Rivian to offer Binding Purchase Agreements (to help obtain EV tax credit)

[Jac]

Taxpayers.

Yes, taxpayers. The tax credit is open to all on an equal basis —- any taxpayer who wants to buy an eligible EV and has federal tax liability is welcome to take advantage of the current tax credit. It’s an incentive to drive behavior, like excluding contributions to tax qualified retirement plans from income is meant to encourage people to take responsibility for their financial security in old age.

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[Friscorays]

The only issue I have is that What I have configured is just under 83k. But I'm worried if this binding contract doesn't work then I'm on the hook and cant do something simple like remove the camp kitchen. Are any of you going to set up the binding contract under 80k just in case?

I also posed the question in another thread but is camp kitchen part of MSRP? or is it an accessory

Don't think anybody can answer the first part based on lack of any firm details from Rivian.

If you purchase the camp kitchen with the truck, it counts toward MSRP just like the max pack, etc.

 

[Tango45]

I really, really doubt these will hold any water whatsoever with the IRS. It's a good marketing move but thinking the IRS will accept a "binding purchase agreement" that doesn't include a VIN is pretty far fetched.

I imagine for the IRS it will be simple: the date you have a VIN is the date the rules apply to your purchase of that VIN.

Anything else is really, really wishful thinking.

That's not really how the IRS works. We will probably have to update Form 8936 "Qualified Plug-In Electric Drive Motor Vehicle Credit" to reflect the language in the law stating that, if you had a binding agreement in place prior to the signing of the law, but placed the vehicle in service after, you still get the credit. It could be as simple as changing line 3 on the form or adding a line 3b: "when was a binding purchase agreement executed?" or words to that effect. We will all fill out the form with the dates that, hopefully, Rivian will get us the agreements and the subsequent vehicles, and we'll file our taxes. At that point, you'd have to get selected for an audit for something to get changed or contested... but the language of the law as quoted elsewhere would stand and you'd be fine. What's simple for the IRS is that the law is the law; this kind of thing isn't really a hard issue for the IRS to manage.

 

[pc500]

Yes, taxpayers. The tax credit is open to all on an equal basis —- any taxpayer who wants to buy an eligible EV and has federal tax liability is welcome to take advantage of the current or new EV tax credit according to the rules for qualification.

The only issue I have is that What I have configured is just under 83k. But I'm worried if this binding contract doesn't work then I'm on the hook and cant do something simple like remove the camp kitchen. Are any of you going to set up the binding contract under 80k just in case?

I also posed the question in another thread but is camp kitchen part of MSRP? or is it an accessory

Legally, Rivian can accessorize anything not bolted to the vehicle. What they'll do... who knows. Worry about that if you're in the post-2023 crowd.

 

[pc500]

That's not really how the IRS works. We will probably have to update Form 8936 "Qualified Plug-In Electric Drive Motor Vehicle Credit" to reflect the language in the law stating that, if you had a binding agreement in place prior to the signing of the law, but placed the vehicle in service after, you still get the credit. It could be as simple as changing line 3 on the form or adding a line 3b: "when was a binding purchase agreement executed?" or words to that effect. We will all fill out the form with the dates that, hopefully, Rivian will get us the agreements and the subsequent vehicles, and we'll file our taxes. At that point, you'd have to get selected for an audit for something to get changed or contested... but the language of the law as quoted elsewhere would stand and you'd be fine. What's simple for the IRS is that the law is the law; this kind of thing isn't really a hard issue for the IRS to manage.

What will take longer is the IRS issuing their opinion on what qualifies as a binding agreement.

 

[Ralph]

I imagine as part of that binding agreement, Rivian will make you lock your configuration? Otherwise what are you "bound" to purchase?

Rivian could simply make you lock a "minimum configuration"; perhaps the base vehicle.

 

[Autolycus]

What will take longer is the IRS issuing their opinion on what qualifies as a binding agreement.

Assuming there's any political will at all for them to even touch the subject and not just let people use their own generous interpretations.

 

[pc500]

Assuming there's any political will at all for them to even touch the subject and not just let people use their own generous interpretations.

They usually provide a general overview of what qualifies. Getting a formal tax determination would take forever, but someone will probably ask for a letter.

In either case, none of it is quick enough for the timeframe (we have 5 days).

 

[electruck]

Here's one thing to keep in mind with regard to having a binding purchase agreement that might entitle you to the "old" tax credit per the transition clause. To get the "old" credit, you would have to file your taxes to claim the credit. If the vehicle is put into service after tax day, on say April 20, 2023, you would have to go back and amend your 2022 return to claim the credit. For $7500 it would be worth it but still additional hassle.

 

[pc500]

Rivian could simply make you lock a "minimum configuration"; perhaps the base vehicle.

There's no indication the ruling has to be VIN or Vehicle specific. Other than to purchase a vehicle. We'll see though.

 

[pc500]

Here's one thing to keep in mind with regard to having a binding purchase agreement that might entitle you to the "old" tax credit per the transition clause. To get the "old" credit, you would have to file your taxes to claim the credit. If the vehicle is put into service after tax day, on say April 20, 2023, you would have to go back and amend your 2022 return to claim the credit. For $7500 it would be worth it but still additional hassle.

It's worth re-reading the rules; but I *think* it's a 2023 credit under 2022 rules under current verbiage.

 

[Tango45]

What will take longer is the IRS issuing their opinion on what qualifies as a binding agreement.

Arguably, yes. There is language in there...

(l) TRANSITION RULE.—Solely for purposes of the application of section 30D of the Internal Revenue Code of 1986, in the case of a taxpayer that— (1) after December 31, 2021, and before the date of enactment of this Act, purchased, or entered into a written binding contract to purchase, a new qualified plug-in electric drive motor vehicle (as defined in section 30D(d)(1) of the Internal Revenue Code of 1986, as in effect on the day before the date of enactment of this Act), and (2) placed such vehicle in service on or after the date of enactment of this Act, such taxpayer may elect (at such time, and in such form and manner, as the Secretary of the Treasury, or the Secretary’s delegate, may prescribe) to treat such vehicle having been placed in service on the day before the date of enactment of this Act.

Bolding is mine. That's where the wiggle room might appear to be. However, all that really means is, "update your forms". It doesn't let the Treasury/IRS say, "I don't agree with the law, so I'll nullify it on my end". I would hold again, that we will all fill out whatever version of Form 8936 and it all gets automatically processed. It's fun to think there's some working group in some conference room in DC exercising "political will", but it's really just a bunch of middle-aged office workers watching this and saying, "ugghhh, guess we have to update a bunch of forms again, womp womp." I'm confident that, if we get something that looks like a binding purchase agreement before this is signed, we'll be fine. Just, you know, keep records.

 

[electruck]

It's worth re-reading the rules; but I *think* it's a 2023 credit under 2022 rules under current verbiage.

Hmm, interesting possibility. Will be interesting to see how this all plays out.

My own interpretation (as completely worthless as that is) of the "taxpayer may elect to treat such vehicle as having been placed in service on the day before the date of enactment of this Act" suggested that one should claim this for 2022 based on the effective in-service date (rather than the actual). So many details to be ironed out around all of this.

 

[pc500]

Hmm, interesting possibility. Will be interesting to see how this all plays out.

My own interpretation (as completely worthless as that is) of the "taxpayer may elect to treat such vehicle as having been placed in service on the day before the date of enactment of this Act" suggested that one should claim this for 2022 based on the effective in-service date (rather than the actual). So many details to be ironed out around all of this.

Most would probably rather this anyways (a known tax quantity is better than an unknown, future tax quantity), even if a refile is part of it.

 

[electruck]

Most would probably rather this anyways (a known tax quantity is better than an unknown, future tax quantity), even if a refile is part of it.

yes... and this very well may have biased my interpretation.

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