WASHINGTON — In a move that could have implications for credit union auto lending, the Department of the Treasury and the Internal Revenue Service have begun allowing car dealers to register for the IRS Energy Credits Online portal.
The announcement is part of the implementation of one part of the Inflation Reduction Act, which seeks to boost access to tax credits at point of sale for new and previously owned clean vehicles, Treasury said.
“Researchers have found that consumers overwhelmingly prefer an immediate rebate at point of sale,” Treasury stated. “Starting Jan. 1, 2024, consumers will be able to choose to transfer their new clean vehicle credit of up to $7,500 and their previously owned clean vehicle credit of up to $4,000 to a registered car dealer. This provision of the Inflation Reduction Act (IRA) will effectively lower the vehicle’s purchase price by providing consumers with an upfront down payment on their clean vehicle at the point of sale, rather than having to wait to claim their credit on their tax return the next year. Only vehicles purchased under the consumer clean vehicle credits are eligible for this benefit.”
Prompt Payment
According to Treasury, the new Energy Credits Online portal will allow registered dealers to submit clean vehicle sales information to the IRS and promptly receive payment for transferred credits. Dealers will also use Energy Credits Online to submit “time of sale” reports, which will confirm vehicles’ eligibility for a credit, whether or not the buyer chooses to transfer the credit to the dealer, Treasury said.
“President Biden’s Investing in America agenda is focused on lowering transportation costs for consumers and giving American auto dealers, workers, and companies the tools they need to lead the world on the next generation of vehicles,” Chief Implementation Officer for the Inflation Reduction Act Laurel Blatchford said in a statement. “For the first time, the Inflation Reduction Act allows consumers to reduce the up-front cost of a clean vehicle, expanding consumer choice and helping car dealers grow their businesses.”
What Dealers Must Do
According to Treasury, when a buyer chooses to transfer the credit, registered dealers will reduce the purchase price of the vehicle or provide cash to the buyer. The amount provided must equal the full amount of the credit available for the eligible vehicle.
When completing the sale, the dealer will electronically submit information regarding the transfer, including a time of sale report, to receive an advance payment for the value of the credit. The IRS expects to issue advance payments within 72 hours, Treasury stated.
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