- Some taxpayers who bought electric vehicles in 2024 had trouble claiming the tax credits because of bad paperwork.
- Auto dealers group announced an IRS change that will enable dealers to fix EV tax credit problems.
Some drivers who bought electric vehicles in 2024 have found it impossible to claim their EV tax credits now when filing their tax returns, thanks to a glitch. But now, a new alert offers a bit more hope.
A fix could be on the way. But you’re going to need to see your car dealer, not your tax professional, first.
The National Association of Auto Dealers informed its members that the Internal Revenue Service has reopened its portal for dealers to submit time of sale reports for EVs sold last year. It’s an unusual step to fix a nagging tax problem.
Earlier in March, I wrote a column that highlighted the clean vehicle tax credit snafu that was gumming up some 2024 federal income tax returns. In some cases, the IRS was rejecting 2024 federal income tax returns even when the tax filer was trying to correctly claim the EV tax credit.
Some buyers experienced glitches after dealers made mistakes or faced troubles with the new system. Right now, though, some EV buyers might want to return to their dealerships, if they didn’t have the correct paperwork in hand so that the IRS doesn’t reject their tax return.
“The IRS is allowing time of sale reports to be submitted for qualifying clean vehicle credit transactions that occurred in 2024,” according to the NADA alert.
“It is unclear how long the functionality will remain open but, according to the IRS, dealers can begin using the portal now. NADA will provide additional details when they become available,” according to the NADA compliance alert published March 25. The group represents more than 16,000 new car dealers.
In a statement sent to the Detroit Free Press last week, the IRS confirmed that its IRS Energy Credits Online portal has been opened for dealers and sellers who were registered in 2024 to submit late time-of-sale reports. The IRS said the portal will remain open indefinitely.
Some dealers did not submit time-of-sale reports within the three-day period, according to the IRS statement, so the new relief will allow them to submit the reports that they missed or never submitted.
The seller must report required information at the time of sale, including the buyer’s name and taxpayer identification number, to the IRS for the buyer to be eligible to claim the credit.
“If a taxpayer did not receive a time-of-sale report from the dealer, they should ask the dealer for a copy,” according to an IRS spokesperson on Thursday.
Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting in Riverwoods, Illinois, said Wednesday that it appears the IRS has not yet issued information to the public on the EV fix.
“NADA may have received first notice because they wanted NADA to test the portal before announcing it to the public,” Luscombe said.
“It does appear that the time limit on filing the sales report has been waived, and it is still up to the dealer to file the report rather than the taxpayer taking action with the IRS,” Luscombe said.
Luscombe suggests that the taxpayer might want to alert the dealer about resubmitting the sales report.
The National Automobile Dealers Association told the Detroit Free Press earlier in the tax season that the IRS portal to report EV sales last year didn’t work properly in some cases. “In some instances,” the auto dealers group said, “time of sale reports for qualifying clean vehicle credit transactions were not filed in 2024.”
How it is supposed to work
Typically, the dealer must complete and submit the time-of-sale report online shortly after the sale. The time-of-sale report is due within 72 hours of the vehicle being placed in service. The report is to be accepted or rejected in real time.
The auto dealer completes a Form 15400 “Clean Vehicle Seller Report,” which includes the VIN number, Social Security number of the buyer, and other information. That form is essential for claiming the tax credit.
The IRS automated their systems so that they could give a real time verification based on the vehicle identification number.
But things didn’t work out the way that they should have in some cases. The latest development relating to the portal could help some taxpayers who faced problems.
Tax professional Mike Mader, principal and leader of Baker Tilly’s dealership practice, confirmed that the portal is open and dealers are submitting information for customers who bought in 2024 to get the credit.
“If there are taxpayers who did not get the credit they were entitled to because the dealer did not submit the sale on the portal, they should go back to the dealership and have them submit through the portal,” Mader said.
Mader said he spoke with a dealer who seemed to have no issues with using the portal. “However, this isn’t to say that will be the case with every dealer that uses it,” Mader said.
Three months into tax season, of course, some people might have decided to give up claiming the credit and just file their tax returns. If so, those taxpayers might have to file an amended return to now claim the clean vehicle credit. If you did not yet file a return, the tax deadline for most taxpayers is April 15.
What the EV tax credits are worth
The credits can be up to $7,500 for eligible new EVs and up to $4,000 for eligible used electric vehicles. For vehicles placed in service April 18, 2023, and after, for example, you’d receive up to $3,750 if the vehicle meets the critical minerals requirement only. An eligible clean vehicle can’t contain any critical minerals that were sourced by a “foreign entity of concern,” such as China.
Or you’d receive up to $3,750 if the vehicle meets the battery components requirement only. Or you’d receive up to $7,500 if the new qualifying EV meets both.
Starting in January 2024, dealers turned to the IRS Energy Credits Online website to determine credit eligibility and the amount of the credit at the time of sale. Dealers had to register with the IRS to submit time-of-sale reports and receive advance payments when those applied. Not all dealers took this step and buyers want to ask their dealer if they registered.
Beginning in 2024, EV buyers could receive an “instant rebate” at the time of purchase at the dealership when buying a qualifying emission-free car or truck. Or buyers could wait to claim the credit when filing a tax return. You have a choice.
The troubles with the IRS portal came in two models — one that hit dealers and another that involved everyday customers.
“In both situations, customers are facing issues filing their tax returns because the return does not match a VIN in the IRS’s system,” the NADA alert stated. “Absent relief, dealers would face significant financial losses, and customers would be unable to claim clean vehicle credits.”
One portal problem involved instant rebates where the dealer who applied the credit at the point of sale didn’t get properly reimbursed for that credit.
If the buyer wanted the money upfront, the dealer was then responsible for securing reimbursement for the credit through the IRS portal.
Jared Allen, vice president of public affairs for the National Automobile Dealers Association, told the Detroit Free Press earlier this month that the NADA was aware of instances where dealers have been unable to secure their own reimbursement due to portal issues.
The second type of problem involved individual taxpayers who faced tax time headaches when trying to claim the credit when filing 2024 income tax returns. You could claim the credit at tax time, if you qualified and if the auto dealer didn’t apply the instant rebate at the time of the sale. You cannot get both that upfront rebate and a tax credit when filing an income tax return.
Some consumers have been unable to claim new clean vehicle tax credits when filing their 2024 federal income tax returns due to discrepancies between clean-vehicle time-of-sale reports and IRS records, Allen said earlier.
“We have heard from dealers who have attempted to refile time-of-sale reports on behalf of their customers but were not able to do so successfully because the IRS is not accepting submissions past the three-day deadline following the sale,” Allen said in early March.
Now the IRS has made a change, according to the NADA, to address these ongoing tax problems.
The NADA said it “advocated aggressively for the IRS to remedy these issues,” including sending a letter to leadership at the U.S. Department of Treasury and the IRS requesting timely relief for dealers and reaching out to members of Congress.
IRS data indicates that only 7% of consumers who were eligible for a new clean vehicle tax credit between Jan. 1 and Oct. 1, 2024, opted to receive the credit when they filed their taxes, Allen said.
The majority of buyers, he said, “opted to receive the credit upfront in the form of ‘cash on the hood’ at the time of sale.” And those buyers who benefited at the point of sale don’t now qualify for a tax credit when filing a tax return.
Currently, the tax credit is available for purchases through Dec. 31, 2032, unless the law changes. Some speculate that President Donald Trump plans to kill the EV consumer tax credit, according to reports by Reuters and elsewhere.
The EV tax credit rules are complicated — and will not work for everyone. The credits do not apply to every electric vehicle or plug-in hybrid. Buyers must meet set income limits. You can see FuelEconomy.gov to search for eligible vehicles and better understand the rules.
Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X @tompor.