There’s been a lot of debate over how much good the EV tax credit does, whether the number of cars it covers should be increased or if it should be phased out altogether. But in the meantime, people and companies are falsely claiming millions of dollars of tax credits.
According to a report by the U.S. Treasury Inspector General that was first covered by Forbes, up to $74 million in tax credits for plug-in electric vehicles and battery electric vehicles have been claimed by people or corporations who shouldn’t have been able to claim them.
The false claims happen in a couple of ways, almost all of which are enabled by the fact that you don’t need to submit a unique VIN to claim the credit. Most commonly, a leased vehicle is double claimed.
The credit, as it was written, only applies to the owner of the vehicle. So if you lease an electric car, it’s still owned by the leasing company or the automaker’s financial arm. Because of that, the lessor is eligible for the credit and the lessee isn’t. Even still, over a thousand people have claimed the credit on a leased vehicle and received it when they shouldn’t have. It’s possible that the people double claiming genuinely didn’t know that they weren’t eligible in this case.
Buyers have also reportedly claimed a larger tax credit than they were eligible for. While the federal tax credit is often thought of as a $7,500 credit, that’s actually the maximum credit. The credit actually starts at $2,500, with larger batteries qualifying for more credit up to the $7,500 maximum.
So while a Chevy Bolt qualifies for the full $7,500 credit, a Volvo XC60 T8 plug-in only qualifies for $5,002. Even still, many buyers of smaller-battery plug-in hybrids have claimed the full $7,500. Some of that is likely nefarious, but even among educated buyers a lot of people don’t know that the tax credit varies based on battery size.
Regardless, now that the IRS is aware of the rampant cheating, it’s coming for its money. Per Car and Driver:
The IRS has agreed to the IG report’s recommendations in audit procedures, and it will be sending notices to all 16,510 taxpayers who made ineligible claims to the IRS by February 2021.
You can never dodge the taxman for long.