Gaming the System? Treasury Department Complains of Unworthy EV Credit Recipients

Steph Willems
by Steph Willems

Tax credits are a great way to stimulate purchases or participation, and in the politician’s mind, they often take precedence over affordability measures that would benefit broader swathes of society. That being said, they’re here to say… unless you’re referring to the slowly vanishing federal EV tax credit.

Automakers like Tesla and General Motors are already watching their $7,500 credits halve, then halve again, after surpassing the 200,000-vehicle threshold that starts the countdown to a credit phase-out. Now, the Treasury Department is claiming some recipients of the eco stimulus shouldn’t have received it in the first place.

According to Bloomberg (via Automotive News), an audit of tax returns filed over a five year period ending in 2018 revealed thousands of suspect EV claims.

Of the $1.4 billion paid out to roughly 240,000 EV buyers during that period, the Treasury Inspector General for Tax Administration identified 16,510 returns worthy of further scrutiny. Money paid out to that cohort amounted to upwards of $70 million.

So, how exactly did these tax filers get their hands on the supposedly unearned credits? That’s a mystery for now — much of the audit’s juicy details were redacted. Depending on type of vehicle, where the automaker rests in its credit tally, and the vehicle’s battery capacity, recipients stand to gain between $2,500 and $7,500. Full-on EVs get the biggest bucks, but buyers of plug-in hybrids stand to gain a considerable incentive. The credit available to buyers of the Mitsubishi Outlander PHEV is $5,836. The now-departed Cadillac CT6 Plug-In, being of solid American stock, was eligible for the full $7,500, despite its 2.0-liter turbo.

While the wrongful credit payout remain shrouded behind black ink, the Internal Revenue Service claims it’s on the case, vowing to recoup the money. “Although the IRS has taken steps to address some of TIGTA’s previous recommendations to improve the identification and prevention of erroneous credit claims, many of the deficiencies previously identified still exist,” the audit stated.

[Image: General Motors]

Steph Willems
Steph Willems

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  • ToddAtlasF1 ToddAtlasF1 on Oct 06, 2019

    "The now-departed Cadillac CT6 Plug-In, being of solid American stock, was eligible for the full $7,500, despite its 2.0-liter turbo." Was it not also wholly Chinese?

  • Darex Darex on Oct 07, 2019

    I always find it pretty bogus when a Ford Fusion Energi PHEV has a prized dedicated charging station/parking spot in front of its house, or it's parked at a public EV station. I don't think PHEVs should ever have qualified for any of EV credits.

    • SCE to AUX SCE to AUX on Oct 07, 2019

      They qualify because there are many times a PHEV car can run long distances on electric power alone, unlike a traditional hybrid. IIRC the PHEV credit is roughly 2/3 or 1/2 of the BEV credits.

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