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UPDATE: Dealers Pocketing $7,500 Chevy Volt Tax Credit?

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2011 Chevrolet Volt

2011 Chevrolet Volt

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UPDATE: Several sources have reported that the practice described below appears to be confined to a few isolated incidents, if at all, and a General Motors spokesman called the NLPC 'confused.' The NLPC meanwhile in a follow-up cried foul on GM's claim that there's "high demand" for the Volt and argued for greater transparency on the tax credit. While we couldn't reach GM for comment at the original post time, we've updated this piece to reflect later communication with the company.

Auto dealerships might not be as smoke-filled and full of tricks as they used to, but a few bad seeds continue to perpetuate the old slick stereotypes.

And they're at it again—this time with our hard-earned tax money. According to an ethics and corruption watchdog group, the National Legal and Policy Center (NLPC), GM's new-car dealers are participating in a new scheme: applying for the $7,500 federal tax credit on a new-stock Volt, then 'selling' it to another dealership to pass it off as used.

The alleged game: One dealership titles the vehicle, sells it to another dealership, and that second dealership (perhaps) splits the tax rebate with the first one.

The federal government's $7,500 tax credit on electric vehicles is a big deal. For one, it takes the sticker price of the 2011 Chevrolet Volt down to a much more accessible $33,500. And secondly, it helps kickstart a charging infrastructure and a fledgling sector of the auto industry.

And if there aren't enough actual Volt customers getting the federal rebate they're supposed to, it could be affecting the model's sales, as well as its resale value.

Sleazy Car Salesman

Sleazy Car Salesman

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Mark Modica, an investigator from the NLPC, was told that in several cases he wasn't eligible for the tax credit on what was essentially a new car, because a dealership had already applied for it. One Kia dealership, possibly involved in the scam with a neighboring Chevrolet dealership, even said initially that a Volt with 30 miles had previously been a rental car.

Modica saw the same scam in Chicago, at an actual Chevy dealership, with the dealer calling a Volt with 10 miles on it used; he was told that he wouldn't be eligible for the subsidy as the dealer had already applied for it.

But according to GM, the NLPC is getting matters confused. The practice that Modica describes, the company says, is the normal practice of dealer trades or inventory swaps, which wouldn't involve the vehicle being 'sold' to a second owner (the dealership).

However, there might be a few cases in which a dealership does actually buy the vehicle, concedes GM spokesperson Michelle Bunker--such as in places outside the seven states where the Volt is currently available. In those cases they "need to be upfront with the customer if they buy it first," said Bunker. GM hasn't yet been able to verify the instances alleged by the NLPC--both of which involve dealerships to which GM doesn't directly supply Volts.

"We expect all of our dealers to be honest and very transparent," said Bunker. "But we can't keep our dealerships from buying vehicles from other dealerships."

As for whether those dealerships are legally allowed to claim the tax credit, Bunker argued that this is a federal tax issue, not a GM issue.

The scheme might not even technically be illegal, but it's definitely sleazy, and it's not what the law intended.

Taxpayers, does this infuriate you? Or is it simply part of the game? And should the tax credit be restricted to individuals, not businesses like GE?

[National Legal and Policy Center, via Edmunds, Autoblog]

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Comments (11)
  1. NASCAR pulls the plug on inaugural Chevrolet Volt 400. The story can finally be told ...

  2. GM has responded to this story, explains that authorized dealerships are unable to take this tax credit and resell Volts, and explains how the NLPC (the anti-environment group who is the source for this story) got "confused:"

  3. The volt is not a pure electric vehicle and should not be getting the credit in the first place. If you need to fill it up with gas, the. The rebate should not apply. Only for pure electric vehicles.

  4. Surprise, a dishonest car salesman. Add to that they are now "used" car salesmen which are even worse!

  5. misinformation. More people who do not know what they are talking about. She blames Chevrolet for the scam, yet it is the independent dealership that is doing it. She has no idea what she is talking about. I am glad they set her straight. Not a word out of her after that.

  6. Soapy, that was a joke site. There was no Volt Indy 400.

  7. No surprise, here, that a government program is being manipulated.
    Personally, I think the government ought to stop doing these credits. The money the government gives for the credits doesn't come out of thin air; it comes from the tax payers, thus, you and I are giving Volt buyers the $7500. Far better, I think, to stop moving this money around; that's all these credits are, really: moving money from taxpayers to a particular individual who engages in a government-sanctioned behavior. Doesn't stimulate the economy; it merely changes the part of the economy to which the money goes.

  8. that's okay Chris

  9. @PathMi
    Stop your pathetic lies dude. A tax credit does not come out of your pocket. Maybe learn some tax law before spouting your nonsense. A tax credit generally only affects that amount of taxes that you pay, and is not refundable, meaning you don't get the whole amount if you haven't paid enough taxes. Basically, let's say you paid 20000 in taxes this year from your income, then chances are you can get back the full amount. If you only paid 5 thousand, you will see only a portion of the $7500. It doesn't affect you.

  10. i dont know whether this article carries true matter but i want to tell all you people that paying tax is one of the essential duty of every citizen and we should do it in a right way.

  11. Credit for individuals only! Is the dealer getting the tax credit? Otherwise, the individual is financing the full cost.

    As a disabled vet I have no tax liability, so paying almost $50,000 for a car is out of the question. And I'm not part of Romney's 47%. I earned my pension!

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