08-04-2022, 02:00 PM | #1 |
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Is anyone able to do a Binding Contract with their dealer for a future delivery?
My i4 should hit the dealership around late October. I have a VIN. But one of the provisions of the proposed Inflation Reduction Act legislation to quality for the $7500 credit is the existence of a binding contract to purchase between the dealer and buyer. A VIN and refundable deposit doesn't seem like it meets this criteria.
Has anyone been able to do something contractually with their dealership? (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 as having been placed in service on the day before the date of enactment of this Act. |
08-04-2022, 02:05 PM | #2 | |
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08-04-2022, 02:20 PM | #3 |
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08-04-2022, 02:25 PM | #4 |
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08-04-2022, 02:44 PM | #5 |
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Yes. But the law goes into effect immediately on the day the President signs it. And my understanding is that it replaces the current legislation. Yes, the old law does apply. BUT you have to meet certain criteria for it to apply.
"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" ... "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 as having been placed in service on the day before the date of enactment of this Act. 11 So if the act is enacted on Sep 15, 2022 for example, the date the President signs it into law, you needed to be in a binding contract PRIOR to Sep 15, 2022 - and the car would be considered as having been in service on Sep 14, 2022. I think most people THINK that since the new legislation applies to cars delivered from 1/1/23, that the old rules apply for deliveries up to 12/31/22. But from what I read, that doesn't seem to be the case. I'd rather try not to roll the dice on $7500 if it's avoidable. Last edited by mbchris; 08-04-2022 at 02:57 PM.. |
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08-04-2022, 05:29 PM | #9 |
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In addition to the price cap and domestic production provisions there is this—
"The income cap returns, although now with much lower limits—individuals buying a new EV with an adjusted gross income (AGI) of more than $150,000, heads of households with an AGI of more than $225,000, or joint filers with an AGI of more than $300,000 would not qualify any longer." Much can change between now and the final vote but the current draft certainly excludes the i4 from the federal tax credit. |
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08-05-2022, 05:29 PM | #10 |
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It's not retroactive, and many components don't apply until Jan 1, 2023. But part of it does take effect before Jan 1, 2023.
Specifically: (2) FINAL ASSEMBLY.—The amendments made by subsection (b) shall apply to vehicles sold after the date of enactment of this Act. and subsection (b) says the credit applies when final assembly "occurs within North America.". |
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08-06-2022, 07:57 AM | #11 |
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IANAL and please interpret this as you think best, but I did a search for 'binding' and 'transition rule' and came across an old post from 2018 that I think is relevant to the 'transition rule' in the Inflation Reduction Act.
The first key point was that the IRS issued guidance on 'written binding contracts' (and material modifications). The IRS specifically wrote about some of the items that a company must consider in evaluating whether an agreement constitutes a 'written binding contract'. The second key point was that one of the main evaluation points was the 'enforceability under applicable law' section. That section had a line that said, "In addition, the obligation will be considered binding solely to the extent of the amount stated in the contract. Any payment in excess of the legally obligatory amount (other than due to the application of a reasonable interest rate or investment returns) may not be grandfathered." https://twitter.com/winstonlaw/statu...i1sWsADO8qN4fQ So all this to say, I think the IRS may have to issue guidance around this issue if it doesn't get modified before the Act is signed (if the Act does indeed ever get signed). And I'm hoping that there's similar guidance around what will be considered binding and that it’s solely based around the 'price' (i.e., the amount stated in the contract) that was agreed upon by all parties involved. Hopefully, the "written binding contract to purchase" part of the transition rule is related to ensuring that the amount stated in the contract can't be modified later on. Again, IANAL but the reading of a previous transition rule certainly helped me feel better about what the current transition rule might be referring to. (p.s. - I'm not a regular on this site but I've been searching multiple enthusiast sites to get information and felt I should share what I've found since I often benefit a lot from the conversations that have already been ongoing.) Last edited by bucoshi; 08-06-2022 at 08:20 AM.. |
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08-09-2022, 04:37 PM | #12 |
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Thanks. So I'd also like to see if there is a consensus on what that means. Several folks on here are worried that they need a written agreement. Have these folks given a deposit and gotten a signed paper with price, options, etc?
If not, are you just waiting in line to put a deposit down? If I DO have a deposit down and signed papers as such with the options selected and a price, does this count?? I just looked at the four pages with our signature on each one. None of them are titled as any specific type of doc. One rather amateurish page has written checkmarks next to "Order" and " Deposit". |
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08-09-2022, 04:50 PM | #13 | |
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08-09-2022, 04:59 PM | #14 |
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08-09-2022, 05:25 PM | #15 | |
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Looking at these papers, like I said there is no title on most of them. Pg1- Primary one just has the dealer logo on the top and says for internal use. Only, identifies the sales person, date, customer name and address and contact info, vehicle specifics as "2023 BMW" with a stock number but no Vin. It shows the market value selling price plus the "dealer options" they force on you (window tint, nitrogen, door edge guards, FFS), and the tax and final price. No signature on this page. Pg2- The second page actually is titled "vehicle inquiry report" whatever that means. It shows the model, i4 eDrive40, the order status = 047, and other corporate information, then it shows the design/ MSRP which shows the base model and all the color and options we chose where the price at the bottom. This one has our signature. Pg3- page 3 is meaningless, shows the MSRP has built with a picture of the car, and on the right lists out basically the same information, model information and all options and has our signature again. Pg4- You can tell page 4 is a dealer specific add-on, and has our name and amount of deposit and handwritten stock number, year, make, model and our credit card information, and has checkmarks next to "order" & "deposit". This one has our signature & date. My wife is convinced that this qualifies as a purchase agreement. Since it is still refundable, I'm not so sure.... Last edited by heatmizr; 08-09-2022 at 05:38 PM.. |
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08-09-2022, 06:29 PM | #16 |
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08-09-2022, 08:59 PM | #17 | |
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If the agreement is a legally enforceable one, that happens to say the deposit is refundable if the order is canceled, that counts. |
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08-09-2022, 09:01 PM | #18 | |
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08-09-2022, 09:02 PM | #19 |
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I just received what I would consider a binding contract to purchase my iX that I've had inbound since mid-June from my dealer. The vehicle just left Bremerhaven today, so I expect to use this contract to determine my eligibility to still receive the $7500 tax credit under the grandfathering clause in the "new EV credit" bill.
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08-09-2022, 09:07 PM | #20 | |
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Now, so what makes a purchase agreement legally enforceable? Cornell law school says:
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Adequate consideration - is it a reasonably fair trade according to the market? Or is someone fleecing you, or selling you something for peanuts to skirt tax laws or something? Capacity - IOW are you old enough to make such a binding agreement? Legality - is it legal for them to sell you this vehicle? Or are they trying to sell you a car they don't own or something? Of course my opinion is that if the IRS are in up to their elbows in scrutinizing your preorder docs to this degree you probably have bigger issues |
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08-13-2022, 09:17 AM | #22 |
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The EU has also cottoned on to this and has been saying it’s a breach of the WTO agreements and is discriminatory against all non-US built BEVs.
Of course they could just ship the cars on dollies without wheels, mark them as needing final assembly and put the wheels on at the relevant VPC…..but that might be bending rules a little far, creative or not. |
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