Thanks. I was searching endlessly for an opinion on this EV rebate situation and finally found your post. The IRS and Minnesota Department of Revenue are both frustratingly unhelpful in giving a clear answer to whether or not the EV rebate is taxable. I agree that when you look at the original Minnesota bill, the intent was to give the EV buyer a rebate through the dealer:
Subd. 6. Program administration. Specifies rebates shall be awarded on a first
come, first-served basis. Requires the commissioner of commerce to coordinate
with dealers and other state agencies to develop a procedure whereby rebates
can be made at the point of sale.
However, the rebates were sent to us as well the 1099-MISC which implies that the rebate could be taxable.
If you recall, many states gave rebates to people during the COVID pandemic, and these rebates were not taxable. However, the State of Minnesota approved these rebates 2 weeks AFTER the federal government decreed that the COVID pandemic had passed. As a result, unlike people in many states, we Minnesotans had to pay taxes on the rebates we received. Never underestimate the ability of tax collectors to screw things up!
I believe there is no telling whether or not the IRS will decide that the EV rebate is taxable and eventually send a tax bill if the rebate was not reported as income. Having said that, I intend to use your strategy on this issue and treat my rebate as untaxable. If it is deemed taxable, I may have to pay a penalty, but that's a chance I'm willing to take.
