The Tax Attic with Jerry Coon

Jerry Coon, Enrolled Agent

Jerry Coon, Enrolled Agent

Tax rebate for golf carts

The amount of tax questions I receive on an ongoing basis is a sign of not only how complicated and convoluted our tax system has become, but also how often we think about our tax situations. The questions seem to have gotten a bit more complicated, too. Even though my bank of tax experiences grows year by year, the amount of questions that I have to get some help to answer also has grown.

For example, I received a call from Dale Boersma this week. Dale and his wife, Jamie, moved to Iowa from Rockford several years ago. My wife, Deb, and I go to Iowa most summers to visit the Boersmas. Dale and I go to the Mecca of sprint car racing, also known as the Knoxville Raceway and soak up the Knoxville Nationals, while Jamie and Deb do the things they enjoy, like shopping. Dale also golfs and owns his own cart. This year he traded in his old one in favor of a new cart. The salesperson set Dale up with a nice new cart, but then added the fact that for $1,000 more, Dale could get a cart that would qualify for a tax credit of $4,000. Dale was a little skeptical of that statement and thought maybe that the salesman might be stretching the truth just a little in order to get a sale. After all, this is a golf cart we are talking about here and not a Toyota Prius.

When Dale got home, he did two things. First, he Googled “Tax Rebate for Golf Carts” and, second, he called me to find out what I knew about golf carts qualifying for a $4,000 tax credit. As he explained the situation, I could see Dale was serious and wasn’t pulling my leg, so to speak. “Tax Rebate for Golf Carts” was not something I have ever Googled before our conversation, but I told Dale I would do some investigating. $4,000 is a lot of money and definitely worth looking into. The Internet took me to the Villages of Lady Lake Florida’s site, villagesgolfcartman.com. It was very informative. I also was directed to a Wall Street News article of October 17, 2009, titled “Cash for Clubbers.”

The bottom line is this: There is a federal credit for the purchase of an electric “vehicle.” For a golf cart to qualify as a “vehicle,” it must have seat belts, a rearview mirror, horn, headlights, taillights, stoplights, side reflectors, a parking brake, turn signals, and have a vehicle identification number (VIN). I’m guessing that it cost an extra $1,000 or so to install these items on a cart like Dale’s original cart, and that’s how the salesman got his additional amount. The federal tax credit runs from $2,500 up to $5,900, is based on the battery capacity of the cart, and is claimed on the individual’s Form 1040. The Villages sells several models of golf carts dressed up to not look like golf carts, i.e. a California Roadster, a Hummer H3, and a Cadillac Escalade. They are pretty neat-looking and, with the credit, the net out-the-door pricing is very low. To quote Roger Gaddis of the Ada Electric Cars Co. located in Oklahoma, “The purchase of some models could be absolutely free.”

This is a story of unintended consequences. Congress passes a tax credit to encourage taxpayers to buy electric plug-in vehicles. The loop-hole they didn’t see is the definition of “vehicle.” I believe Congress meant “vehicle” to mean a vehicle that is used on the public highways for transportation purposes. The golf cart industry looks at the law and determines, with a little dressing up, the strict definition of a vehicle can be met by a golf cart and they got the Internal Revenue Service to agree. It’s a wonderful life if you are in the business of making and selling golf carts. Oops, I mean making and selling qualified plug-in electric vehicles.

Business is booming, too. Dale told me the salesperson could not guarantee his personal qualified plug-in electric vehicle (it’s still a golf cart to me) would even be made by the end of the year, and Dale would be put on a waiting list.

In the end, Dale declined the offer, but it might be worth looking into for those people with a lot in Sandy Pines, for instance. Imagine tooling around Sandy Pines in a Cadillac Escalade-looking vehicle and being paid $4,000 from the federal government to do it. Sounds a little over the top to me, but I’m just a tax professional in Rockford, Michigan. This is Jerry Coon signing off. 

Jerry Coon is an Enrolled Agent in Rockford. He owns Action Tax Service on Northland Drive. His telephone number is (616) 866-4704 and his e-mail address is jcoon@actiontaxservice.com

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