CA rebates not taxable for feds or state

[PaulScott]

This is from Jay Friedland, Legislative director of Plug In America:

Hi all,
Just wanted to post a quick update. I spoke with a CARB lawyer last week at the AQIP funding workshop and she told me (and the whole room) that the CVRP rebates aren't taxable for either the Feds or State. They will not be sending out 1099s, so I think everyone getting them is in great shape.
- Jay

Jay Friedland
Legislative Director
Plug In America
[email protected]

 

[mwalsh]

I think we all assumed that, but it is rather nice to have it confirmed once and for all.

 

[EVDRIVER]

It does not matter if they send out a 1099 nor does it matter what a CARB lawyer says since they don't write the tax law, enforce or interpret it. What the IRS and FTB say is what matters. Ultimately it is what they say in writing that covers you, not even what they say on the phone to be really precise. I'm not saying someone at CARB may have a written answer but they don't decide what you owe. I have yet to see a definitive answer from the IRS on this, even the tax specialist I called could not give me one and said I had to write a letter. Ignorance can be bliss though I doubt CA will be an issue but the feds could.

 

[SanDust]

It does not matter if they send out a 1099 nor does it matter what a CARB lawyer says since they don't write the tax law, enforce or interpret it. What the IRS and FTB say is what matters. Ultimately it is what they say in writing that covers you, not even what they say on the phone to be really precise. I'm not saying someone at CARB may have a written answer but they don't decide what you owe. I have yet to see a definitive answer from the IRS on this, even the tax specialist I called could not give me one and said I had to write a letter. Ignorance can be bliss though I doubt CA will be an issue but the feds could.

The rebate will reduce your basis but I don't see how it would be income. It's like getting a rebate on a consumer electronic purchase. You pay X and get a lesser amount back. Since you're net negative on payments where would the income come from?

 

[Jimmydreams]

It does not matter if they send out a 1099 nor does it matter what a CARB lawyer says since they don't write the tax law, enforce or interpret it. What the IRS and FTB say is what matters. Ultimately it is what they say in writing that covers you, not even what they say on the phone to be really precise. I'm not saying someone at CARB may have a written answer but they don't decide what you owe. I have yet to see a definitive answer from the IRS on this, even the tax specialist I called could not give me one and said I had to write a letter. Ignorance can be bliss though I doubt CA will be an issue but the feds could.

No 1099 means neither state nor federal will know about the money. You're right, the IRS is the ultimate judge and jury, but if there's no 1099, then what evidence do they have?? In the hustle and bustle of my year, a $5,000 rebate check could easily be forgotten at tax time.....unless there was a 1099 to remind me about it.

 

[hill]

The rebate will reduce your basis but I don't see how it would be income. It's like getting a rebate on a consumer electronic purchase. You pay X and get a lesser amount back. Since you're net negative on payments where would the income come from?

If you go down to Frys ... buy a hard drive that costs $100 ... and you have a rebate coupon for $100 ... guess what ... you STILL pay sales tax. It's not income tax that you pay.

It does not matter if they send out a 1099 nor does it matter what a CARB lawyer says since they don't write the tax law, enforce or interpret it. What the IRS and FTB say is what matters. Ultimately it is what they say in writing that covers you, not even what they say on the phone to be really precise. I'm not saying someone at CARB may have a written answer but they don't decide what you owe. I have yet to see a definitive answer from the IRS on this, even the tax specialist I called could not give me one and said I had to write a letter. Ignorance can be bliss though I doubt CA will be an issue but the feds could.

No 1099 means neither state nor federal will know about the money. You're right, the IRS is the ultimate judge and jury, but if there's no 1099, then what evidence do they have?? In the hustle and bustle of my year, a $5,000 rebate check could easily be forgotten at tax time.....unless there was a 1099 to remind me about it.

Are you kidding? Glad you guys aren't representing me in tax court.
:lol:
Bottom line ... when push comes to shove, only THESE peeps can say what is, and what isn't tax law, where WE live:
http://www.ustaxcourt.gov/judges.htm
I haven't had to represent any one for years, but one thing is still the same. It does NOT matter what the IRS says in many cases ... EVEN when a prior IRS written letter says so. The IRS makes TONS of decisions, ie; or "determinations" ... but the IRS are NOT the law.
http://www.taxalmanac.org/index.php/Internal_Revenue_Code:Sec._6110._Public_inspection_of_written_determinations

(3) Precedential status
Unless the Secretary otherwise establishes by regulations, a
written determination may not be used or cited as precedent. The
preceding sentence shall not apply to change the precedential
status (if any) of written determinations with regard to taxes
imposed by subtitle D of this title.

The IRS is just a tax collection agency. The IRS makes private letter rulings all the time. They don't always hold water. Go to tax court, and you won't even be allowed to cite a IRS private letter ruling that favors your stand!
http://www.taxationtimes.com/2010/09-108-2010-09-01/
AmerGen Energy Co., LLC, v. United States, F.3d (Fed. Cl. 2010)
http://www.taxationtimes.com/2010/09-108-2010-09-01/
Few have the money and the cojones to go up against the IRS ... but it happens. And the opposite happens too. Taxpayers rely on private letter rulings from the IRS ... and they go down for it.

On the OTHER hand, if a CARB attorney (or ANY licensed attorney in your state, for that matter) gives you tax advise such as "it's NOT taxable"? And you rely on it? You CAN go after the attorney for the penalties and interest if (s)he's wrong. You STILL have to pay the tax on your own dime. There's CA case law in effect regarding that. But again ... it better be worth your while. So the IRS is NOT your judge and jury. However, if YOU get a "published Revenue Ruling" from the IRS (that FAVORS your view), those ARE as good as gold, for YOU. Just DON'T think someone else BESIDES you can rely on it. People often do. Most they time they get away with it. Just remember though, it's a gamble.

 

[EVDRIVER]

[/quote]
The rebate will reduce your basis but I don't see how it would be income. It's like getting a rebate on a consumer electronic purchase. You pay X and get a lesser amount back. Since you're net negative on payments where would the income come from?[/quote]


That is a manufacture's rebate, these funds again are not coming from Nissan and it is a third party incentive. Everyone can speculate but only the IRS can rule on this to be precise since they make the rules. If there is no posted policy on the IRS site then one needs to get it in writing as per the IRS to be "covered" in an audit. It may or may not be taxable, only they set the policy. Not the check issuer, not tax preparers, not forum members, not CARB lawyers, it's that simple.

 

[smkettner]

Are any rebates on cars taxable? Automakers have been handing out rebates for many years.
Are any rebates taxable?

Ok not quite the same. But it is the same as it is a reimburesment or reduction of cost, not income.

For better or worse that is how I stand and unless Turbo Tax asks I am listing nothing.

 

[mwalsh]

reduction of cost, not income.

That's certainly the way I look at it.

 

[EVDRIVER]

Are any rebates on cars taxable? Automakers have been handing out rebates for many years.
Are any rebates taxable?

Ok not quite the same. But it is the same as it is a reimburesment or reduction of cost, not income.

For better or worse that is how I stand and unless Turbo Tax asks I am listing nothing.

Funny, Turbo Tax is going to know you received this? No. Everyone can take the risk they choose but the bottom line is that without something in writing from the IRS there is the possibility of it being taxable. Many incentives are taxable, I have been taxed on them before and not getting a 1099 is not the basis that determines if something is taxable.

 

[EVDRIVER]

reduction of cost, not income.

That's certainly the way I look at it.

If it were from Nissan it would be and it would not be taxable. My city solar incentive (rebate), reduced the cost and was fully taxable. You can look at taxes any way you choose but it still will not change an official policy. For anyone in denial about this just call an IRS tax specialist or I suppose one could tell the IRS how to designate it and see how that goes

 

[stanley]

What is a surprise is that one pays sales tax in Ca on the $5,000.00 at time of delivery

 

[EVDRIVER]

What is a surprise is that one pays sales tax in CA on the $5,000.00 at time of delivery

Absolutely, you pay tax on the purchase price, the incentive from a third party agency has nothing to do with that and is not deducted from the sales price. In addition, if you own a business and depreciate the vehicle you will have to deduct the incentive likely and it may open that amount up for IRS disclosure.

 

[smkettner]

What is a surprise is that one pays sales tax in Ca on the $5,000.00 at time of delivery

All rebates work this way. Kills me.

Sometimes products are free with rebates but you pay the tax :evil:

 

[smkettner]

Are any rebates on cars taxable? Automakers have been handing out rebates for many years.
Are any rebates taxable?

Ok not quite the same. But it is the same as it is a reimburesment or reduction of cost, not income.

For better or worse that is how I stand and unless Turbo Tax asks I am listing nothing.

Funny, Turbo Tax is going to know you received this? No. Everyone can take the risk they choose but the bottom line is that without something in writing from the IRS there is the possibility of it being taxable. Many incentives are taxable, I have been taxed on them before and not getting a 1099 is not the basis that determines if something is taxable.

TT will know I bought an electric car and claimed the federal credit. TT also knows I live in CA and file CA taxes. No secrets from TT or the feds.

 

[EVDRIVER]

Are any rebates on cars taxable? Automakers have been handing out rebates for many years.
Are any rebates taxable?

Ok not quite the same. But it is the same as it is a reimburesment or reduction of cost, not income.

For better or worse that is how I stand and unless Turbo Tax asks I am listing nothing.

Funny, Turbo Tax is going to know you received this? No. Everyone can take the risk they choose but the bottom line is that without something in writing from the IRS there is the possibility of it being taxable. Many incentives are taxable, I have been taxed on them before and not getting a 1099 is not the basis that determines if something is taxable.

TT will know I bought an electric car and claimed the federal credit. TT also knows I live in CA and file CA taxes. No secrets from TT or the feds.

It does not know you filed and received a CA state incentive, that is the topic not the fed rebate.

 

[smkettner]

TT is no dummy, if the there is even a romote possibility and it is taxable the question will be asked.
OK maybe you can find an exception but this is basic stuff that would be covered if it applied.
I do have a blind faith in TT.

 

[garygid]

The tax-computing programs usually include several "other" categories, asking you to report any "other" taxable items. It is a CYA for them.

 

[EVDRIVER]

The tax-computing programs usually include several "other" categories, asking you to report any "other" taxable items. It is a CYA for them.

Yes they do, but since the IRS tax specialist asked me to put this question in writing as he could not say either way I doubt TT is more of an expert in this area. When someone shows a ruling on this in writing from the IRS the answer will be definitive as it is very subjective.

 

[smkettner]

This is going to go similar to locating Barack's birth certificate