You do understand that the federal tax credit does go to the leasing company right? That is part of the reason the lease is so reasonable. That dealership telling you that YOU'LL get the tax credit is completely wrong though.

 

The sales staff and management at Simpson has been repeatedly telling me, the Volt team and my tax consultant that I would receive the credit. ... Simpson is trying the tell the Volt Team the credit is rolled back into my payment, which is a complete lie.

That is odd -- they seem to both be saying that you get the credit directly, and that Ally will somehow credit it to you. The Form 8936 clearly states "You are the owner of the vehicle. If the vehicle is leased, only the lessor and not the lessee, is entitled to the credit;", so your tax consultant should easily understand the issue (*unless* you stated to him that you qualify, based on what you heard from the dealer).

As for Ally, they get 100% of the tax credit (assuming they can use it), and can pass any amount on to you that they want to, either directly ("Here's a $7,500 (or other amount) allowance since we get the tax credit") or indirectly (through better terms).

But, it doesn't just get "rolled back" into payments; by leasing, you spend perhaps $15,000 or so in payments, so you shouldn't really be entitled to the full $7,500 (in other words, if the tax credit was $15,000 instead of $7,500, you could lease the car for free if the full tax credit was applied to your lease).

 

What?!? A car salesman mis-representing? My apologies to all car salesmen! lol

Seriously though this is really really simple. The purchaser get the tax credit. When you lease you are renting not buying so you are NOT the purchaser. When you rent an apartment or a house do you pay the property tax? No the owner of the real estate does. When you lease do you pay the sales tax? Uh, this is where it does get complicated. Technically no you dont the purchaser does but varying state laws have decided to say that the lessor does indeed pay the sales tax as part of their lease payment in some states. Why complicate things? Because in some states sales tax paid is deductible.

 

"so your tax consultant should easily understand the issue (*unless* you stated to him that you qualify, based on what you heard from the dealer)."

And if this is the case find a different tax consultant! Your tax consultant shouldn't be consulting you....

 

Unless you have something in writing saying otherwise, I'd imagine they would just say they told you you get the tax credit benefit, they apply it to reduce the cost calculation. If it's not in writing it didn't happen....

Best of luck

MrEnergyCzar

 

Probably nothing will stick (ie. you need proof - that being something in writing or a tape-recording of the discussion with them).

If they do have something in writing then it truly is trouble and misrepresents the tax situation in order to sell a product.

It would be like a real estate agent taking a buyer to closing saying "this property does not have taxes on it" and then the buyer eventually getting the bill. The buyer should check with the township or county before buying. If it is public knowledge to situation <a> and they say <b> in order to make a sale, that is something that, if provable, is business fraud. Same for the Volt - an EV buyer should *know* the tax liability implications before stepping into the showroom. Unless the sales dealer swayed someone from a Cruze "up to" a Volt saying "you can lease *and* get a tax refund if you buy this."

 

When Leasing, Ally bank was giving around a $5,000 dollar cap reduction from the $7,500 tax credit they received. They did not, or still are not giving 100% of the tax credit of $7500 back to the Leaser of the Volt. But $5,000 is decent enough of a cap reduction.

To get a full $7,500 tax credit, not only do you have to buy the car instead of leasing, BUT you also have to have $7,500 tax liablity left after all yout tax credits, like mortage interest, et al. If you on;y have $4,000 left over, you only would get $4,000 tax credit, AND it does not roll over the difference of $3,500 for the next tax year.

 

Kind of puts me in the mind of the late great John Retsek of "The Car Show" on KPFK in L.A. They were talikng one day about how the car buying experience had seemed to get a little less unpleasant in recent years. He famously said "Don't worry, the guy in the plaid sport coat, white belt and shoes, and polyester pants didn't leave the dealership." "He just moved to the leasing office."

 

Caveat emptor, but of course some of the credit to Ally is rolled back into the lease. Ally (nee GMAC) gets the tax credit. In turn they provide a loan for the lease that considers their overall anticipated cost..mainly the ADJUSTED resale value at lease end (residual) subtracted from the deal you negotiate with the dealer. The residual is adjusted with some portion of THEIR tax credit. then loan number is adjusted for a money factor (interest) and that is your lease payment spread over the lease term. Obviously, the lease can be negotiated as a single payment up front with less interest paid or spread out over the term. The point is that residual is adjusted by Ally because of the rebate...so it does contribute to lowering your lease payment...but not as a distinct amount...

The real variability comes from the dealer. Very high volume dealers with hundreds of Volts in their pipeline get hidden rebates that other dealers don't get. They can knock more off the MSRP. They also are more likely to have well trained and experienced shop techs.

Finally, inventories are low. Don't expect one of the give away leases from last summer.

The upshot is always negotiate with more than one dealer, and pay close attention to "specials" or national deals as indicative of real cost structures. Don't blow your cool, its all about negotiating.

 

I find that dealers are typically clueless about this kind of stuff. They just want to make a sale......

I knew exactly where I stood on the tax break before I walked in the dealership..........

 

I find that dealers are typically clueless about this kind of stuff. They just want to make a sale......

True. But in most high-dollar disputes, there isn't a problem. For example, if a salesman says "Yeah, that $2,000 GM rebate will still be valid next week" (of course they would never say THAT, as you wouldn't buy today, but...), then if the rebate goes away, you haven't bought the car, so you aren't very likely to sue them over it.

This, however, is very different, in that it is high dollar ($7,500), the salesman made a promise out of a lie, and it is one that sticks after the sale.

And for those that aren't aware, I believe that legally in the U.S. a verbal statement is as legally binding as a written statement, just nearly impossible to prove.

 

correction

Sorry, I meant the reason you will get audited is because Ally takes the rebate. Ally is not applying the rebate to the car sale, it would show up in the lease agreement like it did when US Bank was applying the rebate. I was going to buy the car, but after I was told about the Fed Credit is going to the lessee (which is untrue) I decided to lease. I wouldn't have thought they would rather have you lease than make a sale. Live and learn. Just sending a warning to everyone. Thanks

 

Please folks who would believe anything a car salesman said without investigating it yourself. Its like asking a thief to hold your wallet and assuming when you come back your money and wallet will still be there.......

 

Very true

The great part is that the sales person texted me the information about the tax rebate. I also received an email from Simpson stating I "would" receive a tax rebate. Even if I get 0$ and the lawyer gets everything, it would probably be worth suing. Alright, I will now make Volt positive posts after this. Thank you for listening

 

If you did a 36-month lease in CA, you will get a $1500 rebate from the state (tax credit, assuming you paid $1500 in CA state taxes in 2012). You will not get a $7500 Federal rebate.

 

The CA rebate is independent of your state tax liability.

 

Bought my Volt from Simpson and give them nothing but the best rating. They did tell me something odd on the state rebate - that I had to install a charger to get it, but whatever. The internet sales team there is awesome.

 

Presently the Volt buyer can offset his/her federal tax liability up to $7,500 for the year of purchase. You use part or all of the credit with no carry forward allowed. This is why leasing may well be better than a purchase. If you anticipate, say a $3,500 federal tax liability, you are forfeiting a substantial portion of one of the advantages available to a buyer. So a lease could be the better deal since you don't have to have any federal tax liability whatever to obtain the advantage of the credit. As a real-life example my recent lease with US Bank offered me the benefit of the entire $7,500. How? US Bank used a 47% residual of MSRP for my 36 mo. 10k a year lease. Even with a substantial discount this would have resulted in a large depreciation amount paid 1/36 monthly plus interest and taxes. The latter two also would be high because of the large depreciation figure. However, USB added $7,500 to the residual, or put another way, lowered the depreciation figure by $7,500 which also lowers interest charges and sales tax. Needless to say this dramatically lowers the monthly payment. However, it also inflates the lease-end buy out. But, I believe there will be a lot of Volts coming off lease just about the time the second generation comes on line so low mileage first generation Volts will be around at, guess what, about 47% of original sticker and possibly even less. So, the credit can be "rolled" into your payment if you lease. Just check the work sheet and see how much has been added to the residual. If it's not $7,500 or close to it I'd look for another deal unless the negotiated price discount makes up for not getting all or most of the credit. So you can see that leasing can in fact be the best way to "claim" the credit; and if you don't have a substantial federal tax liability the only way.