Clean Vehicle Credits, and that list is on FuelEconomy.gov, and there's no space between fuel and economy. It's FuelEconomy.gov. This list is updated as manufacturers provide updated information. You can go right to FuelEconomy.gov/new tax credit, verifying the manufacturer's suggested retail price, final assembly, or then specific vehicle information may be necessary for certain makes and models. And this is referenced in our FAQs that we have on IRS.gov. Final confirmation of vehicle qualification is done at the time of purchase when you're working on that time-of-sale report, the seller must provide and when you're working on that time-of-sale report, so when you're entering in the vehicle identification number, if it will come back as successful on that screen, if it is one that the manufacturer has submitted as eligible for that particular credit. Rich? Well, thank you, Laura. And the audience will have much more to say on the time-of-sale report a little bit later. So, Laura, here's an interesting one on the tax consequences for the credit, if any. So how are the transfer tax credits from the buyer of the vehicle, the eligible vehicle, back to the dealer or seller, how are these treated for tax purposes both from the perspective, I guess, first of the dealers who are getting the advanced payments and then for the buyers? For the dealers, the advance payments received by the registered dealer are treated as monies received from the buyer. For example, the car negotiated price is $50,000. The buyer elects to transfer the eligible credit to the registered dealer. The sale price is still $50,000 with $7,500 coming from the IRS on behalf of the buyer. And the buyer is paying and/or financing the balance. For tax purposes, there is a sale of $50,000, when the $7,500 is received, such payment is treated as repaid by the buyer to the registered dealer as part of the purchase price of the vehicle and, therefore, is treated as included in the total amount received for the sale transaction. For the buyer of the vehicle, the payment made to the registered dealer on behalf of the buyer from the IRS. The amount that the dealer pays or provides to that buyer is a cash payment or can be a down payment or partial down payment depending on what the buyer has requested. This is not included in income from the buyer. Such payment is made is treated as an advanced payment on the credit to the buyer on behalf of the IRS. And under federal tax return, the buyer is still required to elect the credit on their tax return and is required to report the transfer election information. And so that's one important thing. They still have to report that credit on the election to claim that credit on their tax return and they will be reporting the transfer election information in addition to that. Rich, back to you. Thank you, Laura. Great last point. So for these 2024 advanced payments where the buyer is electing to transfer the credit, they will have to on their 2024 tax return filed next year, fill out a form which we'll look at later to show that they made that election. Great, great information. Thank you, Laura. So, Roy, let me turn it back over to you to drill down a bit on the Clean Vehicle Credit under 30D. Thanks, Rich. I appreciate that. So let's explain the Clean Vehicle Credit under IRC 30D. The IRA made several changes to the code for new qualified plug-in electric vehicles or fuel cell vehicles. Eligible vehicles may qualify for a tax credit of up to $7,500. The vehicle requirements are gross vehicle weight rating of less than 14,000 pounds; final assembly must be in North America; minimum battery capacity of 7 kilowatt hours; and vehicles must be made by a qualified manufacturer. Now, continuing with clean vehicles under IRC 30D, the vehicle requirements, manufacturer suggested retail price limitations apply, based on the type of vehicle, $80,000 for vans, sport utility vehicles and pickups, and $55,000 for other vehicles. Income limits apply to taxpayers. $300,000 for joint filers, $225,000 for head of households, $150,000 for all other taxpayers. Taxpayers can use modified adjusted gross income for year in which the vehicle was purchased or for year immediately preceding year of the purchase. So continuing with the Clean Vehicle Credit, again, under 30D vehicle requirements. For vehicles placed in service on or after April 18, 2023, the credit amount will depend on the vehicle meeting the critical minerals requirement. Maximum credit of $3,750 and/or the battery components requirements, which is a maximum credit also of $3,750. And if a vehicle meets both of those requirements, the maximum credit remains at $7,500. So, now, let's talk about seller requirements under Clean Vehicle Credit, the Internal Revenue Code 30D. Sellers must provide reports to the buyer and the IRS regarding the sale of the vehicle on which include the names and taxpayer identification numbers of the seller as well as the buyer, the vehicle identification number of the new clean vehicle, battery capacity of the new clean vehicle, and verification that the buyer is the original user of the new clean vehicle. Continuing with seller requirements under the Clean Vehicle Credit, again, under Internal Revenue Code 30D, the date of the sale and the sales price of the vehicle, the maximum credit allowable for the new clean vehicle being sold, and for sales after December 31, 2023, the amount of any transfer credit applied to the purchase. Now, I will cover previously-owned clean vehicles under Internal Revenue Code 25E. So for previously-owned clean vehicles under Internal Revenue Code 25E, the purchase of an eligible previously-owned clean vehicle with the sales price of $25,000 or less may qualify for a tax credit of 30% of the sales price up to a maximum credit of $4,000. In order for the previously owned vehicle to qualify, the sales price must be $25,000 or less, which includes the dealer-imposed costs or fees, but does not include any separate financing, extended warranties, insurance, and separately-stated taxes, as well as fees required by the State or Local law. Again, continuing with previously-owned Clean Vehicle Credit under 25E, the model year of the vehicle must be at least 2 years earlier than the calendar year in which a taxpayer acquires the vehicle. The gross vehicle weight rating must be less than 14,000 pounds, and the battery capacity must be at least 7 kilowatt hours. The vehicle must not have already been sold as a used vehicle after August 16 of 2022 based on the vehicle history reports. So, let's move to previously-owned Clean Vehicle Credits under 25E for the buyer requirements. Under the buyer requirements, the modified adjusted gross income limitation can be based on the tax year in which the vehicle is purchased or the tax year immediately preceding purchase of the qualified vehicle. For joint filers, it's $150,000. For head of household filers, it's $112,500. And for all other filers, again, $75,000. So, let's continue with buyer requirements for previously-owned Clean Vehicle Credits under IRC 25E. The buyer is not the original owner. Purchase of the vehicle was for personal use and not for resale. The buyer cannot have claimed another used Clean Vehicle Credit in the 3 years before the purchase date. And the buyer cannot be claimed as a dependent by another taxpayer. So, now, I'll talk about seller requirements for previously-owned Clean Vehicles Credit under Internal Revenue Code 25E. Previously-owned Clean Vehicle Credits under Internal Revenue Code 25E seller requirements, you must be one a licensed dealer, and a report with required information to the buyer and IRS at the time-of-sale will contain the following: The name and taxpayer's full identification number of the dealer are entered; the taxpayer identification number, or TIN, is truncated on the form, so only the last four digits are displayed; the name and full taxpayer identification number of the buyer is entered. And, again, the form will only display the last four digits and also added in the vehicle identification number. So, let's continue with seller requirements for previously-owned Clean Vehicle Credits under Internal Revenue Code 25E. So a report with required information to the buyer and IRS at the time-of-sale will contain: One, the battery capacity; the sales price of the vehicle; the date placed in service, or placed in service date; and the maximum credit allowable for that particular VIN. So, now, Rich, I believe you have some other common questions for Laura at this time. I do indeed. Thank you, Roy. So, Laura, here's a question that we in stakeholder liaison hear frequently about credits. Particularly, is this new Clean Vehicle Credit refundable or able to be carried forward? And let me just explain for those who aren't fully familiar with refundable. Refundable means that if a particular credit exceeds the tax liability of the taxpayer, the balance can be refunded. And carry forward means that if it's a non-refundable tax credit, the remainder after being used against the current tax could be carried forward to another year. So Laura, is the new Clean Vehicle Credit either refundable or able to be carried forward to another tax year? Hi. Thank you, Rich. The new Clean Vehicle Credit can be claimed to the extent of reported tax due of the buyer, and it cannot be refunded. The new clean vehicle, both the new clean and the used clean vehicle, cannot be carried forward to the extent for personal use on the Form 1040 Schedule 3. However, it's a new Clean Vehicle Credit for business purposes. Then it can be carried to the extent that it's claimed for business use on Form 3800, which is the general business credit form that businesses attached to their tax return. And I just want to give an example, if I buy a used clean vehicle, I'm an individual and I meet all the requirements and my tax liability, I have X amount and $10,000 in taxable income, but I only have $1,000 in tax liability. When it comes down to it, even if I have a $4,000 credit, I only receive the benefit of $1,000. I don't get a refund of the other $3,000 and it doesn't carry forward. That is the same for the new Clean Vehicle Credits. But to the extent that it's used for business purposes and it's claimed as a business expense - it's used for business, then the credit is allowed on $3,800, which does allow the carrying of the credit. Rich? Thank you, Laura. That's very helpful information So, Roy was just discussing the previously-owned Clean Vehicle Credit under 25E. So, Laura, the question coming in is how will I know if a previously-owned clean vehicle may be eligible for that credit? Well, first of all, I would start by looking at the brand and models that are eligible for the used clean vehicle on FuelEconomy.gov, and you can go to FuelEconomy.gov/usedtaxcredit. And I would see if that vehicle is listed there, and they have some other additional very helpful information there on, what's eligible and what's not eligible? The vehicles, it was mentioned before, Roy mentioned, the sale price has to be $25,000 or less. Sometimes we've been asked a key question with regards to the $25,000. Does that $25,000 include delivery costs and everything else? And yes, it does. But it doesn't include the sales taxes, financing charges, and everything that Roy had mentioned. The model year must be at least 2 years earlier than the current calendar year. So if I'm purchasing that vehicle in 2024, the model year has to be 2022 or older. And it can't have already been transferred to a qualified buyer after August 16 of 2022. So for dealers, that means you need to check car facts and stuff like that, as it's been already transferred to somebody else as a used vehicle. And it must be primarily for use in the United States. And the VIN has to have been reported as eligible by a qualified manufacturer. So if you come across a used vehicle that you're thinking, Hey, this should qualify, one of the key things is the qualified manufacturer has to report it as being an eligible VIN. As Roy mentioned, for the buyer themselves in order for the buyer to qualify, they must not have claimed a used vehicle credit in the 3 years preceding the purchase date. And if the individuals adjusted gross income cannot exceed certain limits that Roy had mentioned earlier. Thank you, Rich. Well, thank you, Laura. So, Roy, let me turn it back over to you to begin discussing the dealer's transfer rules. All right. Thanks, Rich. I appreciate that. The IRA's dealer transfer rules allow individual buyers to get the benefit of the new Clean Vehicle Credit and previously-owned Clean Vehicle Credit at the point of sale. So for buyers to be eligible to elect to transfer a credit, starting January 1, 2024, the dealer they purchase an eligible vehicle from must first have completed the Advanced Payment Registration on IRS Energy Credits Online and receive their advanced payment Dealer Registration ID. So dealer transfer rules continue. So to provide clarity and certainty to individual buyers, the registered dealer will provide buyers with required disclosures as part of the credit transfer and electronic time-of-sale submission process, and confirmation that the vehicle they're buying is eligible for credit via a time-of-sale report. The guidance proposes rules regarding who is an eligible buyer to elect to transfer the credit to the dealer and under what circumstances such buyers may have to pay back some of the transferred credit. The guidance also provides clarity regarding the federal income tax treatment of the transferred credit and advanced payment for the buyer and the dealer. So, let's continue with the dealer transfer rules. So, again, under dealer transfer rules, dealers generally will be in the same positions as if no credit transfer or advanced payment occurred. Eligible buyers may transfer the full value of the new or previously-owned vehicle credit regardless of their individual tax liability, and the payment made by the registered dealer to the consumer is not includible in the gross income of the buyer. So, now, I will discuss the dealer registration process. So under the dealer registration process, the IRS published a Clean Vehicle Registration User Guide that walks through each step of the dealer registration process. An individual rep of the dealer or seller who is currently authorized to legally bind the dealer or seller with the IRS can complete the registration using IRS Energy Credits Online. Registration is initially limited to one authorized official per dealership. The initial user will be able to authorize additional users to submit time-of-sale reports on behalf of the dealer. So continuing again with the dealer registration process, registration is initially limited to one authorized official per dealership. The initial user will be able to authorize additional users to submit time-of-sale reports on behalf of the dealer or the seller. To complete registration, the IRS will validate the personal identity of your individual rep as a program integrity measure. The IRS uses ID.me, a technology provider, to provide identity verification and sign-in services. If you have an ID.me account, just sign in. Don't create a new ID.me account for the dealership. If you're a new user, have your ID ready. You'll verify your personal identity, not your dealership's information at this step. So continuing with the dealer registration process, you will then be able to create an IRS Clean Energy business account. You need the dealership's name, the EIN, the bank account, and the routing numbers, dealer state license, if it's applicable, and associated proof of license. You will also include your name as the authorized official, mailing address, phone number, and email information. Dealers may choose to register only to submit required time-of-sale reports or to also receive advance payment for transferred clean vehicle credits. A registration ID is provided to the dealer once the IRS has validated the registration information. Continuing with more dealer registration process. First, if you have an ID.me account, simply sign in. If you do not have one, you'll need to create a new account. Personal identity verification is required. So have your personal identification ready, not your business information. Your personal information used to create your ID.me account will not be shared with the dealership or the seller. So, continuing with the dealer registration process, click Start Authorization for clean energy business account authorization to create your clean energy business account. You will need to register the entity by providing the relevant business information such as the EIN, mailing address, and the bank account information if the dealership wishes to register for advance payments. Once registered, dealers and sellers will be able to submit time-of-sale reports and register to obtain a registration ID to receive advanced payments. To submit time-of-sale reports to the IRS, click on Go on your Dealer Registration homepage. So, Rich, I'll turn it over to you to provide some answers to some more common questions the audience may have. Well, thank you, Roy, and thank you for discussing the dealer registration process. Before I give, Laura, a couple of questions involving dealer registrations, I just want to point out, in the resources today, our Communications and Liaison division has created Publication 5867, Clean Vehicle Dealer and Seller Energy Credits Online Registration User Guide. This is well worth looking at if you haven't looked before, and I'm speaking specifically to dealers who are registering on ECO, because this guide has screenshots of each step in the registration process. So Laura, yeah, we have several questions here I'd like to get to before I turn it back to Roy. First question is, may a buyer claim the new or previously owned clean vehicle tax credit if the dealer or seller of that vehicle is not registered with the Internal Revenue Service? Hi. Thank you, Rich. No, the starting with vehicles placed in service January 1 of 2024 or later, buyers will only be able to claim credit if the seller has registered with the IRS and successfully submit the seller report through the IRS Energy Credits Online. The submission is done at the time-of-sale through the IRS Energy Credits Online portal and the seller must provide a copy of the successfully submitted seller report to the buyer. Rich? Thank you, Laura. So the next question is an interesting one and I've seen it before. What is the difference, if any, between a dealer registering for seller reporting and registering for the advanced payment program? Is there a difference, Laura? Thank you, Rich. Yeah, there is a difference. Registration to submit seller reports will allow the dealers, sellers, the ability to submit seller reports to the Energy Credits Online when selling eligible vehicles. This does not include the ability to receive advanced payments. A completed registration for the advanced payment program granted the dealer the ability to submit seller reports when the selling a vehicle and submit a request for the advanced payment to the IRS. For the advanced payment program, one of the underlying requirements is that only licensed dealers may register to receive advanced payments. And when your advanced payment registration is completed, you receive a specific advanced payment dealer registration number. In addition to being a licensed dealer, you cannot have any tax compliant - you have to be fully tax compliant. That means all returns or forms are up to date on filing and there isn't any balance due on any particular account. Thank you, Rich. Great information, Laura, and thank you for clarifying the distinction between registering for time-of-sale reporting and registering for the advanced payment program. And one final question before we turn it back to Roy. Is the dealer required to register for both the seller reporting and the advanced payment? No, if somebody just doesn't want to worry about the advanced payment program, they can just register for the seller reporting. Anybody that's doing the advance payments, they'll be registering for the seller report first. That's the first step of registering for the advance payment program, but if somebody just wants to register for a seller reporting, they can do that. And Laura, am I correct that only licensed dealers can be registered to receive advance payments? That is correct. And as I mentioned before, yes, for the underlying requirement for registering for advance payments is that the seller registering must be a licensed dealer, and they must also be tax compliant in order to register for advance payments. Thank you, Rich. Thank you very much, Laura. Great information. So, now that we've talked about registration, let's turn it back to Roy to talk about the time-of-sale reporting. Roy? Thanks, Rich. So, yeah, let's go over time-of-sale reporting. Once your business has completed registration, you will be able to complete new vehicle time-of-sale report under Internal Revenue Code 30D; you'll be able to complete the used vehicle time-of-sale report under Internal Revenue Code 25E; submit your time-of-sale report; and the primary user will also be able to approve, deny, or manage users associated with the dealership or the seller's business accounts. So continuing with the time-of-sale report, starting in 2024, all qualifying new and used clean energy vehicles must have a time-of-sale report submitted to IRS, and a copy must be provided to the buyer. IRS Energy Credits Online first requires general information be entered. This includes the Vehicle ID Number, or the VIN, the taxpayer identification number, and the buyer's name. The buyer's name must match Social Security records. So let's move on to more time-of-sale reporting. In completing the vehicle information, the second step is completing the vehicle information. This includes the date of sale, the date vehicle placed in service, which might be different than the date of sale, model year, battery capacity, and sales price. This information should match the provided manufacturer's details regarding the specific VIN reported. If the buyer does not choose to transfer their credit to the dealer, you will indicate a transfer credit election was not made by clicking the radio button. Continue with time-of-sale reporting, and completing the vehicle information, the dealer will also read and make an attestation, under penalties of perjury that the information entered in the time-of-sale report is true to their knowledge. The attestation is made via checkbox, which acts as an e-signature. If a credit transfer to a dealer with an advanced payment registration ID is elected by the buyer, additional fields will need to be completed as discussed in later slides. So, now, let's talk about some buyer elections. So, under the buyer elections, the buyer has the option to elect the Clean Vehicle Tax Credit. They may elect it on their personal tax return using Schedule A, attaching Form 8936; or they may elect to transfer of the credit to the dealer with an advance payment registration ID before the purchase is completed. They still report the election on their personal tax return, but also report the transfer of the credit. So, continue with buyer elections, after the vehicle information has been completed, the buyer will need to decide if they elect to transfer the credit. The dealer will need to make an original use attestation and an attestation, under penalties of perjury, that the information entered in the time-of-sale report is true to their knowledge. Both attestations are made via separate checkboxes that will act as an e-signature. The dealer will receive confirmation of the qualified credit amount. After this step is completed, if the buyer makes the election, the dealer with an advanced payment registration ID will then move forward to claim the advanced payment. So, now, let's talk about the advance payment. Under the advance payment, the vehicle and credit amount will be auto-populated from previous input. The dealer with an advance payment registration ID will be responsible for providing verification of the buyer's information. The buyer will read and make an attestation via checkbox and type their first and last name acting as an E-signature that they agree to the buyer's terms of the agreement. After the buyer and seller information is correctly input, there is an opportunity for review. Moving on to report submission. After the information is submitted, you will receive verification of a successful submission. After this, you will need to download the report to view the PDF copy. The information will auto-populate. After you verify the dealer, vehicle, the buyer, and credit information, the time-of-sale is successfully submitted, a copy can be then downloaded. Provide the buyer a copy of the time-of-sale report, which will be needed to complete their personal tax return. You can void a time-of-sale report up to 48 hours after submission. Advanced payment should be deposited into the bank account within 72 hours after the 48-hour void period. If completed correctly and timely, the dealer will receive verification of the void report. Advanced payments will only be made to accounts provided by the dealer or the seller during registration. It cannot be sent to another account. The tool will store both successfully submitted and voided time-of-sale reports. So, now, I'll cover some other qualified vehicles. So the buyer still has the option to directly receive the CEV credit on their personal tax return or transfer to the seller for the advance payment. Publication 5867, Clean Vehicle Dealer and Seller Energy Credits Online Registration User Guide is available with examples and step-by-step instructions. Both dealer and seller used vehicle under IRC 25E time-of-sale report needs certain used clean energy vehicles are eligible to receive a CV tax credit. A time-of-sale report is also required for qualified vehicles. The system follows the same path as new qualifying vehicles. The credit dollar amounts available are reduced for used CV. So, let's review important considerations for transfer elections. So under important considerations for transfer elections, as of January 1, 2024, buyers can choose to transfer their new or used Clean Vehicle Credit to a dealer with an advanced payment registration ID in exchange for the credit amount to be used as a payment towards the cost of the vehicle. The dealer must provide the buyer with certain required information and must also submit a time-of-sale report containing buyer and vehicle information to IRS Energy Credits Online. So, let's continue with important considerations for transfer elections. Information and disclosures the dealer must provide under important considerations for transfer elections include the following: potential repayment to the IRS; a copy of the submitted time-of-sale report to IRS Energy Credits Online and confirmation the report was accepted. Buyers will need this report when filing their tax return. If a buyer transfers a credit, but exceeds modified adjusted gross income limitations in both the year the vehicle is placed in service, and the prior year, the buyer must repay to the IRS the full amount of any transferred credit when they file their tax return. To claim the credit, the buyer will file Form 8936 Clean Vehicle Credits with their tax return. Because time-of-sale reports are accepted in real time, buyers can rely on the information submitted to and accepted by the IRS regarding the vehicle's eligibility. So, now, I'll talk about identity verification. So under identity verification, all users will need to verify their personal identity. The IRS uses ID.me, a technology provider, to provide identity verification and sign-in services. If you have an ID.me account, just sign in. Don't create a new ID.me account for your business. If you're a new user, have your government issued photo identification ready. Verify your personal identity, not your business information, with ID.me. Register your dealership to enable credits for clean vehicle buyers, and that can be found on Internal Revenue Service, IRS.gov. So, let's cover the IRS Energy Credits Online functionality. So users can register an organization to use IRS Energy Credits Online functionality for one or more of the following types of tasks, clean vehicle dealer or the seller, and that's to submit required time-of-sale reports and request advance payment for tax. Clean vehicle manufacturer and that's to enter qualified manufacturing agreements and submit required periodic reports and clean energy elective pay or transfer election entity or semiconductor manufacturers and that's to request registration numbers for clean energy tax credits or as a semiconductor manufacturer. So, now, I will discuss the initial user registration. So under the initial user registration to register, please visit IRS.gov/Clean Energy for more information. The first user to register on behalf of an entity will be assigned as a Clean Energy Officer for the entity. This user has the access to all IRS Energy Credits Online functionality for the entity. This includes the ability to authorize additional users and assign permissions governing what IRS Energy Credits Online functionality subsequent users may have. This user must be currently authorized to legally bind the dealer or seller with the IRS. So continuing with initial user registration for any subsequent users to gain access to IRS Energy Credits Online functionality, the first user to register on behalf of an entity must first authorize each subsequent user's access. The first user can approve additional users with a Clean Energy Officer role. Any user with the Clean Energy Officer role in IRS Energy Credits Online can modify or revoke permissions for any user associated with the entity, including the first user. So, now, let's talk about any additional users. So once the first user has created an account for the organization, share the link with additional users who should have access to IRS Energy Credits Online. Each additional user will need the following to create an account associated with the entity: An ID.me account is needed to verify the user's identity. Use an existing ID.me account or have government issued photo identification ready to create a new ID.me account; the entity's EIN and the entity's name as shown on the most recent tax return; and their title within the organization. So continuing with additional users, so to notify the appropriate user of the authorization request, once the new login account and account creation request is submitted, notify the appropriate individual in your organization that you submitted a request. Authorized users can review the request in the Manage Business Users tab of the entity's account. To receive authorization, a Clean Energy Officer for your entity will need to approve the request in IRS Energy Credits Online. And under the user roles, the users who are responsible for managing an entity's users and assigning permissions, for example, the Clean Energy Officers, should pay close attention to the roles assigned to other users in their organization. All Clean Energy Officers have access to all IRS Energy Credits Online functionality. But things to keep in mind when you're adding users. Clean vehicle dealers or sellers should generally assign employees who need access to submit time-of-sale reports and/or request Advance Payment Access the dealer or seller role. So, let's continue with user roles and things to keep in mind when you're adding users. So some things to keep in mind when adding new users, users assigned the dealer/seller role can't manage other users' permission. Clean vehicle manufacturers should generally assign employees who need access to submit periodic reports. So, next, I'll share some clean energy vehicle tax credit resources that we have. So under the clean energy vehicle tax credit resources, we have Publication 5867, Clean Vehicle Dealer and seller Energy Credits Online Registration User Guide. Publication 5867-A, which is the Clean Vehicle Time-of-Sale Reporting User Guide. For email for questions, please email IRS.clean.vehicles.dealer.info@ irs.gov. And dealers are strongly encouraged to sign-up to receive updates from IRS e-news subscription. Please select e-news for business and sign-up for e-news for the clean vehicle industry. So, now, I'll pass it to Rich to start the question-and-answer session. Rich, I'll turn it over to you. Thank you, Roy. Great information you shared with us today. So I'm going to bring back my colleague, Laura Schmitz. Laura, as I mentioned, is the technical subject matter expert for the Clean Vehicle Credit. And, Laura, you and I have discussed previously, and I know you've gotten questions, and I know you want to address leases. And we have two questions that came in. One question simply asked, is the credit available for leases? And then the second question is, do lease vehicles qualify? And then a third question on leases, can the 30D credit, that's the credit for new clean vehicles, be applied to a lease? If so, does the lesser need to transfer it, lesser transfer it to the lessee? So can you give us a little background on how leases impact these credits, Laura? Hi. Yes, for leases, as you guys are aware, especially with the dealers, as you're aware, if I walk into a dealership and I lease a vehicle, it's the lessor, it's the finance company that owns, that actually takes title of the vehicle. It is the finance company, or in the case of a lease, the one that's actually leasing the vehicle to me that it's actually takes ownership of that vehicle and that vehicle is titled in their name. As such, they are the owner of the vehicle and they are the ones that can actually elect to take the credit. Businesses cannot do - under 30D, a business could actually, if the vehicle is eligible for a 30D credit, they could actually claim the credit under 30D on their tax return, and that is done just like everybody else, they could do it as 30D, but they cannot elect to transfer the credit as individuals could actually do. If the business wanted to claim the credit under 30D, a time-of-sale report would be required. In general, though, we're seeing that they'll be claiming the credit under commercial Clean Vehicle Credits, which do not require a time-of-sale report, and that is done, again, on Form 8936, Schedule A, but that particular credit, commercial Clean Vehicle Credits do not require a time-of-sale report, so the dealer would not need to submit a time-of-sale report for the lessor in the lessor's name and et cetera. I'm just trying to make sure I covered, did you mention like three different questions, Rich? So, even if I walk into a dealership and I end up leasing a vehicle and the lessor of the finance company is saying, Hey, I'm giving you the benefit of the credit by having your lease payments be lower, the leasing company is still the one that's getting the credit. They're just reducing my lease payments, so that's how I'm benefiting from it, but I do not, the person that's leasing the vehicle does not get the credit, they don't get a time-of-sale report, they don't get to claim the credit on their tax return or anything like that, and there's nothing in the statute that allows for them to split it with us or anything like that. The benefit that they're giving us is they're giving the people leasing the vehicle is by providing lower lease payments. But that is at their discretion. But it's the finance company, the leasing company that actually claims to credit on their tax return. Does that answer all of that, Rich? I think it did. And just for everyone's awareness, Laura mentioned the commercial Clean Vehicle Credit under the Inflation Reduction Act, and that's we did not discuss that today, it's 45W, but we do have frequently asked questions on IRS.gov that go into the requirements for that commercial Clean Vehicle Credit. So a couple of questions on the registration process, Laura. Who at the dealership should complete the initial registration on behalf of the dealer or seller of the clean vehicles? The individual representative for the dealership, the dealer who is authorized to legally bind that dealership, to bind the dealer in these matters, can complete the initial registration through the Energy Credits Online. That is who would be the one. Okay, great. And just as a refresher, again, what information is required for dealers registering? The dealer should be prepared to account for the business information, including the business with EIN, address, phone number, and email. Also, if the dealer is a licensed dealer and not just a seller, they should also have the dealer's license number and actually a picture of it that they can upload when they're registering. They should have that available. And if they're registering for advanced payments, they're going to need to be able to provide the bank's routing number and the bank account number for that dealership. Great. And, again, I would remind everyone of the user guide, Publication 5867, in your resources today that should help some of you for the registration process. Laura, is there a separate registration for used and new clean vehicle sales, separate dealer registration? No, there is not. And we recognized that a lot of states have - a lot of states, I think all of them, and you get dealers who would know this better than I would. My understanding is that states will, even though you have one brick-and-mortar building, they'll require a separate new vehicle dealer license and besides the used vehicle dealer license. But only one registration is required for, you don't register separately and everything else. It's based on filing of a tax return. So if you have a couple of brick-and-mortar dealerships and they all file on one tax return, one 1120, one partnership or one S corporation return, that would be one registration for even if it's multiple brick-and-mortars file on that, they combine all their income together and everything else for that return. That would be one registration. And I would pick the license like the dealer license that most represents like, Hey, this is the one for that particular address instead of picking one of the other ones and that would just maybe help in the process and everything else. In addition, because I know I've seen, I saw a bunch of the email registrants that are the tax accountants and everything else that are probably trying to make sure that they're assisting their dealers as much as they can. If I'm filing a consolidated 1120 corporate return and each one of those fully owned subsidiaries, they're filing their own return on that consolidated return. Each one of those subsidiaries can file their registers separately, because they actually file a return where they report their own income and expenses, et cetera, separately. So that is for, I'd say that for the benefit of the tax people that are on this webinar. Thank you, Laura. And we only have time for one quick question involving tax compliance. So an attendee is asking, why did my dealership receive a tax compliance error? I mentioned this a little bit earlier, when we had some questions. If you have a filing requirement for a form and you haven't been filing it or if you owe any money on any of your accounts and everything else, you're not in tax compliance, you're not in compliance, and those issues need to be resolved before you can register for an advance payment, be fully registered for the advanced payment program. That is required. And Laura, I know we have a set of FAQs for dealers in registration and they have a phone number for those who are getting that tax compliance error and let me give that phone number if I may. It's 877-968-3413. So if you have any questions during the registration and get a tax compliance error, you can call 877-968-3413. Thank you so much, Laura - oh, go ahead. There's one other one that I saw a couple of times. And this is in the FAQs. And I strongly recommend that dealers and the tax representatives go to the FAQs that we have. But one of the questions that a lot of dealers have is, we have demo cars or cars that we let the clients try out and everything else. But we never have them titled in our name. When we sell that car, it might have 100 miles on it or 200 miles on it, but the vehicle was never titled, that new vehicle was never titled in the dealership's name. Is that considered a new vehicle? And the answer is provided in the FAQs. And the answer is yes. So I just want to put that out there. And so, as far as what is, it's FAQ number eight, I just want to put that out there. So the dealers who have asked that question, which is a commonly asked question, that is, like I said, question number eight for eligibility of new clean vehicles. And so I strongly recommend that you go to the FAQs. Thank you, Rich. Thank you, Laura. So Roy, let me bring you back briefly to summarize the key points that you shared with the audience today during your presentation. Thank you, Rich. I do have several key points I'd like the audience to remember. Eligible buyers may be eligible to claim a tax credit of up to $7,500 for purchasing a new clean vehicle and up to $4,000 for a previously-owned clean vehicle. For vehicles placed in service January 1, 2024 or later, dealers must register with IRS Energy Credits Online and use the tool to electronically submit time-of-sale reports. Buyers will not be able to claim a clean vehicle tax credit if the dealer has not registered and does not successfully submit a time-of-sale report to IRS Energy Credits Online. Other key points, as of January 1, 2024, buyers can choose to transfer a Clean Vehicle Credit to a registered dealer in exchange for an equivalent reduction in the purchase price of the vehicle. The transfer is treated as a down payment reducing the amount financed or final cash price, not a reduction of the negotiated purchase price. So when a buyer transfers a tax credit, registered dealers must provide certain disclosures and receive attestations from the buyer. And continuing lastly with the key points, registered dealers are not required to verify a buyer's income. Registered dealers are required to inform buyers of income requirements since the buyer is responsible for repaying the full amount of any transfer credit when they file their tax return if they exceed the income limitations for the tax credit. Audience, remember we have a resource document with links to useful websites, publications, as well as e-posters you can download from the Materials tab. That's all I have today, Rich. I want to thank you. Back to you. Well, thank you, Roy; and thank you, Laura, for a great webinar. Now, audience, we here at the IRS are planning additional webinars throughout the year. To register for any of our upcoming webinars, please visit IRS.gov and use the keyword search Webinars, and then select either Webinars for Tax Practitioners or Webinars for Small Businesses. When appropriate, we will be offering certificates and CE credit for upcoming webinars. Now, please remember, though, that today's webinar does not offer certificates of completion or continuing education credits. We also invite you to visit our Video Portal, again, that's at www.irsvideos.gov, as you see on the slide. There you can view archived versions of our webinars. Continuing education credits or certificates of completion, however, are not offered if you view an archived version of any of our webinars on the IRS Video Portal. Again, a big thanks to my colleague, Roy Chaney, and to our subject matter expert, Laura Schmitz, for a great webinar today and for sharing their expertise. I also want to thank you, our attendees today, for attending today's webinar. And before you leave, we would appreciate if you'd take a few minutes to complete a short evaluation. If you'd like to have more sessions like today, please let us know that. If you have thoughts on how we can make them better, please let us know that as well. If you have any requests for future webinar topics or pertinent information you'd like to see on the IRS Fact Sheet, Tax Tip, or Frequently Asked Questions series on IRS.gov, then please include these suggestions in the comment section of the survey. Click the Survey button on the right side of your screen to begin. If it does not come up, again, make sure you've disabled your pop-up blocker. It's been a pleasure to be here with you, and on behalf of the Internal Revenue Service and our speakers, we'd like to thank you for today's attending webinar. It's very important for the IRS to stay connected, not only with the tax professional community, but with individual taxpayers, industry associations, such as the dealer community, along with our federal, state, and local government organizations, because you make our job a lot easier by sharing the information we provide that allows for proper tax reporting. Again, thanks again for your time and attendance, and we wish you much success in your business or practice. And you may exit the webinar at this time.
