The Biden administration’s effort to make new electric vehicles more appealing to the American public with $7,500 tax credits is becoming a big hassle for some buyers. The Internal Revenue Service has been rejecting the tax returns of some EV owners claiming the credit. However, they are also looking to help.
EV buyers are getting a second chance from the IRS to get their $7,500 tax credit, but a trip to the dealer is the first move.
Recent reports reveal the IRS has been rejecting the returns of some EV buyers who elected to use the tax credit as part of a downpayment. They were sent back because the dealer they bought the vehicle from failed to file paperwork in a timely manner.
Dealers must file the paperwork within three days of the purchase of the vehicle otherwise the buyers are ineligible. Some dealers missed the window during the cyberattack last summer that forced many of them offline for as much as two weeks.
So you’re saying there’s a …
The IRS is granting EV buyers who used the credit toward the purchase a second chance to file for the credit. However, owners will need to head back to the store where they purchased their vehicle, according to the National Automobile Dealers Association (NADA).
EV sales remain strong based, in part, on the availability of federal tax credits.
“It is unclear how long the functionality will remain open, but according to the IRS, dealers can begin using the portal now,” NADA officials told dealers.
Once in touch with the dealer, they can create a time-of-sale report for taxpayers with rejected returns should ask dealers for a copy. This should permit them to finish their amended return, the Detroit Free Press reported.
“If there are taxpayers who did not get the credit they were entitled to because the dealer did not submit the sale on the portal, they should go back to the dealership and have them submit through the portal,” tax professional Mike Mader, principal and leader of Baker Tilly’s dealership practice, told the Free Press.
Taxpayers with questions can also call the IRS helpline at (800) 829-1040. Be prepared to wait, however. The agency has recently laid off thousands of workers during peak tax season as part of President Trump’s government efficiency initiative.
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Impact on EV sales
Despite criticism from Republicans, the incentives did push many fence-sitters over to the EV side, and sales rose in last year, although not at the meteoric rate of the second half of 2023.
The cyberattack against dealers last summer is one reason why EV owners are getting a second chance.
In 2024, full-year EV sales reached 1.3 million, an increase of 7.3% from the upwardly revised total in 2023, according to Cox Automotive. Sales of EVs in the U.S. benefitted from strong incentives from the automakers, excellent lease deals, and federal and state incentive programs.
“The gains in 2024 were also supported by excellent new products, particularly from General Motors and Honda Motor Co., which together sold nearly 80,000 more EVs in 2024 than in 2023. Hyundai Motor Group and Ford Motor Company also notably increased EV sales last year,” Cox analysts noted.
The official numbers for the first quarter of 2025 haven’t been compiled, but GM reported a 94% increase in EV sales during the period. Ford saw battery-electric sales jump 12% and its hybrids jump 33%. Stellantis, Kia, Hyundai, Honda and others all saw similar jumps in Q1.
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