New guidance released for previously-owned and new clean vehicle credits

On June 7, 2024, the Department of Treasury (Treasury) and the Internal Revenue Service (IRS) issued Rev. Proc. 2024-26 [1]. This guidance outlines the procedures for manufacturers of new clean vehicles and dealers or sellers of previously owned clean vehicles to submit information to ensure compliance with the requirements for clean vehicle credits under Sections 25E and 30D of the Internal Revenue Code (IRC). The previously-owned and new clean vehicle credits incentivize the purchase and use of clean vehicles and is part of the Inflation Reduction Act (IRA) of 2022.

What’s changed?

The issued guidance did three things:

1. Updated existing procedures and provides additional guidelines for qualified manufacturers to ensure their vehicles meet the necessary criteria for eligibility. The guidance introduced updated procedures to streamline and clarify the steps that manufacturers must follow to certify their vehicles as eligible for the clean vehicle credits under Sections 25E and 30D. These updates ensure that the manufacturers understand the compliance requirements, including adherence to the vehicle component sourcing regulations.
2. Addressed updates and rescissions related to seller reports and modifies certain sections of previous revenue procedures.
3. Provided the detailed requirements for qualified manufacturers on how to submit information about the vehicles, including compliance with critical mineral and battery component requirements. This information is crucial for determining the eligibility of vehicles for the clean vehicle credit.

Manufacturers are required to attest to the accuracy of this information and report any material changes to the Department of Energy and the IRS. The information must be collected and retained to ensure vehicles meet the clean vehicle credit requirements, and this process involves substantial due diligence on the part of manufacturers.

Compliant battery ledgers are now required

Starting Jan. 1, 2025, manufacturers must submit compliant-battery ledgers that track the anticipated supply of foreign entity of concern (FEOC) compliant batteries for each calendar year. The collection of this information ensures that the clean vehicle credit is applied correctly and that the vehicles benefiting from this credit adhere to the stipulated environmental and manufacturing standards.