Memo to tax cheats out there: Don’t try to claim an electric car tax credit when you buy a Dodge Durango.
From the Associated Press:
A Treasury Department inspector general report says nearly 13,000 taxpayers erroneously claimed about $33 million in credits for plug-in electric and alternative vehicles during the first six months of 2010. The inspector general says about 20 percent of the $163.9 million in credits provided to taxpayers were claimed in error.
It gets worse:
But Treasury Department review found problems with thousands of taxpayers claiming the credits for cars that failed to qualify. For example, some car owners tried to claim the $7,500 credit for their Hummer H3, Dodge Durango or Cadillac Escalade. Someone claimed it for a golf cart.
The report said some IRS employees erroneously claimed the credits. They were referred to the department's Office of Investigations for further review.
Even prisoners tried to take advantage. The inspector general found that 29 prisoners received $49,926 in vehicle credits even though they were incarcerated throughout 2009.
This story underscores the problem with trying to promote preferred market outcomes through tax credits: Any number of morons can erroneously claim the credit, shorting the taxpayers millions of dollars and forcing the Internal Revenue Service to chase them down.
While I think encouraging the ownership of electric cars is an admirable goal, there has to be some better way.
Any ideas? Why not just a subsidy direct to the automaker for each electric car sold, allowing them to just go ahead and lower the sticker price by that amount?