Tuesday, May 13, 2008

Hybrid Vehicle Tax Credits: Not Enough MIles per Tax Dollar?

The Inspector General of Tax Administration for the U. S. Treasury (TIGTA) found that complex laws caused the Internal Revenue Service difficulty in administring the alternative motor vehicle tax credit. Although IRS in general provided correct information, taxpayers incorrectly claimed credits which the IRS in some cases missed because of poor controls. Specific concerns included leasees of hybrid vehicles taking credits, credits claimed for non-qualifying vehicles, insufficient documentation or overstating the qualifying amount. The TIGTA asked the IRS to clarify instructions for Form 8910 (where the credit is taken); to consider requiring sellers of alternative fuel vehicles to add documentation at time of sale related to the credit and to correspond with taxpayers if the Form 8910 is not satisfactorily completed. The IRS agreed to implement these findings.

Another case where tax complexity is causing an unsatisfactory result in tax compliance. I'm sure that this is too much to hope for, but it would be nice if Congress required that before a new law was implemented, there would be a trial period to assure that the law was widely understood.


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