US Government Acknowledges Tax Credits Are Confusing and Difficult

This is one of those bits of news that engenders two distinct and seemingly incongruous reactions. The first is, "Well, duh!" Of course understanding and complying with the IRS vast number of rules and regulations. The other reaction is complete amazement that the tax collecting agency is actually acknowledging that the directions and regulations for at least one particular tax credit are confusing and could have bee presented in a clearer way.

The credit in question is the Hybrid Vehicle Tax Credit. The credit, which is designed to defray some of the cost of the more expensive hybrid technology and encourage growth of the industry, is different for each model and year of production and reduces each year of ownership. Also, neither the dealership that sells the car nor the manufacturer are obligated to provide the taxpayer with any information leaving up to her to research and determine the amount of the credit.

It's easy to see how this whole mess could get confusing. And the Treasury Inspector General for Tax Administration recently did a study where it was determined that the IRS might have done a better job setting the whole thing up. You can read all about it in the report The Complexity of the Law Makes Administering the Alternative Motor Vehicle Credit Difficult.