Sioux City Journal: Tax credit program for electric cars deserves scrutiny

Jeff Patch
Sioux City Journal
February 25, 2020

Senator Chuck Grassley is seeking greater scrutiny of a tax credit program for electric cars after oversight revealed pervasive problems – including widespread fraud. Grassley’s watchdog role is important, as Democrats are pushing to expand the program.

In a letter to IRS Commissioner Chuck Rettig, Grassley pressed for more information about how the IRS administers the $7,500 credit for purchasing all-electric and plug-in hybrid cars.

Last September, the Treasury Inspector General for Tax Administration released an audit report finding that taxpayers improperly claimed $73 million in tax credits for electric vehicles and that the IRS “does not have effective processes to identify and prevent [these] erroneous claims.”

It’s not the first time the IRS has identified major problems with the credit. In 2010, about $33 million in tax credits for electric plug-in cars were awarded to people who purchased vehicles ineligible for the credit, according to a similar audit.

“It’s troubling that these improper payments continue and have more than doubled in size,” Grassley wrote. “The apparently systemic problems with the electric vehicle tax credit are even more concerning as Congress considers a potential $15.7 billion expansion to the program, which overwhelmingly benefits wealthy electric vehicle owners in one state.”

The popularity of electric cars has surged in recent years, boosted by the popularity of Tesla, steady improvements in battery strength of electric vehicles (EVs), and the incredibly generous tax credit.

EVs now constitute nearly two percent of all cars sold, a market share that is increasing rapidly. As of March last year, more than 1.18 million EVs were on the roads, but those benefiting from the tax credit are predominantly wealthy Golden State residents. More than 150,000 such vehicles were sold in California in 2018, compared to just 917 sales in Iowa.

Read more here.