IRS Tax Credit misinformation?

Expecting to find knowledge & honesty at a dealership is like expecting to find virginity in a whorehouse.

A law's title has NOTHING to do with whatever is contained in it. It is nothing but marketing to get people who haven't read the contents to vote for it.

Your junior congressman is going to discover in January that he has less power than he imagines.

There are some that want tax loopholes closed. Here's one they can jump on. Do you want any of the other credits repealed?

The law as written allows BUYERS, all buyers (individuals, corporations, LLC, sole proprietors, trusts) to claim a tax credit. In a lease a bank buys a car & rents it.

Let's just look at the facts in your example. The lead paragraph refers to relying on the IRS certifying that the vehicle qualifies for a credit and the amount of the credit. Basically it is saying that you can claim whatever number the IRS posted. If they change it later you don't file an amended return & pay the difference.

2. The credit applies only to the first sale of the vehicle. Used cars don't qualify. The taxpayer, the bank, is the 1st owner to put the vehicle in service by renting it to you.

3. The vehicle is intended to be used, not sold. The bank will sell the used vehicle at the end of the lease. That buyer can not claim the credit.

In Small Claims Court the plaintiff, that's you, has to prove the case. Unless you have something in writing from an employee of the dealer, bank, or Toyota (and be careful who you name as the defendant) making a statement contrary to the Internal Revenue Code I don't believe you have much of a case because they have a lease signed willingly. I wouldn't bring the IRS form or instructions I linked and I wouldn't quote the wrong section of the IRC.

I'm not a lawyer & going in front of a judge or jury is always a crapshoot. If you pursue this route please keep us posted.

 

In the instructions for Form 8936, which is the form you'll fill out for the credit, it specifically states:

If you leased, you cannot claim the credit, period. Personally I would not risk claiming it and end up getting audited. That could result in a fairly unpleasant situation.

 

Sure Toyota's a foreign company but they have a lot invested here in the US: TOYOTA IN THE UNITED STATES.

 

You really should contact TFS and plead your case directly with them. TFS will be claiming the $2500 federal tax credit and they can apply that credit how ever they wish, perhaps to lowering the capitalized cost, lowering the lease payments, or lowering the residual.

You probably should not expect to receive the entire $2500 since you are only leasing 40-50% of the value of the vehicle in a 36 month lease. Out of $2500, maybe $1200 would be allocated to the first leasee, and the balance allocated to a reduction of the residual.

 

What I am hearing (re: lease) there is a tendency for some dealerships misinform the consumer about the Federal Tax incentives. Note the complexity- some of the state Plug-In incentives do apply to leases and well as purchases. I am not the expert on consumer complaint options in car leasing, but would think the first step is to approach the dealer with the complaint, and see what they say. In a totally unrelated matter in my life, my local elected official filed a complaint on my behalf (after I got zero response). The (cable) company felt it best to totally ignor even the elected official's complaint. So then I was instructed how to file an official complaint to the public record. Lotta good it did me but there it is.

There are some citizens groups working to improve the federal Plug-In laws, not sure how well they are doing, but I believe they are seeking to change it from a tax credit to an automatic rebate (so everyone can qualify - not sure how it would apply to a lease).

 

Dealer also tried to convince me that Fed Tax Rebate was already factored into the $4,000 cash back. I countered with the fact that $4,000 applied to buy OR lease so anyone buying had the potential to get back additional $2,500 from IRS. Only TFS could get it if I leased. They countered with then why don't you just buy it. We tried working out a buy deal and they came up with a ridiculous amount. Once they realized I wasn't buying or signing their lease until they passed some of the tax credit back to me they finally made things "right" and we closed the lease deal.

 

The bolded part caused me to remember this thread: My Nissan Leaf Forum • View topic - 24 Mo. Lease NOT ELIGIBLE for CA Rebate.

 

Did you buy any of them when the Federal tax deduction or credit was in effect?

I am curious. You gladly pay money three times for a car that is made in Japan & composed of 100% Japanese parts and believe that you as a consumer & taxpayer should receive Federal money for stimulating the economy. Most of the money you paid helped stimulate the economy of Japan.

I don't have a problem with that. I don't believe in buying crap just because the crap is made in a particular place.

Why should the Federal government pay anyone to buy a car? Part of our problem is too much buying & not enough saving.

 

Forte I do not think Toyota is getting much US tax money in the overall scheme.
In another thread I have jokingly summarized US green car policy as: how to give $Billions in tax subsidies to every auto maker other than Toyota to help the other companies compete against Toyota in the EV/PHV/Hybrid arena. I don't think Toyota is pocketing federal tax credits in the lease deals, rather it is the car purchasers that are getting the tax credit. The purchaser is either the consumer or in the case of lease dealer+bank. As I see it, you could have 2 valid complaints: (1) the dealer, including the fact that Toyota might do better job of making sure dealers do not mislead consumers and/or (2) the federal tax law to give the Plug-In/EV tax credits to companies as well as individual consumers sounds possibly like some kind of political handout and may not be good policy. Ultimately the reason we all hate car buying is the dealerships are in the position to fake out customers and charge $thousands extra to any consumer who does not have encyclopedic knowledge of the complex market/credits situation.

 

Isn't Toyota Financial Services (the holder of the lease, and thus the owner of the car, and thus the recipient of the tax credit), a wholly owned subsidiary of Toyota Motor Corporation?

Toyota Financial Services: Company Background

So Toyota IS getting the tax credit?

 

Forte- I am not saying green car tax credits are bad, I like tax credits as much as the next guy (probably more).
I am saying there may be better ways to administratively structure the tax credit so that, as you suggested, the individual consumer benefits vs. some third party "Dealership A" involved in a car trading with "Dealership B".
I am taking your lead, to say possibly your experience points to a generic problem with the nature of credit scheme.

Over the last ~decade we have had 3 big tax credits: (1) Hybrid credit (2) Clunker Credit and now (3) Plug_in credit. These have all been structured differently in the tax law, and not clear we have yet arrived at the proper technique. So far I got 2 out 3 of the tax credits myself. At the rate sales are going, looks like I will have quite a while to make it 3-for-3 on tax credits.

Charles- I don't know who ultimately benefits from the tax credit in that case. Never leased myself. I would think TFS gives the dealer the extra money.

 

Of all the entities being discussed here, I think the dealership is the only domestic one. As I understand it, dealerships are usually owned by local or regional dealership groups; that is, moneyed individuals who live in a nearby upscale neighborhood.

 

...yeah those guys, my theory that's where the tax credit is going if the individual does not get it. But salesman may get a cut too and he/she is struggling sometimes.