As the year's end approached, the Internal Revenue Service promised regulations for some clean vehicle provisions of the Inflation Reduction Act, as well as updated guidance on accounting methods for some research and experimental expenses.
The Inflation Reduction Act of 2022 made several changes to the new clean vehicle credit for qualified electric drive motor vehicles, and added a new credit for previously owned and commercial clean vehicles.
In Notice 2023-1, issued Thursday, the Treasury and the IRS laid out the regulations they intend to propose regarding defining certain terms relevant to the clean vehicle credit of Section 30D, including "final assembly," "North America," "manufacturer's suggested retail price," vehicle classifications, and "placed in service."
The proposed regs, which are supposed to be issued in March, may allow imported vehicles to qualify for the credit, a possibility some have said is inconsistent with the intent of the law. (See "U.S. Treasury signals opening for foreign carmakers on EV subsiday.")
The regs will also offer guidance on the critical mineral and battery component requirements.
At the same time, the IRS issued Fact Sheet 2022-42, a set of frequently asked questions that address how the IRA revised the clean vehicle credit, and provide a variety of related information.
The IRS has also posted a list of makes and models of vehicles that may qualify for the credit as of Jan. 1, 2023.
Meanwhile, Notice 2023-9 provides a safe harbor regarding the incremental costs of some vehicles that are qualified for the Sec. 45W commercial clean vehicle credit, based on a Treasury Department review of a Department of Energy analysis.
Finally, the service also updated its guidance on accounting methods for specified research or experimental expenses. Revenue Procedure 2023-11 supersedes Rev. Proc. 2023-8, to "encourage timely compliance with changes made by the Tax Cuts and Jobs Act of 2017."
