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For those of us waiting for delivery on an i4, any strategies to secure the $7500 tax credit (be cognizant of the Inflation Reduction Act now being legislated) if deliveries slip in 2023?
 

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I'm hoping my deposit, signed term sheet with interest rates and total out the door price, along with an unchanged VIR from Jan is indication of a contract to purchase.



Waiting for my M50......
 
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One important thing everyone should note, is that the transition rule requires certain documentation to be signed BEFORE the date of enactment of the Inflation Reduction Act. If you wait till after the act is enacted, you may no longer be eligible, if you lack the required documentation.

Here's my strategy:
1) Obtain a "motor vehicle purchase contract" from my CA, complete with legally binding contractual obligations and penalties
2) Find the relevant requirements in the transition clause of the Inflation Reduction Act
3) Bring those to my CPA and confirm those are sufficient to satisfy the requirement.
4) If I need anything else, go ask my CA for it.

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My suspicion is that it will come down to what your tax preparer is comfortable filing and the level of scrutiny that the IRS chooses to employ, Since tax enforcement is part of the actual bill, the IRS may look more closely at each individual claim than in years past. I’m working under the premise that if I can’t take delivery in 2022, I need to show that a VIN was issued during the calendar year. Whether or not the tax incentive will trigger a closer examination of your return is anyone’s guess. By adopting a lower standard, you may get the credit initially and then get tripped up in the event of an audit. Everyone has a different level of risk tolerance. I tend to err on the more conservative side.
 

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I checked California consumer protection law.

While a company like Fisker or Tesla can write a contract that requires a non refundable deposit. They can since they are manufacturing the vehicle.

Dealers/brokers in California will find it difficult to write a "binding" contact for a car they do not have possession of or doesn't even have a VIN assigned.

I'm not a lawyer but if someone other than me in California has had a dealer generate a binding contract let me know so I can talk to my dealer. Right now, they are firm that they cannot write a binding contract and they also will not take a non refundable deposit until a car is actually in their possession.

They said it violates CVC on how they can operate and take deposits. If they don't own the car they are brokering the transaction and that's where it gets sticky.

I guess my strategy is pray it arrives before Dec 31.


Waiting for my M50......
 

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I checked California consumer protection law.

While a company like Fisker or Tesla can write a contract that requires a non refundable deposit. They can since they are manufacturing the vehicle.

Dealers/brokers in California will find it difficult to write a "binding" contact for a car they do not have possession of or doesn't even have a VIN assigned.

I'm not a lawyer but if someone other than me in California has had a dealer generate a binding contract let me know so I can talk to my dealer. Right now, they are firm that they cannot write a binding contract and they also will not take a non refundable deposit until a car is actually in their possession.

They said it violates CVC on how they can operate and take deposits. If they don't own the car they are brokering the transaction and that's where it gets sticky.

I guess my strategy is pray it arrives before Dec 31.


Waiting for my M50......
EXACTLY.
 

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I checked California consumer protection law.

While a company like Fisker or Tesla can write a contract that requires a non refundable deposit. They can since they are manufacturing the vehicle.

Dealers/brokers in California will find it difficult to write a "binding" contact for a car they do not have possession of or doesn't even have a VIN assigned.

I'm not a lawyer but if someone other than me in California has had a dealer generate a binding contract let me know so I can talk to my dealer. Right now, they are firm that they cannot write a binding contract and they also will not take a non refundable deposit until a car is actually in their possession.

They said it violates CVC on how they can operate and take deposits. If they don't own the car they are brokering the transaction and that's where it gets sticky.

I guess my strategy is pray it arrives before Dec 31.


Waiting for my M50......
Binding Contract: What Makes a Contract Legally Binding? (contractscounsel.com)

Requirements For a Legally Binding Contract
In order for a contract to be legally binding it needs to satisfy the following elements:

  1. Offer and acceptance : All parties involved in the exchange should agree upon the value of the item exchanged. When one party presents their assessed value of a good or service, the other party/parties must accept or decline this offer.
  2. Consideration/Agreement : In a contract, both parties will gain or receive something and this benefit is called consideration . It can be money, goods, services or anything that is of value to the parties. Both parties need to agree upon this consideration or value.
  3. Mutuality or intention : A contract needs to be mutual and intentional for all parties involved.
  4. Legality : The contract cannot contain unlawful promises or considerations in order to be valid. A promise to do or exchange something that violates the law will make the contract invalid.
  5. Capacity and competence : Capacity means that the parties signing a contract need to have the legal ability to do so. A minor will not have the legal capacity to sign a contract.
Only when these five elements are present, a contract is a binding contract and enforceable.

When Is A Contract Binding | UpCounsel 2022

There are several vital pieces to a contract:

  • Offer. The offer declares one of the parties will provide or do something. Most contracts include a precise time frame to complete the task. If the acceptance time expires, the offer is withdrawn.
  • Acceptance. You can only accept the parts included in the contract. Before an agreement occurs, if there are any new terms to include, this is a counteroffer. You can accept in writing, verbally, or by inferring.
  • Intention of legal consequences. In a contract, all parties know they must abide by the contract, and the law can enforce the agreement. The contract doesn't need to state that you acknowledge the legality of it; however, if the parties don't agree that the contract is legally binding, the contract must state this fact.
  • Consideration. For the contract to be binding, it must have valuable consideration. This means that one party must do something in exchange for a benefit of value, which is the consideration.
  • Terms and conditions. If there's a dispute, the courts examine the terms and conditions in the contract.
  • Breach of contract. This occurs if one of the parties doesn't fulfill the terms and conditions. The courts determine if the contract suffers a breach, and one party might receive damages.
Consideration Component of a Contract
The consideration component includes the obligations and conditions that state what each party must do. It also mentions the performance, payment terms, liabilities, and what happens if there's a breach of contract.


Binding vs. Non-Binding Contracts: What's the Difference? - AXDRAFT blog

Which elements are required for a contract to be legally binding?
Contracts need to contain the following elements to be considered legally binding:
– the capacity of the parties to fully understand and consent to the terms
– consideration or value provided to both parties
– legality of the stipulated conditions or obligations
– mutuality of the agreement
– the establishment of the offer and acceptance of the terms and conditions

-----------------------------

While the wording is slightly different in every description I found for legally binding contract, none make a distinction that the goods must be in the possession of the seller. All descriptions basically say (as part of the consideration component): "the terms, obligations and conditions must be defined" Otherwise it would be impossible to write a legally binding contract to purchase a not-yet-constructed house, because the home-builder would not have possession of the to-be-built-house.
 
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Binding Contract: What Makes a Contract Legally Binding? (contractscounsel.com)

Requirements For a Legally Binding Contract
In order for a contract to be legally binding it needs to satisfy the following elements:

  1. Offer and acceptance : All parties involved in the exchange should agree upon the value of the item exchanged. When one party presents their assessed value of a good or service, the other party/parties must accept or decline this offer.
  2. Consideration/Agreement : In a contract, both parties will gain or receive something and this benefit is called consideration . It can be money, goods, services or anything that is of value to the parties. Both parties need to agree upon this consideration or value.
  3. Mutuality or intention : A contract needs to be mutual and intentional for all parties involved.
  4. Legality : The contract cannot contain unlawful promises or considerations in order to be valid. A promise to do or exchange something that violates the law will make the contract invalid.
  5. Capacity and competence : Capacity means that the parties signing a contract need to have the legal ability to do so. A minor will not have the legal capacity to sign a contract.
Only when these five elements are present, a contract is a binding contract and enforceable.

When Is A Contract Binding | UpCounsel 2022

There are several vital pieces to a contract:

  • Offer. The offer declares one of the parties will provide or do something. Most contracts include a precise time frame to complete the task. If the acceptance time expires, the offer is withdrawn.
  • Acceptance. You can only accept the parts included in the contract. Before an agreement occurs, if there are any new terms to include, this is a counteroffer. You can accept in writing, verbally, or by inferring.
  • Intention of legal consequences. In a contract, all parties know they must abide by the contract, and the law can enforce the agreement. The contract doesn't need to state that you acknowledge the legality of it; however, if the parties don't agree that the contract is legally binding, the contract must state this fact.
  • Consideration. For the contract to be binding, it must have valuable consideration. This means that one party must do something in exchange for a benefit of value, which is the consideration.
  • Terms and conditions. If there's a dispute, the courts examine the terms and conditions in the contract.
  • Breach of contract. This occurs if one of the parties doesn't fulfill the terms and conditions. The courts determine if the contract suffers a breach, and one party might receive damages.
Consideration Component of a Contract
The consideration component includes the obligations and conditions that state what each party must do. It also mentions the performance, payment terms, liabilities, and what happens if there's a breach of contract.


Binding vs. Non-Binding Contracts: What's the Difference? - AXDRAFT blog

Which elements are required for a contract to be legally binding?
Contracts need to contain the following elements to be considered legally binding:
– the capacity of the parties to fully understand and consent to the terms
– consideration or value provided to both parties
– legality of the stipulated conditions or obligations
– mutuality of the agreement
– the establishment of the offer and acceptance of the terms and conditions

-----------------------------

While the wording is slightly different in every description I found for legally binding contract, none make a distinction that the goods must be in the possession of the seller. All descriptions basically say (as part of the consideration component): "the terms, obligations and conditions must be defined" Otherwise it would be impossible to write a legally binding contract to purchase a not-yet-constructed house, because the home-builder would not have possession of the to-be-built-house.
Seriously, what’s your point? The IRS at its sole discretion will make a determination as to what constitutes a legal binding contract. Their interpretation is likely to be very conservative. Based upon all of the restrictions in the proposed legislation, “Maserati Manchin” (his personal car of choice) and the Democrats are doing their best to eliminate the rebate. If you’re so inclined, file for the incentive, roll the dice, and see what numbers come up. Continuing to litigate it here is senseless.
 

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I checked California consumer protection law.

While a company like Fisker or Tesla can write a contract that requires a non refundable deposit. They can since they are manufacturing the vehicle.

Dealers/brokers in California will find it difficult to write a "binding" contact for a car they do not have possession of or doesn't even have a VIN assigned.

I'm not a lawyer but if someone other than me in California has had a dealer generate a binding contract let me know so I can talk to my dealer. Right now, they are firm that they cannot write a binding contract and they also will not take a non refundable deposit until a car is actually in their possession.

They said it violates CVC on how they can operate and take deposits. If they don't own the car they are brokering the transaction and that's where it gets sticky.

I guess my strategy is pray it arrives before Dec 31.


Waiting for my M50......
I checed the California consumer protection law. There is a specific section on conditional motor vehicle sales:
Codes Display Text (ca.gov)

They have specific references to purchase orders:
(l) “Purchase order” means a sales order, car reservation, statement of transaction or any other such instrument used in the conditional sale of a motor vehicle pending execution of a conditional sale contract. The purchase order shall conform to the disclosure requirements of subdivision (a) of Section 2982 and Section 2984.1, and subdivision (m) of Section 2982 shall apply.

And specific regulations for how conditional sale contracts must be executed:
Law section (ca.gov)

CIVIL CODE - CIV
DIVISION 3. OBLIGATIONS [1427 - 3273.16]

( Heading of Division 3 amended by Stats. 1988, Ch. 160, Sec. 14. )

PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS [1738 - 3273.16]
( Part 4 enacted 1872. )

TITLE 14. LIEN [2872 - 3081]
( Title 14 enacted 1872. )


CHAPTER 2b. Automobile Sales Finance Act [2981 - 2984.6]
( Chapter 2b added by Stats. 1961, Ch. 1626. )
2981.9.
Every conditional sale contract subject to this chapter shall be in writing and, if printed, shall be printed in type no smaller than 6-point, and shall contain in a single document all of the agreements of the buyer and seller with respect to the total cost and the terms of payment for the motor vehicle, including any promissory notes or any other evidences of indebtedness. The conditional sale contract or a purchase order shall be signed by the buyer or his or her authorized representative and by the seller or its authorized representative. An exact copy of the contract or purchase order shall be furnished to the buyer by the seller at the time the buyer and the seller have signed it. No motor vehicle shall be delivered pursuant to a contract subject to this chapter until the seller delivers to the buyer a fully executed copy of the conditional sale contract or purchase order and any vehicle purchase proposal and any credit statement which the seller has required or requested the buyer to sign and which he or she has signed during the contract negotiations. The seller shall not obtain the signature of the buyer to a contract when it contains blank spaces to be filled in after it has been signed.
(Added by Stats. 1981, Ch. 1075, Sec. 13. Operative October 1, 1982, or sooner, by Sec. 25 of Ch. 1075, as amended by Stats. 1982, Ch. 129, Sec. 12.)

I am not a lawyer, but it seems fairly clear cut that conditional sales including purchase orders can form the basis for a sale contract
 

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With the IRS you’re dealing with federal law and the federal government will apply one standard to all states regardless of the individual state statutes.
 

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Seriously, what’s your point? The IRS at its sole discretion will make a determination as to what constitutes a legal binding contract. Their interpretation is likely to be very conservative. Based upon all of the restrictions in the proposed legislation, “Maserati Manchin” (his personal car of choice) and the Democrats are doing their best to eliminate the rebate. If you’re so inclined, file for the incentive, roll the dice, and see what numbers come up. Continuing to litigate it here is senseless.
My point is that the requirement for a VIN, or actual possession of the vehicle by the seller, is not stated anywhere in the Inflation Reduction act or any definition of a legally binding contract. I don't understand how people are coming to that conclusion. Do you have examples where the IRS made a determination that a contract which conforms to the definition of a legally binding contract, is not a legally binding contact? On what basis is your suggestion that they will be conservative?
 
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Bottom line is that you’re not going to know until you file your taxes and the IRS makes a determination as to whether your individual submission is valid or rejected. No one knows what form the final legislation will take, however, there’s every reason to believe that the IRS will be taking a close look at these submissions. Anyone who unequivocally needs the incentive in order to purchase the car should think through things carefully.
 

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Bottom line is that you’re not going to know until you file your taxes and the IRS makes a determination as to whether your individual submission is valid or rejected. No one knows what form the final legislation will take, however, there’s every reason to believe that the IRS will be taking a close look at these submissions. Anyone who unequivocally needs the incentive in order to purchase the car should think through things carefully.
Ok fair. I would also add that if you want the tax credit, push your CA to sign a sales contract that conforms to the definition of a legally binding contract now, before the Inflation Reduction Act is enacted. Whether or not the IRS considers that a valid contract, if you don't have what is required by the transition rule, you will not be able to even apply for the credit.
 
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Ok fair. I would also add that if you want the tax credit, push your CA to sign a sales contract that conforms to the definition of a legally binding contract now, before the Inflation Reduction Act is enacted. Whether or not the IRS considers that a valid contract, if you don't have what is required by the transition rule, you will not be able to even apply for the credit.
You’re going to be hard-pressed to find a dealer that will willingly deviate from long established business practices and write a contract that can be construed as legally binding. Last thing they want us to get tied up in a dispute with the IRS. It just isn’t going to happen. Your best bet remains to get a VIN before the end of the year and write a contract for the sale of a specific unit. Also, you need to be dealing with the finance manager since a client advisor is unable to bind the dealership. Do you have a production number yet?
 

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You’re going to be hard-pressed to find a dealer that will willingly deviate from long established business practices and write a contract that can be construed as legally binding. Last thing they want us to get tied up in a dispute with the IRS. It just isn’t going to happen. Your best bet remains to get a VIN before the end of the year and write a contract for the sale of a specific unit. Do you have a production number yet?
I already have one. This "Motor Vehicle Purchase Contract" is my contract that conforms with all 5 requirements for a legally binding contract.
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Roll the dice. You may get lucky. Then again, you may crap out. Let us know next April.
what's the alternative... don't roll the dice and just leave the $7500 on the table?
 

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what's the alternative... don't roll the dice and just leave the $7500 on the table?
If you're unlucky, the IRS may decide you committed fraud. That'll cost you a lot more than $7,500 + penalties + interest.
 

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By all means file. Just don’t count on it. If you get it, it’s a gift. Best insurance policy is still to have a 2022 VIN. (Parenthetically, going up against the IRS will cost you a lot more than $7500.)
 
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