Kristina Meier had done everything right.
She bought a plug-in electric minivan in September and knew she wanted to claim the $7,500 federal EV tax credit. And Meier, a physicist, wasn't afraid of a little research. "I'd read the IRS website," she says. She pored over the requirements for eligibility and for paperwork.
As she was finalizing the purchase of her new car, she told the finance rep that the dealership would have to report the sale to the IRS and send her paperwork confirming it. The IRS instructions emphasized that to get the tax credit, she'd need a "seller report" — and the dealership sent her a document with those words on the top. She thought she was all set.
But a few weeks ago, when Meier tried to claim the EV tax credit, the IRS rejected her return.
She'd done everything right — but her dealer hadn't.
The electric vehicle tax credit underwent a big change in 2024. It was a change that — for hundreds of thousands of people — made the valuable credit easier to access and more useful. But for a smaller number of buyers, it created a way for the credit to slip through their fingers.
A new option for an up-front rebate
The EV tax credit has been around for years, but after the Inflation Reduction Act passed during the Biden administration, it got a shake-up. Now there's also a credit for used vehicles, as well as stricter battery-sourcing requirements for new ones.
And, in a very significant change, the credit is now available to car buyers as a rebate at the time of purchase. That means instead of waiting for months to get a credit on their tax returns, buyers can get the credit knocked off the price of a vehicle and even use it as a down payment.
That has been good news for many consumers. It has made the credit much easier to access, especially for people with lower incomes and smaller tax bills, who can't take advantage of the credit at tax time.
To pull off this change, the IRS created a new online portal for the 2024 tax year. Dealers had to enroll in the new system to accommodate customers who wanted to claim the rebate up front.
But crucially, dealers also had to use the portal to report sales for buyers who planned to claim the credit at tax time — that is, dealers couldn't use the same forms they'd used prior to 2024.
The Treasury Department and the IRS, working with the National Automobile Dealers Association and state dealer associations, did repeated rounds of outreach to spread the word about the changes. A former Treasury staffer, who did not want to be named because they aren't authorized to speak for the current administration, said that the outreach primarily focused on how to offer the credit up front. But, the former staffer said, "We did make it very clear that if you want to participate at all, this is what you have to do."
The Treasury Department, IRS and NADA have not responded to NPR's requests for comment.
Steven Barber, a certified public accountant who works with hundreds of dealers, says that the IRS and NADA did "a good job" getting the word out. He personally wrote memos for a state dealer association and walked his clients through the new process.
"Our dealers are not having any issues with it, but it doesn't surprise me that other dealers are having issues," he says. "If you're not paying attention …"
Not all dealerships signed up for the new system
By last September, over 14,000 car dealers were registered to report sales to the IRS using the new portal. That's most of the dealers in the U.S.; last year, there were just under 17,000 franchised car dealers nationwide, according to the dealers' trade group.
But that still left some 3,000 dealers that weren't in the system — including the Santa Fe, N.M., dealer where Meier bought her vehicle.
NPR has talked to a half-dozen other EV buyers throughout the country who are having trouble getting their credits because their various dealers didn't report the sale. Heatmap, a climate-focused news outlet, has also covered this problem, speaking to several other shoppers and reviewing dozens of accounts on social media.
Every customer NPR spoke to understood their dealer wasn't offering the rebate up front. But they were still under the impression they could get the credit later.
Some, including Meier, even requested confirmation that their dealer had followed the right process. And they received documents from their dealers that were labeled as "seller reports," just as the IRS told them to expect. But they turned out to be outdated forms. They might have worked in 2023, but they weren't valid in 2024.
Other buyers didn't realize that there was a process to follow at all.
Meier's dealership, Lithia Chrysler Dodge Jeep Ram Fiat of Santa Fe, acknowledges that it made a mistake last fall. Michael Garza, the general manager, says that his employees just used the paperwork that was loaded into their dealership computer systems.
"It was the wrong form," he says. "We're working to get it resolved for the customer."
The problem is that it may be too late. Dealers weren't just required to use the new system. They had to report sales within three days.
Meier says that her dealership now has access to the portal — an employee showed it to her. But, she says, the employee still wasn't able to submit the sale to the IRS. The system rejected it because the sale date was too far in the past.
It's not yet clear how many buyers are affected
Of course, since most dealers did sign up for the new portal, many EV purchases were properly reported to the IRS — more than 300,000, with the overwhelming majority of the tax credits delivered up front as rebates.
It's not clear how many buyers, like Meier, might have fallen through the cracks. Over a million new electric vehicles were sold last year in the U.S., but many of those transactions would not have been eligible for the credit in the first place. (Buyers need to be under an income cap, and new vehicles need to meet strict battery-sourcing requirements.)
"It's early in the filing season," says Alison Flores, the manager of the Tax Institute at H&R Block. "We haven't seen enough people to really get a fair sample. So I really can't tell you how common this is."
But, she says, H&R Block is seeing more EV credits rejected than it had anticipated.
Flores says that the changes the IRS made to allow that up-front tax rebate were, overall, very positive changes. But they carried a risk.
"This is a new system," she says. "And unfortunately, consumers and dealers have struggled to get apprised of the new rules."
Frustrated customers NPR spoke to are considering different remedies: working with the Taxpayer Advocate Service, calling their representatives in Congress, filing paper returns with letters of explanation, appealing the rejection of their credit through an IRS process, weighing legal action against dealers.
And all of them had plans for the money they thought they were saving. Meier intended to use her credit to build up a nest egg after years of grad school. Another buyer was going to pay off a student loan. A retiree in Maine who bought a used EV had planned to put the credit toward living expenses, like covering his heating oil bill.
The IRS could take a step to solve this problem by temporarily allowing retroactive reports. The agency has done that before.
But multiple sources contacted for this story expressed concern about whether the upheaval in the federal government would make it more challenging to resolve this problem. The IRS is currently laying off thousands of people, including those hired specifically to help taxpayers resolve problems and to help implement the tax credits in the Inflation Reduction Act.
In the meantime, Flores recommends that anybody who is planning to claim the EV tax credit file their return as soon as possible, so that if they encounter a problem, they have time to try to resolve it.
And if you're planning to buy an electric vehicle this year, she says, lock that discount in as an up-front rebate to avoid getting an unpleasant surprise next year.
Meier is still hopeful she'll be able to get the credit — eventually. And despite the headache, she has no regrets about her purchase.
"We love the car," she says. She raves about the convenience of plugging it in at home, the gas savings, the extra room for car seats and finally having a backup camera.
But the tax credit process has left her more than a little frustrated. "Both my husband and I do research for a living," she says ruefully. "And we still struggled with trying to figure out all this information — and were unsuccessful."
Copyright 2025 NPR
