The latest clean vehicle FAQs explain what happens if a clean vehicle sale is cancelled or the buyer returns or sells the vehicle. Note, “placed in service” means the buyer takes possession of the vehicle. See Topic A (Q/A 12) and Topic H (Q/A 18)
- Cancelled sale. If a sale is cancelled before the vehicle is placed in service, the taxpayer may not claim a clean vehicle credit. Because of the cancellation a transfer election would not apply. The vehicle would still be eligible for a clean vehicle credit if another taxpayer buys it.
- Returned vehicle. If a taxpayer returns a vehicle within 30 days of taking possession, the taxpayer may not claim clean vehicle credits (either the new or previously-owned clean vehicle credit) for the returned vehicle. If the taxpayer had made the transfer election, the election would be nullified and the dealer would have to recapture any advance payment received as an excess payment.
- For new vehicles, the taxpayer is treated as having placed the vehicle in service before returning it and therefore a subsequent buyer could not claim the new clean vehicle credit.
- For used vehicles, the taxpayer is treated as the second buyer, so a subsequent buyer (the third buyer) would also be ineligible for the previously owned clean vehicle credit.
- Resold vehicle. If a taxpayer resells the vehicle within 30 days of taking possession, the taxpayer is treated as having purchased the vehicle with intent to resell and cannot claim a clean vehicle credit. For the same reasons that apply to returned vehicles, subsequent buyers could not claim clean vehicle credits either.