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California electric vehicle rebates

October 11, 2016 • Wayne Smith • Log In to Post Comments

Are Californi electric vehicle rebates taxable for Federal or California purposes?


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Wayne,

That's a great question with a fairly simply answer but long explanation.  In short, the answer is Yes, the California electric vehicle rebates are taxable for both federal and California purposes.

The reason goes back to the definition of gross income under IRC section 61: Gross income means all income from whatever sourced derived, unless specifically excluded by law.  Rebates have been held to be excluded from gross income when they are treated as reductions in the purchase price of a product or service.

 The California electric vehicle rebates come from the California Clean Vehicle Rebate Project (CVRP), which is administered by the California Center for Sustainable Energy for the California Air Resources Board.  In other words, the rebates are issued in a transaction wholly separate from the purchase of the vehicle and cannot really be considered a reduction in the purchase price of the vehicle.

For California purposes, California conforms to IRC section 61 and does not provide a specific exclusion for the CVRP rebate, so the rebate is taxable for California too.

Please note the following from the CVRP website's FAQs: "CSE does not issue a 1099 for your rebate.  We cannot offer tax advice of any kind, and advise you to contact a certified public accountant or tax professional regarding the taxability of the CVRP rebate."

 

 

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