Joe Manchin to Janet Yellen: Block EV tax credit ‘loopholes’

WASHINGTON — Senator Joe Manchin is calling on the U.S. Treasury Department to prevent companies from exploiting loopholes to circumvent the Suppress Inflation Act’s strict eligibility rules in the electric vehicle tax credit.

In a letter sent to Treasury Secretary Janet Yellen on Monday, Manchin said the commercial EV tax credit would be implemented “in a way that would enhance domestic manufacturing while ensuring economic and national security” and that companies would “It is unacceptable to cheat the system.”

Democrats in West Virginia called for a broader interpretation of a commercial EV tax credit filed last week by some automakers and foreign governments that allows for rental cars, leased vehicles and ride-hailing vehicles like those used by Uber and Lyft. pointed out. Known as 45W, he is eligible for the full $7,500 commercial credit.

Manchin argued that if permitted, the company would effectively bypass the tax credit procurement and assembly requirements for consumers who purchase the new EV known as the 30D.

“If these vehicles are deemed eligible, companies will divert their attention from trying to invest in North America to meet the 30D requirements and instead continue business as usual, further endangering the transportation sector. I can assure you,” he said. In a letter he said

Manchin is calling on the Treasury Department to release guidance to ensure that vehicles used for leasing, rental, or ride-hailing purposes are not eligible for the commercial EV tax credit, in accordance with “the intention of Congress.”

“Instead of trying to find these credit loopholes, domestic automakers should seize the opportunity to consolidate our country’s role as an automotive superpower,” the senator said.

When the Inflation Reduction Act is enacted in mid-August, eligible new EVs must be built in North America. Restrictions on sticker prices, buyer income, sourcing of battery components and critical minerals will take effect Jan. 1, disqualifying automakers that have yet to make EVs in the U.S., such as Hyundai Motor Group.

In addition to the commercial EV tax credit, the law also provides income-qualified purchasers with a used EV equivalent to 30% of the total cost of a used battery electric, plug-in hybrid, or fuel cell vehicle. Includes deductions. The maximum amount of EV credits used is $4,000.

Eligible vehicles eligible for the used or commercial EV tax credit are not subject to the same stringent procurement and assembly requirements as the revised tax credit for new EVs.

Automakers including Rivian, Hyundai and Kia have asked governments to make their consumer vehicle leases eligible for the commercial EV tax credit, Reuters reports.

In comments to the Ministry of Finance, the South Korean government also called for a broader interpretation of the commercial EV tax credit, which applies to rental cars, leased vehicles and vehicles purchased for use in Uber and Lyft fleets, the report said. .

Tesla said the commercial exemption “should apply only to commercial end users” and the consumer tax exemption “should apply only to individual end users,” the report said.

Reuters reports that the Treasury Department will release draft guidance on Dec. 31 to further define how tax credit eligibility limits are met, amid calls from automakers and U.S. allies for flexibility in rules and equal treatment. We are preparing to issue it by the date.