Curated by Daniel Xu
The landscape is shifting once more for electric vehicle incentives. We’ve been sounding the alarm on this for more than a year, and now the deadline is upon us—on April 18, 2024, only a handful of EVs will still qualify for the full $7,500 federal EV tax credit.
The Inflation Reduction Act is responsible for these changes—specifically, its stringent requirements on material sourcing, vehicle assembly, and supply chains.
To qualify for the full credit, a vehicle, including its battery, must have its materials mainly sourced and its final assembly completed in North America or with a qualified trading partner. The vast majority of EV batteries and components are sourced from overseas, particularly China, which represents nearly 80% of the global battery cell supply.
These requirements aim to strengthen domestic manufacturing. But absent careful policy drafting, that goal is at odds with reducing reliance on foreign energy sources. Manufacturers may yet spool up new supply chains before the April deadline and allow more models to qualify for the credit, but the current dearth of qualifying vehicles suggests a policy miscalibration.
If the tax and climate law’s priority is to encourage EV adoption, changes need to happen before April. The turbulent EV tax credit seas now mirror the unpredictable tides brought by climate change. As rising sea levels relentlessly challenge coastal communities, shifting EV credit policies threaten to inundate the market with uncertainty.
At Bloomberg Tax, we’ll continue to watch the fast-approaching cliff for EV credits and deliver analysis on the interplay of legislation, market dynamics, and technological innovation in the green energy sector.
The Exchange—It’s where great ideas intersect.
—Andrew Leahey
Look for Leahey’s column on Bloomberg Tax, and follow him on Mastodon at @andrew@esq.social
Federal Insights
Legislation that would allow K-12 educators to use federal grants for accounting education would help create highly skilled tax practitioners as well as diversify the profession, says Jan Taylor of the American Institute of Certified Public Accountants.
Charles and Kathleen Moore’s reply brief to the US Supreme Court makes the clearest arguments yet for why the justices should invalidate the mandatory repatriation tax, say RSM’s Donald Susswein and Ramon Camacho.
Schulte Roth & Zabel’s Andi Mandell shares ways for tax attorneys to offer pro bono advice to nonprofits as Americans have scaled back on charitable giving.
Jonathan Blitman and Colin Quill of Moss Adams explain how individuals, partnerships, and corporations can use the expansion of federal clean energy tax credits as an investment tool.
Global Insights
Adewole Orobiyi and Saheed Shanu of EY assess the different tax incentives offered by the Nigerian government to encourage investment in the country’s power sector, including the Electricity Act enacted earlier this year.
Columnist Corner
Warner Bros. Discovery Inc. and other film studios have shelved and written down, or written off, several completed productions. In this week’s Technically Speaking, Andrew Leahey argues that tweaking Section 181 of the tax code and increasing scrutiny of claimed carrying costs of productions would reduce this practice, which squanders any public benefits of state film tax credits.
Save the Date
The tax and legal professions are infamous for being among the most stressful lines of work, and during the holidays, that tension can be compounded by more family and social obligations than usual.
Learn more about how to manage and channel stress on Dec. 7 from noon to 1 p.m. ET by joining “How to Make Stress Work to Your Advantage,” the latest installment of our free virtual Lunch & Learn series.
We’ve recruited Stinson’s director of well-being to describe strategies from the science of positive psychology for rethinking stress, boosting well-being, and cultivating resilience during challenging times.
Career Moves
Ceinwen Rees has joined Kirkland & Ellis as a tax partner.
If you’re changing jobs or being promoted, email your submission to TaxMoves@bloombergindustry.com for consideration.
News Roundup
It’s been another busy week in tax news from state capitals to Washington. Here are some stories you might have missed from our Bloomberg Tax news team (login required).
- Wisconsin Gov. Tony Evers (D) vetoed a $2 billion Republican tax plan to modify income tax rates, marking the GOP-dominated legislature’s latest unsuccessful attempt to implement a tax cut.
- E-commerce platforms such as PayPal Holding Inc.‘s Venmo and Etsy Inc. got some reprieve as the IRS again delayed the requirement established by a 2021 law that the companies send tax forms to customers with business transactions of more than $600.
- Puerto Rico Treasury Secretary Francisco Parés Alicea is urging the board overseeing the island’s finances and debt restructuring to reconsider a tax plan it challenged last week.
- The UN General Assembly voted to create a framework convention for what developing countries say will be a more inclusive discussion on international taxation.
Tax Journals
Tax Management International Journal
US MNEs should review their org chart to identify US sandwich entities held through foreign entities located in jurisdictions that will have an income inclusion rule in effect in 2024, say KPMG’s Danielle Rolfes, Kevin Brogan, Marcus Heyland, Alistair Pepper, and Samira Varanasi.
The OECD’s 2022 mutual agreement procedure statistics provide taxpayers insight into the effectiveness of the MAPs around the world, allowing taxpayers to gauge whether a particular case will be resolved in an efficient and timely manner, say KPMG’s Phil Roper, Mark Martin, Cameron Taheri, Thomas Bettge, and Alistair Pepper.
Tax Management Memorandum
Employee retention credit filers whose claim hasn’t yet been processed may opt to withdraw it if they now have reason to believe their filing was ill-advised, say Akerman’s Joshua Hamlet and Stefi George.
(Bloomberg Tax login required)
Our Wish List
For December, we’re seeking looks ahead into 2024. What should tax professionals do now to prepare for next tax season, and what will they be talking about in the regulatory space? We’re looking for a thoughtful take that will get tax professionals talking about next year—even before the calendar flips over.
If you have an interesting, never-published article for publication, contact the Insights team at TaxInsights@bloombergindustry.com.
Our Team
We talk about tax a lot. But you would hear much more if you popped into one of our Teams meetings. Here’s a quick look at what some of us are watching, reading, and listening to this week.
Watching
Rebecca Baker (Editor-at-Large): The first half of the last season of “The Crown.” It’s gotten mixed reviews from critics, but I think the show is as compelling as ever.
Reading
Katharine Butler (Acquisitions Manager): Jane Harper’s “Exiles,” a mystery novel set in Australian wine country.
Listening
Daniel Xu (Content Editor): Red Velvet’s new album, “Chill Kill"—another fine installment of the veteran K-pop group’s discography.
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