Reporting Mechanics for the Clean Vehicle Tax Credit

Dealership reporting for customer transactions

Beginning January 1, 2023, dealers are required to report the purchase of any qualifying Electric Vehicle (EV) or Plug-in Electric Vehicle (PHEV) to both the customer and the Internal Revenue Service. Customers must receive the required reporting no later than the date the vehicle is purchased; the summary for the IRS is due within 15 days after the end of the calendar year. IRS guidance requires the following information to be included on the reporting summary:

• The name and taxpayer identification number of the dealer;
• The name and taxpayer identification number of the customer;
• The vehicle identification number of the vehicle, unless, in accordance with any applicable rules promulgated by the Secretary of Transportation, the vehicle is not assigned such a number;
• The battery capacity of the vehicle;
• Only for sales of new clean vehicles, verification that original use of the vehicle commences with the customer;
• The date of sale, sale price of the vehicle, and maximum credit under § 30D or § 25E, as applicable, allowable to the customer with respect to the vehicle; and
• A declaration applicable to the report signed by a person currently authorized to bind the dealer in these matters, in the following form: “Under penalties of perjury, I declare that I have examined this report submitted to the IRS pursuant to Revenue Procedure 2022-42 by [insert name of dealer], and to the best of my knowledge and belief I certify that this report is true, correct, and complete.”

Many state auto dealer associations have developed templates for the above reporting. Be sure to contact your association staff for additional information.

Customer reporting for tax credits

For the purchase of new clean vehicles, both individual customers and business customers can be eligible to claim the tax incentive. Only individual customers are eligible for the Clean Vehicle Tax Credit on purchases of used vehicles. Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit, is used by all taxpayers, individuals and businesses, to report any applicable credits with their respective tax filing.

Change in 2024

As a reminder, beginning after 2023, customers may assign the tax credit to a dealer, rather than claiming it on their own tax return. The required reporting will need to identify any customer who makes an election to transfer the credit to an eligible entity (dealer) and quantify any amount paid or otherwise allowable as a partial payment or down payment to the customer as a result of this election.

Contact your Brady Ware Dealership Services Team member for more information or assistance with any questions on these new rules.