IRC 30D Plug-In Electric Drive Motor Vehicle Credit Sales Definition Clarification

Recently, it has come to our attention that there is confusion regarding the quarterly report required by Public Notice 2009-89 (“the Notice”).  Specifically, the confusion surrounds how to calculate the number of qualified vehicles sold that is to be reported by the manufacturer.  It is our interpretation that the quarterly sales reporting pursuant to the Notice should reflect only the sales to a party for which state title passes for the first time.

Among other requirements, Section 5.05 of the Notice states that the quarterly report must contain “[t]he number of qualified vehicles sold by the reporting entity to consumers or retail dealers during the calendar quarter.” Furthermore, Section 1 of the Notice states, “[t]his notice also amplifies Notice 2009-54 and Notice 2009-58, 2009-30 I.R.B. 163 (relating to the plug-in electric vehicle credit under § 30) to provide that a vehicle is considered “acquired” when title to that vehicle passes under state law.”  Specifically, Section 4.07 of the Notice provides that “[a] vehicle is not “acquired” before the date on which title to that vehicle passes under state law.”  Additionally, Section 1 of the Notice states, “[t]his notice also provides guidance to taxpayers who purchase motor vehicles regarding the conditions under which they may rely on the vehicle manufacturer’s (or, in the case of a foreign vehicle manufacturer, its domestic distributor’s) certification in determining whether a credit is allowable with respect to the vehicle and the amount of the credit.” The aforementioned guidance to taxpayers who purchase motor vehicles can only be provided if the quarterly sales report specifically indicates the number of qualified vehicle that were “acquired for use or lease by the taxpayer and not for resale.”

Accordingly, quarterly sales reports should reflect only the sales to a party for which state title passes for the first time. The reference to “retail dealers” in Section 5 of the Notice has been included for situations involving the dealership placing the vehicle into service by securing title to the vehicle (such as loaner or demo vehicles), and should not be interpreted to mean that manufactures should only report their sales to retail dealers. However, a dealer that secures state title to a new qualified plug-in electric drive vehicle and places the new qualified plug-in electric drive vehicle into service should be reflected in the quarterly sales report.

Therefore, for the Notice to serve its purpose of properly notifying motor vehicle purchasers of the conditions allowing them to rely on manufactures certifications to determine the credit allowance and amount, the quarterly sales reports should reflect only the sales to a party for which state title passes for the first time.