If you are over the income limits (150/300k) of the new bill and haven't gotten your truck....

[GrokTime]

I agree. Basically my reading is that in general a non-refundable deposit is not enough for the IRS to consider the contract to be binding. However, despite that, if the deposit is at least 5% then they will treat it as binding.

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[cvalue13]

However, despite that, if the deposit is at least 5% then they will treat it as binding.

[EDIT: to avoid apparent confusion: below I am NOT talking about F150Ls with deliveries in 2022; as I thought clarifies above, that posture is fine - below is instead about other EV’s not assembled in NA delivered in 2022, or any EV delivered in 2023 and busting any of the bill’s req’s like MSRP, income, battery minerals, etc.]

a bit more that a >5% non-refundable deposit would go into the “probably binding” bucket (weighed against any other indications in the “probably not binding” bucket); whereas a <5% non-refundable deposit gets placed in the “probably non-binding bucket” but could be combined with enough of other elements (depending on state law, etc.) in the opposing “probably binding” bucket to ultimately be weighed as binding, all things considered.

put differently, the attempted contracts with refundable deposits, non-refundable deposits <5% of purchase price, or contingent upon any decision(s) by either the buyer or seller to not perform, are going to have a steep hill to climb to still yet otherwise be found as “binding” in the eyes of the IRS

will be interested for the tax folks to weigh in on just how that will work, procedurally (eg, putting on evidence of state law factors, with IRS factors, etc.), together with legal contract interpretation.

 

[PiMatrix]

a bit more that a >5% non-refundable deposit would go into the “probably binding” bucket (weighed against any other indications in the “probably not binding” bucket); whereas a <5% non-refundable deposit gets placed in the “probably non-binding bucket” but could be combined with enough of other elements (depending on state law, etc.) in the opposing “probably binding” bucket to ultimately be weighed as binding, all things considered.

put differently, the attempted contracts with refundable deposits, non-refundable deposits <5% of purchase price, or contingent upon any decision(s) by either the buyer or seller to not perform, are going to have a steep hill to climb to still yet otherwise be found as “binding” in the eyes of the IRS

will be interested for the tax folks to weigh in on just how that will work, procedurally (eg, putting on evidence of state law factors, with IRS factors, etc.), together with legal contract interpretation.

Are you talking about ford lightning here? It is assembled in USA. If you buy and take delivery anytime in 2022 it will get ITC $7500 credit with or without any binding contract. And the more your income the quicker you deduct the itc as you pay more tax. End of story, you are grandfathered.

Now if you bought a car not assembled in North America or free trade agreement areas that is still eligible for tax credits <200k vehicles + 2 quarters then you better have a binding contract before today.

I think there are some ‘22 buyers that are still worried about what the new law means for them this year and basically nothing has changed for lightning.

 

[cvalue13]

Are you talking about ford lightning here? It is assembled in USA. If you buy and take delivery anytime in 2022 it will get ITC $7500 credit with or without any binding contract. And the more your income the quicker you deduct the itc as you pay more tax. End of story, you are grandfathered.

Now if you bought a car not assembled in North America or free trade agreement areas that is still eligible for tax credits <200k vehicles + 2 quarters then you better have a binding contract before today.

I think there are some ‘22 buyers that are still worried about what the new law means for them this year and basically nothing has changed for lightning.

im only talking about vehicles to which the “binding agreement” might have applied, which broadly speaking include two buckets:

(1) any EV taking delivery after yesterday but before 1/1/23 that is not assembled in North America (which does it include the F150L)

(2) (less clear but still theoretically in play) any EV taking delivery after 1/1/23 that busts any of the other new bill caps/req’s (eg MSRP cap, income cap, battery minerals req, battery complimentary req, etc.)

for folks in the two postures above, whether or not they succeeded in achieving a “binding” agreement will be the $7,500 question

 

[bydabeach]

Are you talking about ford lightning here? It is assembled in USA. If you buy and take delivery anytime in 2022 it will get ITC $7500 credit with or without any binding contract. And the more your income the quicker you deduct the itc as you pay more tax. End of story, you are grandfathered.

Now if you bought a car not assembled in North America or free trade agreement areas that is still eligible for tax credits <200k vehicles + 2 quarters then you better have a binding contract before today.

I think there are some ‘22 buyers that are still worried about what the new law means for them this year and basically nothing has changed for lightning.

Agree with you.

From the IRS link posted above, quote:

"Vehicles Purchased and Delivered between August 16, 2022 and December 31, 2022

If you purchase and take possession of a qualifying electric vehicle after August 16, 2022 and before January 1, 2023, aside from the final assembly requirement, the rules in effect before the enactment of the Inflation Reduction Act for the EV credit apply (including those involving the manufacturing caps on vehicles sold). If you entered into a written binding contract to purchase a new qualifying vehicle before August 16, 2022, see the rule above. "

https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-and-irc-30d

 

[cvalue13]

Agree with you.

From the IRS link posted above, quote:

"Vehicles Purchased and Delivered between August 16, 2022 and December 31, 2022

If you purchase and take possession of a qualifying electric vehicle after August 16, 2022 and before January 1, 2023, aside from the final assembly requirement, the rules in effect before the enactment of the Inflation Reduction Act for the EV credit apply (including those involving the manufacturing caps on vehicles sold). If you entered into a written binding contract to purchase a new qualifying vehicle before August 16, 2022, see the rule above. "

https://www.irs.gov/businesses/plug-in-electric-vehicle-credit-irc-30-and-irc-30d

Yeah, didn’t mean to implicate the F150L delivered in 2022 at all, and thought that was clear but went back and added an EDIT to the front of that post to make clear.

Grok and I had moved on, to talking instead about vehicles for which the “binding” transition rule was ever applicable (which does not include a F150L delivered in ‘22)

 

[ExCivilian]

I agree. Basically my reading is that in general a non-refundable deposit is not enough for the IRS to consider the contract to be binding. However, despite that, if the deposit is at least 5% then they will treat it as binding.

Contracts adhering to CA law may qualify. Dealerships can't refuse to refund deposits in CA so they shouldn't have called the consideration a "deposit."

EDIT: for example, this contract from Rivian, a CA-based company, binds the purchaser to buying the vehicle without obligating Rivian to produce/deliver the vehicle. It also segregates the non-refundable "consideration" ($100) from the refundable "deposit" ($1000).

All of our "deposits" are refundable while Tesla's "order fees" are not.

I think there are some ‘22 buyers that are still worried about what the new law means for them this year and basically nothing has changed for lightning.

I believe there are two delivery deadlines relevant to the F150L that could impact '22 buyers:
Battery composition < guidance issued; no later than 12/31/2022 11:59pm.
MSRP and income limits > 12/31/2022 11:59pm.

 

[cvalue13]

MSRP and income limits =< 12/31/2022 11:59pm.

I see nowhere for you to arrive at this conclusion

The title of the the section you are (presumably) referencing is “per-vehicle dollar limits” but these sections are not talking about the MSRP/Income caps, they are talking about per-vehicle credit dollar limits: see red below for section title, but blue below for relevant provisions

Now see those relevant sections, in yellow:

FINALLY, note that all this means in 2022 is that if and only if the Secretary issues it’s guidance before 12/31/22, any EV delivered thereafter may satisfy both, either, or neither of the applicable new 40%/50% minerals/component requirements, to receive potentially the dual $3,750 credits for either or both of the minerals/components requirements.

So, while this has nothing to do with the MSRP/income thresholds (which do not become effective until 1/1/23), it does beg two primary questions about applicability to the F150L later in 2022:

(1) in these situations, does the Secretary ever/rarely/always release such guidance in advance of the guidance long-stop date (here 12/31/22), and

(2) maybe less-importantly, do Ford’s batteries comply with either or both of these prongs for the battery mineral/component requirements?

I stay maybe less-important because the answer to this question seems like exactly what the IRS will be deciding how to determine, Ford and other US manufacturers will be lobbying around, etc., right up until the guidance is published. So, not only can (2) not really be answered presumptively today (the IRS is still deciding), but also there’s some reason to believe this rule (if we’re optimistic) is an outcome waiting for an explanation (that is, the guidance will look to preserve North American assembled credits at least for 2022).

The last point is obviously conjecture (before anyone asks to show my work), but otherwise points broadly to the fact that the IRS is creating the rules to determine whether for how F150L battery minerals/components will satisfy the requirements for 2022.

Turning back to the MSRP/income caps:
under the “Effective Date” provision, no other carve-out to the 1/1/23 ED relates back to the MSRP/Income caps (see green below)

 

[ExCivilian]

I see nowhere for you to arrive at this conclusion

It was a typo. I corrected it in the interval between you quoting it and posting your response (note my edit timestamp was 20 minutes before your post timestamp). You and I agree on this point.

People who have orders in already who might not get their trucks until after Dec. 31st (in regards to MSRP/Income caps) or anytime between now and Dec 31st (in regards to battery) needed to have signed binding contracts no later than yesterday.

Where you and I seem to disagree is whether Ford customers (or possibly any domestic manufacturers' customers) needed to have signed those contracts; I believe we did.

 

[cvalue13]

Today I tore my calf, and am on enough vitamin-P (steroids) to put an end to this silly tit-for-tat (for me at least).

every time I choose brevity, you recast-it into some incompleteness as though every thought need explicating to not draw your professorial double-speak. So here’s your personal TL;DR:

It was a typo. I corrected it in the interval between you quoting it and posting your response (note my edit timestamp was 20 minutes before your post timestamp). You and I agree on this point.

I don’t follow:

I believe there are two delivery deadlines relevant to the F150L that could impact '22 buyers: … MSRP and income limits > 12/31/2022 11:59pm.

I guess I can squint and see that as a confusing way to say: the MSRP/income caps do not apply to deliveries in 2022?

My difficulty reading that could be fueled by several days of the contrary assertions:

Where you and I seem to disagree is whether Ford customers (or possibly any domestic manufacturers' customers) needed to have signed those contracts; I believe we did.

Nah - it was early on obvious vehicles delivered in 2023 would be subject to to all parts of the new law (but for *potentially* having *certain types* of a “binding• agreement - whatever that meant for people not taking deliveries until 2023).

Granted, I didn’t get into the nuances of the battery composition/Secretary guidance b.s., because - to my mind and experience - that is a nuance that was beyond the scope of the questions being asked as well as far too much conjecture on IRS proceedires and rule-making history to have any merited answer (though I did later raise it when it became on point, noting explicitly it’s a “who knows”).

Bites at apples, not apple as all at once (this post not included).

Instead, and for related reasons, the threads here have been largely if not exclusively focused on people instead taking delivery in the next few days, weeks, or before 2023 - yourself included - each worrying which parts of MARP/Income portions of bill might apply to them despite taking delivery in 2022. See for example the title to this thread.

Confusions fueled in no small part by things like:

But that's not even the worst of it: now we have a new $80K MSRP limit that will completely screw over anyone who ordered a Lariat ER with a special paint. Looks like I've got an $8,000 paint job coming into port in a few weeks...

So.....looking at this it appears like the only thing that effect Lightning before Jan 1 is the Assembly requirement AND the Per dollar(MSRP cap)--but he MSRP cap has to dictated in guidance first.

That's how I'm reading it, as well.

The Transitional Rule (quoted on the first page by OP) is explicit that any EVs purchased after the bill is signed into law will fall under the new rules.

But hey, as I was once told by a law professor:

I wouldn't beat yourself up too much trying to figure this stuff out. It takes me a few years to teach a student the nuts and bolts of contract law and then they'll take a lifetime perfecting that knowledge in the field while focusing on a very narrow, specific aspect of the broader corpus of contract law.

Otherwise, I only ever intended to add that Ford unlike other auto companies wasn’t pushing out a “form” sort of “binding” contract not because it didn’t care for its customers (as you asserted) but likely because (1) Ford didn’t need to like the foreign assemblers needed to, and/or (2) unlike Rivian, Ford wasn’t a joke of a “company”, on the verge of bankruptcy, needing anything but bad news for its sales prospects, and apparently with a General Counsel foolish enough (or pressured enough) to have let the company actively put forward a substantive contract for customers to execute under time-pressure, all while misleading customers with inaccurate language that fairly suggested the MSRP limits went into effect at the bill’s signing (see below) unless they hand over non-refundable fees:

I’ll admit that I’m not perfectly well versed in California’s version of a Deceptive Trade Practices Act, but here in Texas and many other states these misleading statements (made in the statement above but also in other versions of tweets, CEO statements, etc.) would on some views be fairly characterized each as violations of DTPA statues - a violation for each statement, multiplied by each person induced by the statements to give away that $100 fee, at statutorily-defined per-violation penalties.

All for what? If I were representing the board of this company (like others I represent), I’d direct them to fire Rivian’s GC, and find out if any other executives pressured the GC to sign-off, then fire them in a press release announcing refunds of those $100 fees.

Afterall, my feeling had always been that pushing for these “binding” agreements, for cars merely on order and not delivered until 2023, was very likely a waste of time in order to achieve any current clarity as to enforceability unless a person was able to actually sign a purchase agreement (which dealers, much less FoMoCo, was extremely unlikely to do this week for a vehicle with potential 2023 delivery - and surely not without it being a non-standard sales contract with so many caveats it becomes unlikely to be “binding” in any way the average customer wouldn’t need legal representation to understand).

Or as someone else put it (before later shifting views and urging others to sign these form contracts ASAP):

If you want to attempt this [binding agreement], you need to approach the owner of a dealership, offer them a non-refundable order fee, and sign/counter-sign a CA Motor Vehicle Purchase Agreement. I don't think any CA dealership will do this but those are the steps you'd need to take in order for this adhere to this upcoming law as it's currently written.

Main difference here being, as a practicing lawyer, I wouldn’t run around recommending to strangers on online forums to hurry up and enter into substantive contracts across from sophisticated and unsophisticated auto manufacturers, without minimal legal representation.

Much to the relief of the entire forum, I’m done with this. You responding would be the only thing more sad than this post.

apologies all. I blame the steroids, and poor upbringing.

 

[ExCivilian]

The issue is that no one knows when they'll get their truck...including me. Some poor soul had one shipped within a hundred miles of him before being sent back to MI. I think he's been waiting four months. The only way to be certain you'll qualify for the $7,500 tax credit is to have a binding contract signed and dated before yesterday.

The MSRP and income caps don't apply until next year but there's no guarantee one's truck will be delivered before next year. There are a lot of people waiting and ordering right now that won't receive their trucks until after the new year that would have benefited from having a binding contract. I don't think it's accurate to write off everyone's concerns on the basis of they'll probably get their truck in time. Even if that is true, a lot of people ordering now were expecting to get some kind of credit but may not get any.

Some of those posts were made before I'd read the bill myself. A couple times I conflated MSRP/income caps with the battery stuff. Sometimes I corrected myself and then I stopped because it didn't end your attack upon me--just like this response to me clarifying that I made a typo.

Much like you did in this post, your approach to the conversation isn't one of mutual respect or conversation but rather it's structured in a way to provoke; your earlier personal attacks were so persistent and prolific that I started to get caught up in irrelevant minutiae out of sheer defensiveness.

I don't consider explaining a process of securing a purchase order to be recommending that process. Also, the Nissan contract was posted as an example of how one might write a contract that absolved the dealer/manufacture from certain obligations because, as you quoted, I predicted dealerships wouldn't want to sign binding contracts.

I'm not sure why you're so locked into this conflict with me. I don't try to instigate you; I'm sorry if one of my past posts has offended you. I'm just trying to have discussions with people.

 

[TaxmanHog]

Another thread needing a cooling off period.

Until Treasury has completed revision work all theoretical arguments should be dialed down a notch.

These links will reflect changed documents some time by the end of the year, maybe sooner.
https://www.irs.gov/pub/irs-dft/i8936--dft.pdf
https://www.irs.gov/pub/irs-dft/f8936--dft.pdf

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