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I bought a 2015 Chevy Volt with 2600 miles this last week. I was told by the dealer that it was a demo and was considered a new sale and eligible for manufacturers rebates.The sales contract reflects that it is a new sale. I asked the salesman if the dealer had claimed the tax credit. He said no. I also asked him if he had an MSO. He said it would be locked up upstairs and there wasn't anyone to get it since it was 8pm on Friday night. This made sense in my head at the time since the upstairs was dark and it was late. In the end the salesman did leave a bad taste in my mouth with his sales games and no knowledge about the car, but I felt like I got a fair deal at the end of the day.

Fast forward to a week later and I receive the title paperwork in the mail with a title and the car is titled in the dealers name. My biggest concern is that the dealership claimed the credit and lied to me, but I've read enough in the forums to know that only the IRS knows this and I won't find out until I file next year. If they didn't claim the tax credit what would I list as the in-service date on the IRS form? The date I bought it? I love the car, but I'm bummed I didn't know about this site until after I purchased it. Any advice would be appreciated.
 

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For a new car, the in service date is the date you bought it. If the car was titled previous to you whether by the dealer or someone else, it's a used car and not eligible for the $7500 tax credit.

Did you have them put in writing anywhere that it was a new car, not previously titled? Regardless, you could try to get them to take the car back. Just don't hold your breath.
 

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So without an MSO, you really don't have proof that it is sold as new in the irs's eyes. I suggest storming back to the dealership, demanding either a valid MSO or $7500 off the price of the car. threaten to get your attorney involved as well as the states attorney since the salesman appears to have lied to you. Hindsight being 20/20 never buy a volt without an MSO.
 

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On the other hand, we don't know what you paid. Maybe you got a fantastic deal.
 

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I would start to worry right about now. The MSO must be signed by the purchaser at the date of sale for title and lender compliance purposes. Failure to provide it would prevent filing of title work and funding on the contract with the lender.

While I've never dealt wit Missouri, I can think of a dozen states of hand that I have first hand knowledge with and all operate under the same protocol. In addition, I know three of banks that we work with who do business in the Midwest and all require the MSO to fund a deal.

Edit - To the point: if yout didn't sign the MSO, that's a giant red flag. As a finance manager at a CJDR chain and as a CPA, I have a bad feeling.
 

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Ok I have a question. Does anybody know of anyone anywhere that was denied the credit by the IRS because the car was a demo? Or because the dealer misrepresented what the car was? I would love to hear the story. I am pretty sure you have nothing to worry about.
 

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Dealers seem to be under the impression that any new car sale is tax credit eligible because they didn't claim it already. In fact, that is not true as the car has been titled to them and you are not the original owner as specified on the IRS form. I have worked exactly this issue with a dealer and I really think they were blissfully ignorant of the original owner part. I suspect that they have sold other Volt demos (DRAC cars) before in this manner and not been questioned about it by the customer, the customer's accountant, the customer's lawyer, or the IRS, so they mistakenly assume that it is ok. "That's the way we've always done it" doesn't make it right.

At the end of my conversation with my accountant, he gave me the following final tidbit of advice, " You can believe me, or you can believe that car salesman." Nuff said.

This practice appears to date back to the original version of the IRS form, which did not ask for the car's VIN number, so there was no telling which cars had been claimed and which had not.

In any event, assuming they haven't already claimed the tax credit as the state they did not, and you have a buyer's order or bill of sale that states it is a new car purchase, you can claim the credit and present your story and documentation to the IRS if they question the situation. I would not recommend this if you had not already purchased the car, but you may be backed into a corner on this situation.

I would definitely go discuss the matter with the dealer. I would start in a polite matter, but likely escalate my tone and volume substantially in inverse proportion to the success of the conversation.
 

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One possible outcome would be the dealer claiming the credit as it is rightfully theirs. And immediately refunding the $7500 to you. They may need some assistance from your attorney and/or accountant to realize that this is the proper solution. And that doing this would avoid issues of misrepresentation, fraud, and possibly dispensing advice about accounting and/or legal matters with out the proper qualifications.

Steve
 

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I would definitely go discuss the matter with the dealer. I would start in a polite matter, but likely escalate my tone and volume substantially in inverse proportion to the success of the conversation.[/QUOTE]

I concur. I would add that skipping the sales rep and going straight to the finance and title department would save you a headache.
 

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Ok I have a question. Does anybody know of anyone anywhere that was denied the credit by the IRS because the car was a demo? Or because the dealer misrepresented what the car was? I would love to hear the story. I am pretty sure you have nothing to worry about.
I am thinking that this has not yet been a big issue so far. Plenty of demo cars and DRAC cars have been sold and the tax credit claimed by the buyers. Surely we would have heard some screaming from the buyers if their tax credits were denied. And surely there would have been a lot of consternation directed at the Dealers and GM. You would think that kind of negativity would have gotten their collective attention enough to put a stop to this misrepresentation, whether it was purposeful or not.

Stuff like this is absolute fodder to local TV news reporters to get on the air with a report investigation a customer's complaint. Haven't seen one of them either. But it would be a great way to start getting the dealer's attention if the initial conversation does not go as desired. You might have to shop the idea by a few news stations to find one willing that this dealer doesn't advertise on much.

The wise dealer is silent on the tax credit, referring the customer to his/her tax advisor for details and eligibility information other than the fact that the car MAY be eligible for it.
 

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I still want to know of one example where any of this has happened.....You guys are going to give the guy a heart attack. Surely if what you are saying could happen then someone on the forum knows someone it happened to??? I think not.
 

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One possible outcome would be the dealer claiming the credit as it is rightfully theirs. And immediately refunding the $7500 to you. They may need some assistance from your attorney and/or accountant to realize that this is the proper solution. And that doing this would avoid issues of misrepresentation, fraud, and possibly dispensing advice about accounting and/or legal matters with out the proper qualifications.

Steve
Except, if I bought the volt, claimed the $7500 after already selling the car to someone else, the irs may have an issue with me applying for the tax credit of a car i no longer own. The dealership no longer owns this car.
 

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Except, if I bought the volt, claimed the $7500 after already selling the car to someone else, the irs may have an issue with me applying for the tax credit of a car i no longer own. The dealership no longer owns this car.
True........
 

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I still want to know of one example where any of this has happened.....You guys are going to give the guy a heart attack. Surely if what you are saying could happen then someone on the forum knows someone it happened to??? I think not.
You are probably right. As long as the dealer didn't receive a tax credit, the irs can't tell from the form whether your volt is new or used. The only situation which might bring this in question is if they find two claims on the same vin. Or if you get audited for any other reason and they ask to see your MSO.
 

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You are probably right. As long as the dealer didn't receive a tax credit, the irs can't tell from the form whether your volt is new or used. The only situation which might bring this in question is if they find two claims on the same vin. Or if you get audited for any other reason and they ask to see your MSO.
But you don't want to be the buyer involved when the IRS realizes this little quirk that dealers may have been ignoring for 4 or 5 years and decides to put an end to it.
 

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But you don't want to be the buyer involved when the IRS realizes this little quirk that dealers may have been ignoring for 4 or 5 years and decides to put an end to it.
So I revert back to my original suggestion to go bat$#!+ crazy on the dealership and insist on a steep discount for selling a used car as new.
 

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No, I don't remember signing the MSO when I signed all of the paperwork. Would the dealer have told the lender the car was used, but put in contract with me and all other paperwork that the car was new? Even the application for Title and License in MO stated that the car was new.
 

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Doesn't the MSO get turned into to get the title? So if I was audited by the IRS, how would I get a copy of that? Various google searches tell me I'd have no luck. I'd hope my sales contract stating that my car was a new purchase with current rebate eligibility and the application for title stating it was a new car (that they created) would show fraud by the dealership, but I don't have any tax expertise.
 

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Ours was a demo with 3K miles on it. It had been used as a loaner for Volt customers whose cars were in for repairs. We were told that if we bought it outright, we would be eligible for the tax credit. We ended up leasing because we got a better deal. Judging from the rebates we got from the finance company, it appears that they're counting on getting that rebate themselves.

On the other hand, ours had never been titled. The fact that yours was seems troubling to me. New cars generally aren't titled, even if they're being used as demos.
 

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I still want to know of one example where any of this has happened.....You guys are going to give the guy a heart attack. Surely if what you are saying could happen then someone on the forum knows someone it happened to??? I think not.
Since the IRS scans the internet to see what is being discussed about taxes, especially avoidance issues...One can only assume if they are NOT cross-checking VINS NOW, they surely will be in the future and they may run a reverse audit of past returns, especially, if they determine this is a rampant tax scheme...:rolleyes:

Tax Returns and Backup Documentation: Whether personal or business, the general rule is seven years. This may seem like a long time to hold onto these papers, but think of it as an annual cleaning out as new returns are filed. One in … one out and the old adage of “better safe than sorry” will apply. The IRS has 3 years to audit you from the date you file your taxes; however, there are exceptions -- these include:
False Return - Tax may be assessed at any time, without limitation.
Willful attempt to avoid tax - Tax may be assessed at any time, without limitation.
No return - Tax may be assessed at any time, without limitation.
Extension by Agreement - Assessment period defined by agreement between IRS and taxpayer.
Tax resulting from changes in certain income or estate tax credits - No timeframe defined.
Tax resulting form distributions or terminations from a life insurance company - 3 years
Termination of private foundation status - Tax may be assessed at any time, without limitation.
Substantial omission of items (generally defined as over/under reporting of income by 25% - 6 years.
These Limitations of Assessment and Collection are defined in federal law. Please see 26 USC 6501.

And the interest and penalties owed on the unpaid taxes...starts from the ORGINAL required filing date...:(
 
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