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IRS Issues Fresh Guidance and FAQs on Clean Vehicle Credit Transfers

    October 6, 2023 – The Internal Revenue Service (IRS) has today released proposed regulations, Revenue Procedure 2023-33PDF, and a set of frequently asked questions that address the transfer of clean vehicle credits, whether they are newly acquired or previously owned, to eligible entities for vehicles placed in service after December 31, 2023.

    Taxpayers can receive credits for eligible new and previously owned clean vehicles they acquire and put into service during the tax year, as per the Inflation Reduction Act. Effective January 1, 2024, taxpayers may, in certain situations, transfer these clean vehicle credits to eligible entities.

    Today’s guidance offers clarification on the procedures for taxpayers to select the transfer of their clean vehicle credits, whether new or previously owned, to dealers who are eligible to receive advance credit payments. Additionally, the proposed regulations and revenue procedure outline the requirements for dealers to attain eligibility as entities capable of receiving advance payments for clean vehicle credits.

    The proposed regulations provide details on the recapture of the credit.

    Procedures for dealer registration with the IRS to receive credit transfers from taxpayers are included in the revenue procedure, complete with information on how to register through IRS Energy Credits Online.

    Additionally, it outlines the process for revoking and suspending a registration in the event of a dealer’s non-compliance with the program’s requirements. It also puts in place an advanced payment program for eligible entities. Finally, the revenue procedure introduces new information concerning the timing and manner of submitting seller reports, as well as updates on the submission process for manufacturer written agreements to obtain qualified manufacturer status and the method of submitting monthly reports by qualified manufacturers.

    The IRS has incorporated changes to the frequently asked questions (FAQs) for clean vehicle credits as a result of this guidance.

    These are the revisions made in the FAQs:

    • In Topic A (Eligibility Rules for the New Clean Vehicle Credit), we updated Questions 1, 2, 4, and 7 and added Question 12.
    • For Topic B (Income and Price Limitations for the New Clean Vehicle Credit), we updated Questions 1, 3, 7, 8, 9, 10, and 11.
    • Topic C (When the New Requirements Apply to the New Clean Vehicle Credit) saw an update in Question 2.
    • In Topic D (Eligibility Rules for the Previously Owned Clean Vehicles Credit), we updated Questions 1, 2, 3, 7, and 9 and added Questions 11 and 12.
    • Topic E (Income and Price Limitations for Previously Owned Clean Vehicles) had an update in Question 2.
    • In Topic F (Claiming the Previously Owned Clean Vehicles Credit), we updated Questions 2 and 3.
    • For Topic G (Qualified Commercial Clean Vehicles Credit), we updated Question 4.
    • Topic H (Transfer of New Clean Vehicle Credit and Previously Owned Clean Vehicles Credit) had Questions 1 through 21 added.
    • Topic I (Registering a Dealer/Seller for Seller Reporting and Clean Vehicle Tax Credit Transfers) had Questions 1 through 17 added.
    • Topic J (Seller Report Information for Buyers of New and Previously Owned Clean Vehicle Tax Credits Beginning in 2024) had Questions 1 through 2 added.

    Originally Published on – IRS issues guidance for the transfer of clean vehicle credits and updates frequently asked questions