No tax credit for customers with binding contracts.

[mkg3]

What's comical about these CPAs is that none of them state that Binding Contracts are governed by State Law not the IRS...

Any CPA trying to armchair quarterback themselves into these conversations should explicitly state this fact...

Okay I'll take the bate....

Since it's a federal tax credit through IRS, what does any state law do??

If the tax credit is for state income tax, then state law would have an affect but I do not believe any state law can supersede federal laws.

Case in point is those states with legalized pot. Pot businesses cannot use banking services for the most part because banks are federally regulated, and pot is not legal by the federal government.

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[JerseyGreens]

Okay I'll take the bate....

Since it's a federal tax credit through IRS, what does any state law do??

If the tax credit is for state income tax, then state law would have an affect but I do not believe any state law can supersede federal laws.

Case in point is those states with legalized pot. Pot businesses cannot use banking services for the most part because banks are federally regulated, and pot is not legal by the federal government.

In the United States, contracts are governed by state law. There is no such thing as U.S. contract law.

 

[mkg3]

In the United States, contracts are governed by state law. There is no such thing as U.S. contract law.

That's not the point. What does the state law determination has to do with the IRS tax ruling on credit eligibility.

 

[Riv_Ian]

I read a few weeks ago that some EV manufacturers were going to offer leases since they could get the $7500 tax credit directly from the federal government - some business purchase rule? I wonder whether Rivian could refinance the purchased vehicles of those with the purchase agreement and deliveries after 1/1/23 and obtain the rebates.

 

[JerseyGreens]

That's not the point. What does the state law determination has to do with the IRS tax ruling on credit eligibility.

Because it involves a binding agreement (for some of us) aka a contract which is governed by State Law. It has nothing to do with where the rebate is coming from - try to parse those two items.

For people who haven't signed a BPA the contract issue is a moot point.

 

[mkg3]

Because it involves a binding agreement (for some of us) aka a contract which is governed by State Law. It has nothing to do with where the rebate is coming from - try to parse those two items.

For people who haven't signed a BPA the contract issue is a moot point.

I get that it is about the signed BPA. Even if it is deemed legal by a state, it does not mean that the IRS will accept and allow it. That's the point.

I do have a signed BPA and, while its nice to get a tax credit, it is not necessary in my mind for decision to go through with the purchase of Rivian.

 

[JerseyGreens]

I get that it is about the signed BPA. Even if it is deemed legal by a state, it does not mean that the IRS will accept and allow it. That's the point.

I do have a signed BPA and, while its nice to get a tax credit, it is not necessary in my mind for decision to go through with the purchase of Rivian.

Look at this way....the IRS can deny the rebate for many other reasons but if they want to based on the BPA not meeting the definition of a Contract...then they must look at State Law...

 

[VHRivian]

Look at this way....the IRS can deny the rebate for many other reasons but if they want to based on the BPA not meeting the definition of a Contract...then they must look at State Law...

this is correct.

The IRS determination of binding contract is tied to contract law in your state.

 

[freshpow]

I get that it is about the signed BPA. Even if it is deemed legal by a state, it does not mean that the IRS will accept and allow it. That's the point.

I do have a signed BPA and, while its nice to get a tax credit, it is not necessary in my mind for decision to go through with the purchase of Rivian.

Uhh…from the IRS website directly:

“What is a written binding contract?

In general, a written binding contract :

is enforceable under state law, based on the state and relevant facts and circumstances, and…”

 

[Dark-Fx]

Speaking as a CPA (for many years), I can tell you that many of you will be sorely disappointed by your "home grown" interpretation of what constitutes a "binding contract".

Consult your personal tax adviser before making any decisions based on what you "think" or what you read online.

The people who can afford a high end EV have been well and truly screwed by the latest revisions to the tax credits. I am neither seeking nor accepting new clients, and my only advice is "call your tax guy".

I'd fire you if you were my CPA.

 

[Jac]

I think what constitutes a binding purchase agreement is the lesser concern compared to its applicability beyond 2022.

Totally agree. Plenty of R1S preorder holders who signed Rivian binding purchase agreements prior to enactment of the Inflation Reduction Act are now looking at estimated delivery windows in 2024. I’m one of them. Odds of the IRS allowing my BPA to qualify for a $7500 tax credit on my 2024 tax return: slim to none.

 

[JohnB R1T]

I'd fire you if you were my CPA.

Just out of curiosity, WHY? Note that the ONLY thing I've posted in this thread is the message that you quoted above.

Would you fire me because I said that some people's interpretation of what constitutes a binding agreement is going to cause them disappointment? I can guarantee that it will. You only have to read the many and various viewpoints expressed here (and elsewhere) on the topic to know that some are diametrically opposed to others and some people will be disappointed.

I did not state or imply that the Rivian BPA wouldn't hold up...but the IRS hasn't yet indicated (much less ruled) that it will or won't. There is a valid concern that a $100 deposit is not "substantial" enough. Some states forbid "non-refundable deposits" by law. How would no loss translate into "substantial"? These are all questions that eventually will be answered, and some of those answers may well be disappointing. In any case I offered no opinion either way on any of that. I haven't faced the question (for myself or a client), haven't formulated any opinion and seriously doubt that I will ever need to. I further stated that I wouldn't accept any new clients (and none of my existing ones either own a Rivian or have one on order.), so I'm not out "fishing for work" here.

Perhaps you think that the government's (carefully targeted) elimination of many (maybe most) 2023 buyers of Rivians from eligibility for any tax credit didn't constitute a "screwing". If you'd fire me for holding that opinion, have at it.

Maybe you'd fire me because I advised people to get professional advice. For the record, getting that advice can save you substantial penalties in the event that the IRS takes exception to the position you took. If that needs further explanation...see your tax professional.

 

[JerseyGreens]

@JohnB R1T - I would never have to fire you because I would never hire you...

If you understood every states interpretation surrounding contracts then sure speak with confidence but you don't...

In fact I consulted with a Litigation Attorney and guess what?? The BPA is a resoundingly strong Contract as defined under NJ Law.

Calling that a home grown theory is uneducated crap on your part...

 

[JohnB R1T]

@JohnB R1T - I would never have to fire you because I would never hire you...

Calling that a home grown theory is uneducated crap on your part...

Read my lips...I did NOT call the Rivian BPA a "home grown theory".

 

[racekarl]

this is correct.

The IRS determination of binding contract is tied to contract law in your state.

This is not (entirely) correct. That’s one part they mention. The other is that it NOT limit damages. A $100 penalty on a $75-90k contract amount seems doubtful to meet that standard.

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