20% of Electric and Hybrid Tax Credits Claimed Erroneously

The Treasury Inspector General for Tax Administration released a new report a few days ago asserting that individuals received millions of dollars in erroneous plug-in electric and alternative motor vehicle credits

Here's what the TIGTA found:

As of July 24, 2010, TIGTA identified 12,920 individuals who electronically filed their tax returns and erroneously claimed $33 million in plug-in electric and alternative motor vehicle

credits. In addition, 1,719 of the 12,920 individuals also erroneously reduced the amount of Alternative Minimum Tax owed by almost $5.3 million. During this review, management took corrective actions to reduce erroneous claims when process weaknesses were brought to their attention. These actions have resulted in an estimated $3.1 million in revenue protected. The erroneous claims TIGTA identified resulted from inadequate IRS processes to ensure information reported by individuals claiming plug-in electric and alternative motor vehicle credits met qualifying requirements for vehicle year, placed in-service date, and make and model.

In addition, TIGTA found that the IRS is unable to track and account for plug-in electric and alternative motor vehicle credits claimed by individuals on paper-filed tax returns. Processes were not established to capture this information from paper-filed tax returns.

Finally, our review of electronically filed tax returns also identified individuals who erroneously claimed the same vehicle for multiple plug-in electric and alternative motor vehicle credits or claimed an excessive number of vehicles for personal use credits. TIGTA also identified improper claims for the credits by prisoners and IRS employees. TIGTA has referred the information on the IRS employees to its Office of Investigations for further review.

You can download a PDF of the TIGTA's full report at Treasury.gov...

Hybrid Sales Decent in September, but Still Down

With the credit freeze, and people scared of loosing their savings accounts, car sales have dropped drastically in the last month. Although most companies saw sales drop by as much as 30% in September, according to AugoblogGreen, “U.S., General Motors actually did better than many companies with only a 15.8 percent drop in September compared to last year. There were even some bright spots in the numbers with the Malibu being up 192 percent and the Vibe jumping 91.1 percent. GM's hybrid models are also continuing to gain ground with 1,957 units moved during the month. The combined total of Tahoe and Yukon Two-Mode Hybrids topped 1,000 for the first time and the Malibu and Vue mild hybrids held steady at 382 and 443 respectively. The new Escalade hybrid still hasn't climbed into triple digits and the Saturn Aura still doesn't seem to be more than an afterthought with 31 sales. All together, GM has sold 9,053 hybrids through nine months.”

Although General Motors does have impressive numbers, according to CanadianDriver.com, “ales of hybrids in the U.S. in September dropped 8.9 per cent to 20,836 units when compared to September 2007, the lowest September sales volume since 2005, according to a report by the Green Car Congress. Overall sales of light-duty vehicles in the U.S. in September dropped 26.6 per cent year-on-year; hybrids accounted for 2.2 per cent of the new vehicle market share for the month.

Sales of the Prius dropped 13 per cent to 10,873 from September 2007, which Toyota said is due to continuing limited availability. The Prius will be built at a plant in Mississippi in late 2010 to help meet demand. Camry Hybrid sales were down 33.6 per cent to 2,785 units, representing 9.4 per cent of all Camry models sold in the month; total Camry sales were down 27 per cent. The Highlander Hybrid rose to 921 units, up from 193 in September 2007, and represented 16.1 per cent of all Highlander sales, which dropped a total of 30 per cent from 2007, to 5,729 units.”

8 Reasons to Buy a Hybrid

With gas prices putting a strain on everyone’s wallets, hybrid sales are soaring. But do not let the sticker price of a hybrid vehicle scare you – there are plenty of incentives to consider both before and after the purchase. Although we all probably know a handful of obvious reasons to buy a hybrid vehicle, there are actually a lot of incentives that you may have never heard of.

1. The Obvious

Gas consumption levels are much lower for hybrid vehicles (up to 50 mpg in city driving conditions). Studies show that by the 2^nd or 3^rd year (less if you commute or drive often) of owning the vehicle, the gas you’ve saved will have already paid for the car.

2. Future Value

Hybrid vehicles hold their value very well. After years of well-kept ownership, the value of hybrids usually only drops a few thousand dollars. This is partially because hybrids have low idle rates as their engines usually shut off at stoplights, and turn back on when you press the gas pedal again. This causes much less stress to the vehicle’s engine.

3. Maintenance

Hybrid vehicles, particularly the Toyota Prius, are made with parts that do not require much maintenance. As a Prius owner, you will only need check ups and oil changes as often as you do with normal cars.

4. Tax Incentives

Although the tax breaks have definitely decreased over time, certain tax cuts are still available to some hybrid buyers in many states. With the ongoing energy crisis, there is also growing pressure on Congress and the President to extend the old hybrid credits, or even create better ones.

5. Insurance Savings

A decent amount of insurance companies are also beginning to offer discounts for hybrid car owners. Before you buy a hybrid, call around a few different insurance companies to see if you qualify for any alternative fuel discounts.

6. Low, Manageable Leases

Major car companies, such as Toyota, have recognized the demand for hybrids is increasing and offer impressively low leases (as low as $219 a month) to help consumers who cannot afford to buy a new car.

7. Impressive Warranties

Toyota, Ford, and Honda all offer extended warranties on hybrid specific parts of their vehicles. The battery packs alone in the Toyota Prius have warranties that average out to about 12 years of use.

8. Funding a Good Cause

Buying a hybrid vehicle is one way to directly fund fuel-efficient technology. By buying and using a hybrid vehicle, you are making a statement on the ongoing energy crisis in this country.

Green Car of the Year: Chevy Tahoe Hybrid

Green Car Journal founder Ron Cogan announced yesterday that this year’s Green Car of the Year Award is the Chevy Tahoe Hybrid. It received the award for demonstrating that a large vehicle with could still offer fuel economy equivalent to that of a much smaller car. Five cars were nominated for this award including the Saturn Aura Green Line, Chevy Malibu Hybrid, Nissan Altima Hybrid and Mazda Tribute Hybrid.

2007 Nissan Altima Qualifies for Hybrid Credit

Last week the IRS announced that the new 2007 Nissan Altima Hybrid meets the requirements of the Alternative Motor Vehicle Credit as a qualified hybrid motor vehicle. The full credit amount for the vehicle will be $2,350 but will only be available to a limited number of taxpayers. For more information visit the IRS’s website.