Tax Filing Season: Don’t Forget Your $7,500 EV Tax Credit (But Don’t Use for Hummers or Bicycles)

If you missed out on the $7,500 tax credit for your new Electric Vehicle, it’s probably because your neighbor that just bought a Hummer got the tax credit instead.

Are you wondering why the guy that just rode by on his new bicycle is smiling, maybe he’s the one who got your tax credit?

I know this doesn’t even sound feasible, but it seems the IRS actually made a big mistake administering a federal tax credit.

Almost 20% of the tax credits that were supposed to go for alternative and plug-in vehicles, were given away during the first seven months to erroneous vehicle claims. The estimated cost to the U.S taxpayers was more than $33 million, according to the Treasury Department’s inspector general for tax administration.

The tax credits were initially set up to encourage consumers to buy energy efficient vehicles and to offset the price of the new vehicles. The credit was aided by President Obama and his plans to have 1 million advanced technology vehicles on the road by 2015.

Taxpayers who purchase an alternative or electric vehicle such as the Chevy Volt or Nissan Leaf can receive a tax credit worth up to $ 7,500 under the policy.

An investigation by the inspector general, however, found that the credits were being given for non-eligible vehicles that included the Hyundai Sonata, the Buick Enclave, and even a bicycle, to name a few.

The report also stated that 29 prisoners somehow received a total of $49,926 in vehicle credits even though they were incarcerated at the time.

Here are the findings by the inspector general concerning the IRS incompetence:

The report said the IRS lacks adequate procedures to ensure that information provided by individuals claiming the credits met qualifying requirements for vehicle year, placed-in-service date, and make and model. The inspector general’s review of electronically filed tax returns also identified individuals who erroneously claimed the same vehicle for multiple plug-in electric and alternative motor vehicle credits or claimed an excessive number of vehicles for personal use credits.

The IRS’s response to the report (they know they messed up):

The IRS said it agreed with the inspector general’s recommendations and has already implemented measures to address some of the problems in the report. In a statement, the IRS said it took “immediate action to put additional protections in place to stop improper vehicle payments.” The IRS also said it’s taking aggressive steps to recapture the erroneously claimed credits.

Luckily, the inspector general stepped in and the people who actually purchase an EV vehicle will still get their deserving credit for helping the environment.

In conclusion, remember those outrageous late night info commercials, claiming that you could get free government money for hardly doing anything? After seeing what has happened I am beginning to wonder, if maybe I should have purchased their instructional courses!

Read the Full Report from the Treasury Inspector General for Tax Administration [PDF].

Photo Credit: ehpien via Flickr

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