Hatch, Wyden Probe Volkswagen on Federal Tax Credits

Volkswagen AG and Volkswagen Group of America’s manipulation of its diesel automobiles through a “defeat device” to mask the actual amount of vehicle emissions has caught the attention of Senate Finance Committee Chairman Orrin G. Hatch, R-Utah, and ranking member Ron Wyden, D-Ore., who say the practice would allow the automaker to meet requirements for federal tax credits and increase sales of the automobiles. The vehicles in which Volkswagen installed such devices included those that the company certified as qualifying for the advanced lean-burn technology motor vehicle credit.

In a letter to the automaker dated October 7, Hatch and Wyden requested that Volkswagen turn over all certifications and quarterly reports filed by the company related to eligibility of its vehicles for the advanced lean-burn technology motor vehicle credit (Code Sec. 30B(a)(2); 30B(c)). In addition to the certifications and reports, they also requested all documents and communications between Volkswagen and the Treasury Department, Internal Revenue Service or the Department of Energy referring or relating to the advanced lean-burn technology motor vehicle credit.

“While investigations are ongoing, the Volkswagen Supervisory Board has confirmed that the company installed “defeat devices” on as many as 11-million vehicles marketed as model years 2009 through 2015,” said Hatch and Wyden in a joint statement. In their letter, they wrote, “This activity raises questions of whether Volkswagen made false representations to the U.S. government in its certification for federal tax subsidies.”

Created by Congress in 2005, the Alternative Motor Vehicle Tax Credit included an advanced lean-burn technology motor vehicle credit, which was available to purchasers of new, qualifying vehicles. Volkswagen certified to the IRS that several of its 2009 and 2010 models qualified for the $1,300 per vehicle credit, and sales figures suggest that over $50 million in tax subsidies went to purchasers of these vehicles.

Recent findings by the U.S. government show that Volkswagen manipulated emission control systems for as many as 482,000 diesel vehicles sold in the U.S. through the use of auxiliary emission control devices.

By Jeff Carlson, Wolters Kluwer News Staff

Letter from Sens. Hatch and Wyden to Volkswagen

 

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Wolters Kluwer Tax and Accounting

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