GM Trying to Limit Tax Credit Abuse on Chevy Volt Returns

When General Motors announced its 60 day return policy for the Chevy Volt over a week ago, I contacted them to make them aware of the potential for tax credit abuse on returned vehicles that qualify for federal and state subsidies. At the time, GM spokesman Jim Cain did not think that it would be an issue and it was up to purchasers to decide if they would submit for tax credits on Volts that they returned for refunds. I spoke with Mr. Cain to follow up on the story.

Mr. Cain has informed me that GM is working on language for buyers to sign off on, which is essentially a pledge for purchasers not to claim tax credits on returned Volts. Unfortunately, Mr. Cain admits that there is still “nothing to stop” purchasers from going ahead and claiming the credits, even if they sign off on a form claiming that they will not. The pledge is not enforceable and the tax form for plug-in vehicle credits (in its current form) allows for the purchaser to take advantage of the free money.

It will be up to the IRS to decide if it wants to modify form 8936 to put restrictions on the amount of time a vehicle must be owned to qualify for the federal tax credit of $7,500. This form was updated for 2011 to include an identifier field for VIN numbers of qualified vehicles. This change came after I suggested the need for such a basic measure when I brought to light the fact that dealerships were purchasing Volts from other dealerships, taking the tax credits and reselling the cars as used. A database would also be needed to track the claiming of credits for eligible vehicles and preventing double claims.

It is highly likely that there will be (and already has been) a great deal of abuse of the EV (electric vehicle) tax credits. There does not seem to be sufficient safeguards in place to prevent double-claiming of the credits. What will stop a buyer who buys a used Volt (which does not qualify for the credit) which had previously been returned with low miles on it from again claiming the credits? And does a buyer of a Volt who owned the car for 30 days and then returned it for a refund deserve to get $7,500 of federal funds, possibly in addition to state credits?

I find it hard to believe that GM was unaware of the potential tax credit abuse of returned Volts before I exposed the story. The pressure is on to show an improvement to lackluster sales for the Volt as the Obama Administration tries to reach a goal of having a million EVs on the road in a few years. The political motivations seem to outweigh the desire to preserve tax revenues (or profits in the case of GM), especially considering that President Obama is trying to have the federal EV subsidy increased to $10,000. Billions of dollars are being wasted on promoting green energy policies that seem to do nothing but enrich cronies or wealthy buyers of EVs. Democrats and Republicans alike have stood by and allowed the wasteful subsidies to continue as Congressman Mike Kelly’s bill to repeal EV subsidies seems to be going nowhere. Is it any wonder that America’s budget problems do not have a solution in sight?

Mark Modica is an NLPC Associate Fellow.