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Federal Tax Credit For M3

Federal Tax Credit For M3

Just wondering, if prior to purchasing the M3 would Tesla let us know if we will get the full tax credit or not. My M3 is not slated for delivery until summer 2018.

AJPHL | October 1, 2017

Not sure but it will be easy to work out and people will be posting here about it I'm sure, each quarter Tesla reports deliveries.

jordanrichard | October 1, 2017

No, Tesla can't do that. They don't know for absolute certainty as to when you personally will get/register your car as it relates to them reaching the magic 200,000 cars sold in the U.S. Quite literally the person taking delivery at 10 am would get it and you taking delivery at 12 noon won't.

bmalloy0 | October 1, 2017

Jordanrichard, that is completely incorrect.

After 200,000 deliveries, a phaseout period begins. All cars delivered through the end of that quarter (no limit) as well as the entire following quarter all receive the full tax credit. If someone qualifies at 12:01 am, somone who registers at 11:59pm up to almost 6 months in the future will qualify.

ReD eXiLe ms us | October 1, 2017

A 'Delivery', or aquisition of an eligible car is complete at the change of Title. Different States handle this in different ways. For those in places where Tesla direct sales are 'banned' the count may be a bit behind, because the process may have to be completed by the new owner upon visiting their local DMV. I trust that using internal proprietary information, Tesla is more-or-less aware of when they will have reached the 200,000 eligible vehicles sold mark. I expect that they will probably get to within 5,000 units of that goal in the closing weeks of December 2017. Then release the floodgates in the opening weeks of January 2018. So all cars Delivered through June 30, 2018 will be eligible for the full $7,500 EV Tax Credit.

But without being Tax Professionals, Tesla employees would be unwise to advise particular individual customers of 'what they will get'. This isn't a rebate, refund, or price reduction. It isimply a means by which someone gets to keep more of their own money instead of paying taxes.

locnguyencalalum | October 1, 2017

Sweet, my M3 is in March-May window. I really hope to get full federal tax credit

hdharia17 | October 1, 2017

I am crossing fingers for full tax credit also, mine is from may to june.

Patronus | October 1, 2017

When counting up to the 200,000 limit (in the US) there seems to be a lot of question as to what event (and its date) constitutes a sale. I actually do not know myself, but can offer that the tax code is very specific about what date constitutes eligibility for the credit - the "date vehicle was placed in service". https://www.irs.gov/pub/irs-pdf/f8936.pdf

ReD eXiLe ms us | October 1, 2017

The vehicles must be acquired for use or lease and not for resale. Additionally, the original use of the vehicle must commence with the taxpayer and the vehicle must be used predominantly in the United States. For purposes of the 30D credit, a vehicle is not considered acquired prior to the time when title to the vehicle passes to the taxpayer under state law.

Notice 2009-89 applies to vehicles acquired subsequent to December 31, 2009 and provides procedures that a vehicle manufacturer may use if it chooses to certify that a vehicle meets certain requirements that must be satisfied to claim the Qualified Plug-in Electric Drive Motor Vehicle Credit and the amount of the credit allowable with respect to that vehicle.

The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”). Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period.

https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-an...

Q. What does “acquired” mean for purposes of the plug-in electric vehicle credit (ARRA Section 1142) and the plug-in electric drive motor vehicle credit (ARRA Section 1141)?
A. A vehicle is acquired under the laws of the state in which the vehicle was purchased. Generally, under state law, a binding contract to purchase a vehicle by itself does not count as acquiring a vehicle. For a taxpayer to have acquired the vehicle, he or she must have title to it under state law.

https://www.irs.gov/newsroom/energy-incentives-for-individuals-questions...

Patronus | October 1, 2017

ReD eXiLe ms us, thanks for that research. So, if each of the 200,000 sales is counted as "he or she must have title to it under state law", that really adds about 6 weeks from vehicle payment/delivery to having the title. In my state, that is about the time it takes from delivery to my receiving the title in the mail.

6 weeks is a big chunk of a quarter - about half, in fact.

Frank99 | October 1, 2017

I don't think "receiving the title in the mail" is the appropriate point to be counted as "..must have title to it under state law". I would guess that, for most states, the moment that Tesla fills out and signs the Title paperwork would be considered that point. For some states, it might be when the title paperwork is received at the registration office, or it might be when the registration office processes the paperwork and updates it's records to show you as the official owner.

ReD eXiLe ms us | October 1, 2017

Patronus: Perhaps. But again, Tesla probably has a good idea as to when such data would be coming in... If it is typically six weeks, then Tesla could aim for Deliveries through mid December 2017 to be 'close' to 200,000 units, then be sure to go over the mark in the first two weeks of January 2018.

Also, it seems to be based on how the manufacturer reports to the IRS, not necessarily what the buyer reports to get that total. So Tesla would provide the IRS with the VINs four which Title had changed and when. As long as Tesla abides by State laws for switching Title, the Customer should still be covered, even if Title hadn't reached them yet. The IRS mainly would have to see proof of Title to the vehicle if they audited your individual tax return. Manufacturers must provide a quarterly report of qualifying vehicles, but may request the details be kept confidential for a time...

"The quarterly report must contain the following: (1) The name, address, and taxpayer identification number of the reporting entity. (2) The number of qualified vehicles sold by the reporting entity to consumers or retail dealers during the calendar quarter."

https://www.irs.gov/irb/2009-48_IRB