GOP senators press IRS on enforcement of electric vehicle tax credit

A group of Republican senators is pressing the IRS for information about how it enforces the electric vehicle tax credit after a Treasury Department watchdog found that millions of dollars of credits were potentially claimed erroneously. 

In a letter dated Monday to IRS Commissioner Charles Rettig, the senators said they want information about “what appear to be systemic problems” with the tax-credit program.

Fifteen GOP senators signed the letter, including Senate Finance Committee Chairman Chuck Grassley (R-Iowa), Senate Homeland Security and Governmental Affairs Committee Chairman Ron Johnson (R-Wis.) and Senate Environment and Public Works Committee Chairman John Barrasso (R-Wyo.).

In 2011, the Treasury inspector general for tax administration (TIGTA) released a report finding $33 million worth of plug-in electric and alternative motor vehicle credits that were claimed erroneously from Jan. 1 through July 24, 2010. TIGTA said that the IRS didn’t have adequate processes to ensure that information from taxpayers claiming the credits met qualifying criteria.

In September, TIGTA issued another report finding that while “the IRS has taken steps to address some of TIGTA’s previous recommendations to improve the identification and prevention of erroneous credit claims, many of the deficiencies previously identified still exist.” The report, which examined credits claimed from 2014 to 2018, found more than $70 million in potentially erroneous plug-in credits claimed. 

The Republican senators wrote in their letter that “it is troubling that these improper payments continue and have more than doubled in size in the eight years since they were first reported.” 

The letter comes as a number of lawmakers, particularly Democrats, have expressed interest in expanding electric vehicle tax credits. A few Republicans have joined with Democrats in backing an expansion, but many others have been highly critical of the credits.

The GOP senators who signed the letter to the IRS said that the problems TIGTA has identified with the tax-credit program are “even more concerning” as Congress considers expanding the program, arguing that the program “overwhelmingly benefits wealthy electric vehicle owners in one state.”

The GOP senators cited a Wall Street Journal editorial that stated sales data show that about half of all electric vehicle sales occur in California alone.

The senators asked the IRS for information about the amount of credits erroneously claimed, whether the IRS has conducted a program-wide audit of the credit, what actions the agency has taken to reduce erroneous claims and whether it would help the IRS if there were new reporting requirements for dealers of electric vehicles.

A trade association that promotes electric-vehicle technologies said that it’s appropriate for the IRS to inform Congress about its administration of the credit, but also argued that the credit has merit.

“The plug-in credit was created with bipartisan support to promote investment in electric mobility and secure the energy, environmental and economic security benefits of the technology, including maintaining US competitiveness in the global marketplace,”  Genevieve Cullen, president of the Electric Drive Transportation Association, said in a statement. “The credit has been demonstrably effective in advancing those goals.”

– updated at 6:30 p.m.