Imagine you buy a new electric car with 34 miles on the odometer from a legitimate dealership. Later, you go to file your taxes and apply for the $7,500 tax credit, and suddenly make a realization. The car, with 34 miles on it, was sold to you as a used car, and someone has already claimed your tax credit.
The dealer bought the car back from the first owner and sold it to you. You had no idea, maybe you didn’t pay attention to the fine print, or you were misled. Either way, you aren’t getting that credit. You have no recourse, because this is a perfectly legal scam that targets car buyers who miss the fine print.
Last week, I had a Facebook friend of mine post that had this happen to him. Now I suppose someone could have bought the vehicle and found out in 34 miles that it wasn’t a good fit, but the dealership should be required to disclose such information besides doing the bare minimum and adding it into the mice type.
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“When I pulled up the paperwork, it clearly said ‘used’. It’s just that it only had 34 miles. So how could that be? I mean, it could be, but seriously how under normal circumstances?” said John Myers, from Texas.
Tax credits have been a huge selling point for buyers of EV and hybrid vehicles for years. Up until Aug. 15, 2022, car buyers who purchased full battery EVs could get up to a $7,500 tax credit to apply to their tax liability.
Some manufacturers were excluded, such as GM and Tesla because of their volume of production. If you leased a vehicle, the tax credit went to the leasing company who then reduced the price of your lease.
The tax credits have now changed drastically, and now all makers will be subject to domestic production percentage standards. There is also a provision on used car tax credits but applies only to cars that cost less than $25,000. There are also income limits, keeping the wealthiest of car buyers from qualifying for them at all.
The tax credit is getting harder for people to qualify for, but it certainly will not go away. Unscrupulous companies and individuals will continue to exploit loopholes in our tax codes, but this may directly hit you right in the pocket. How can you avoid such a problem in the future?
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Make sure the vehicle you are buying is new, and you are the original owner. The car should have a window sticker displayed stating it is new.
Most importantly, the paperwork should be read in full before signing and it should clearly state that the car is either new or used. Also, make sure the vehicle you are interested in qualifies for the full tax credit before purchasing if that is a deciding factor for you.
The new tax credit is much more confusing than the last so tax questions should be asked of your accountant, not the dealership.
See you on the road.
Taylor Bryant is an automotives instructor for Augusta Technical College.
