978-594-4625
info@yourchoicetax.com

As part of the Inflation Reduction Act of 2022, lawmakers made changes to the Clean Vehicle Credit that were meant to encourage the purchase of U.S.-made electric and fuel cell vehicles. Unfortunately, the criteria for qualifying vehicles has proven confusing for some taxpayers.

To provide clarity for those interested in claiming the credit, the Internal Revenue Service issued proposed regulations for final assembly and MSRP requirements earlier this year. That effort was continued last week, when the agency announced new guidance updating the vehicle classification standard that defines the different types of qualifying vehicles.

How was vehicle classification information for the Clean Vehicle Credit changed?

The vehicle classification standard for vans, sport utility vehicles, pickup trucks, and passenger vehicles now includes the fuel economy labeling regime determined by the EPA Administrator. As a result of this change—and to ensure taxpayers can readily find qualifying information—the IRS updated information under five FAQ topics:

However, the General Overview of Taxpayer Reliance on Guidance Published in the Internal Revenue Bulletin and FAQs page on IRS.gov notes that FAQs are not interchangeable with officially published guidance from the Internal Revenue Bulletin.

While the agency generally sees FAQs as merely a means of “quickly [communicating] information to the public on topics of frequent inquiry and general applicability,” they note “a taxpayer’s reasonable reliance on an FAQ (even one that is subsequently updated or modified) is relevant and will be considered in determining whether certain penalties apply.”

Source: IR-2023-18 

Article provided by Taxing Subjects.