On December 12, 2022, the U.S. Department of the Treasury and the IRS issued Revenue Procedure (Rev. Proc.) 2022-42, providing guidance for manufacturers and sellers of clean vehicles on how to enter into a written agreement with the IRS and provide periodic written reports to the IRS related to the clean vehicle credits found in Sections 30D—Clean Vehicle Credit, 45W—Credit for Qualified Commercial Clean Vehicles, and 25E—Previously-Owned Clean Vehicles Credit. For more information on these credits and other transportation tax incentives, see our FORsights™ webinar, “Transportation Tax Credits & Grants in the Inflation Reduction Act of 2022.”
Guidance for Manufacturers of Clean Vehicles
Manufacturers will need to enter into a written agreement with the Secretary of the Treasury to be considered a qualified manufacturer for purposes of the clean vehicle credits. In addition, qualified manufacturers will need to provide a written report with certain information to the IRS that is generally due on the 15th of each month. Qualified manufacturers will need to email the IRS at IRS.Clean.Vehicles.QM.Reporting@irs.gov letting it know of their intent to file the reports, at which time the IRS will provide instructions on how to go about filing the necessary information.
Rev. Proc. 2022-42 provides additional guidance, including who must sign the written agreement required to become a qualified manufacturer, as well as what information must be contained in the reports that a qualified manufacturer must provide to the IRS.
Taxpayers will generally be able to rely on the certification received by a manufacturer verifying whether they are a qualified manufacturer for purposes of the clean vehicle credits. Taxpayers also will generally be able to rely on the information contained within the reports submitted by a qualified manufacturer to the IRS for determining whether a vehicle qualifies for one of the clean vehicle credits.
Guidance for Sellers of Clean Vehicles
Sellers of clean vehicles that qualify for a credit under §30D or §25E also will need to provide information to the IRS and the taxpayer purchasing the vehicle. Beginning in 2023, the seller must provide the purchasing taxpayer with the required information no later than the date the vehicle is purchased. Information must be provided to the IRS no later than 15 days after the end of the calendar year containing the sale, with the first reports due on January 15, 2024.
Sellers will generally need to report the following information for any clean vehicle purchased:
- Seller’s name and tax identification number
- Taxpayer’s name and tax identification number
- Vehicle identification number of the clean vehicle
- Capacity of the clean vehicle’s battery
- Verification of original use with the taxpayer (required only for new clean vehicle sales)
- Sale date and price of the clean vehicle and maximum credit allowed under the applicable credit
- Any amount paid to the taxpayer or used as a payment against the sales price of the clean vehicle related to the election by the taxpayer to transfer the credit to the seller (for sales after December 31, 2023)
- Signed declaration by the seller with the required statement indicating the information contained within the report is accurate and complete
Rev. Proc. 2022-42 is not intended to be the required guidance related to the critical minerals and battery components. Once this guidance is issued, it will change the way the credit under §30D is determined. Further guidance is forthcoming that will affirmatively indicate it is the intended guidance for that purpose.
For more information, please reference Rev. Proc. 2022-42.
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