Chevy Volt Buyback Sets Stage for Tax Credit Abuse
General Motors has announced it is buying back Chevy Volts from any purchasers who are concerned about safety risks associated with the vehicle. NHTSA is currently investigating fires that occurred after crash tests of the vehicles when the volatile lithium-ion batteries ignited days after the tests. Any buybacks of the vehicles sets the stage for wealthy purchasers to take advantage of lax rules for the $7,500 tax credit available on the vehicle. Essentially, many purchasers can return their Volts and then go ahead and apply for the credit, even though they do not currently own the vehicle and received a refund of what they paid for the car.
Overall abuse of the tax credits for plug-in vehicles is costing taxpayers millions of dollars. A USA Today article back in February estimated false claims for the credits at 20% equaling $33 million just for the first seven months of 2010. It is probable that the number has dramatically increased. The problem with the current scenario of ex-Volt owners scamming the tax credits is that it may be legal.
IRS form 8936 for plug-in tax credit does not specifically state that the individual claiming the tax credit must own the vehicle for a minimum time period, let alone currently own the qualified vehicle. A draft of the 2011 form does require a VIN number, something that was previously lacking which I suggested be added to the form back when I reported that dealerships were gaming tax credits. Anyone who purchased a Volt would have a valid VIN along with documentation for the vehicle including registration and sales receipts. If they choose to take GM up on the buyback offer and receive their money back for the vehicle, there is nothing to prevent them from applying for the tax credit. And even if the IRS tightens the rules, it will be hard to prevent those with documentation from applying for and receiving the credit.
Most of the Chevy Volt buyers are more affluent than the average American taxpayer. Ironically, those criticized by the Obama Administration for not paying their fair share of taxes are benefiting from the administration's wasteful green policies; specifically those revolving around electric vehicle promotion that does little to benefit the environment or foreign oil dependence. Evidence continues to mount that the push towards electrification of America's auto fleet is costing billions of dollars only to benefit the wealthy purchasers of subsidized vehicles along with political cronies, like Obama pal Jeff Immelt who heads GE which sells the subsidized charging stations. It is past time to end the corrupt and wasteful spending of taxpayer funds on Obama's green boondoggle. Congress should start by repealing the $7,500 tax credit for the rich on plug-in vehicles which are selling for upwards of over a $100,000 for a Tesla. I'm sure that President Obama would agree that the wealthy purchasers can afford it.
Mark Modica is an NLPC Associate Fellow.