QueenBee wrote:I don't understand how the math would pan out. They could certainly lease the car to avoid the income tax return problem but how does taking a new car and converting it into a used car which sales tax will have to be paid when it gets sold allow the dealer to make more money? Maybe these sales were needed to meet a quota or allow them to get more of the back end manufacturer cash?
AFAIC the only way the federal rebate getting paid should be fraud is if it was paid twice on the car. It should just be paid at the time of purchase instead of a tax return credit since all someone has to do lease the car.
I posted a link to the rules a few posts up. The fraud is buying the car to merely get the $7500 tax credit, and the reselling it. It's in the rules.
Some states don't have sales tax, so your above arguments wouldn't apply there. Also, some states (at least Washington, maybe others) don't charge a sales tax on EVs.
But, even a 10% sales tax on a $40,000 car is only $4000 in sales tax. I'd say that $7500 directly in a slimy car dealer's back pocket to then sell a "used" car with extremely low miles would be (and has been) very tempting.
Besides, if they will cheat on the fed tax, they will cheat on the sales tax... Maybe sell the car to themselves at $10,000? Then sell it used for $35k?
No no, I'm not disagreeing that it isn't fraud, just saying that IMO the $7,500 should just be taken off the price instead of as a rebate and then there wouldn't be any way to defraud unless the $7,500 is paid twice on the same car, or on a car that never existed.
These two cars are in WA so sales tax applies but not in the way you are thinking. There is sales tax on USED EVs, just not new EVs.
Again, how does the $7500 go into the dealers pocket? They take a new car that would sell for say $35,344 before the federal refund, then pay licensing fees, possibly lease fees and convert it to a used car. They then try to sell the used car for $27,844 but unless they trick a buyer no one would do since the car would actually cost an extra $2645 after sales tax and could not be leased. Even if they are able to get the asking price they are out money VS just selling the car as new.
BTW: In WA the trick of saying you sold the car for a fraction of the cost, or actually selling the car for a fraction of the cost to say a family member doesn't work. The licensing department has a value for the car that if you don't meet you have to go through hoops to prove that it's not actually worth.