On October 6, 2023, Treasury released a notice of proposed rulemaking to provide a process for clean vehicle purchasers to transfer tax credits for new and used clean vehicles to the dealer at the point of sale, reducing the amount due up front. The transfer would be available to consumers purchasing vehicles starting January 1, 2024. The guidance clarifies that consumers may transfer the full value of tax credits for new or used vehicles regardless of individual tax liability. The regulations also provide guidance on when recapture of tax credits may occur – for example, if the consumer exceeds the applicable modified adjusted gross income threshold for that tax year. IRA section 13401 provides consumers a tax credit of up to $7,500 for the purchase of a new clean vehicle and section 13402 provides consumers a tax credit of up to $4,000 for the purchase of a used clean vehicle.
Treasury is seeking public comment on the proposal through December 11, 2023.
Treasury also updated its FAQs on the new and used clean vehicle credits to reflect the guidance.
Opportunities for Participation and Additional Resources:
- Notice of Proposed Rulemaking: https://www.federalregister.gov/documents/2023/10/10/2023-22353/transfer-of-clean-vehicle-credits-under-section-25e-and-section-30d
- Revenue Procedure: https://www.irs.gov/pub/irs-drop/rp-23-33.pdf
- Fact Sheet: https://www.irs.gov/pub/taxpros/fs-2023-22.pdf