Dealers are buying Chevy Volts to grab the $7,500 tax credit

Chevrolet Volt

The best advice for shoppers of the Chevrolet Volt is buyer beware.

Apparently a few car dealers are gaming the system that provides federal tax credits for electric vehicles.

What these dealers are doing probably isn't illegal, but it could make criminals of unsuspecting consumers.

Here's how.

Chevrolet is very slowing building and distributing its all-new Volt, which qualifies for a $7,500 federal tax credit.

A lot of interested Volt shoppers are chasing a small number of cars.

There have been more than a few reported instances of a car dealer buying a hard-to-get Volt from its original Chevrolet dealer, titling the car, claiming the tax credit and then reselling the car as a low-mileage used vehicle.

Only the initial owner titling the car can claim the tax credit. In this case, that would be the purchasing dealer.

Although not entirely scrupulous, this practice is legal.

Where the potentially criminal part comes in is if the dealer reselling the Volt doesn't inform the consumer who eventually buys the car that it no longer qualifies for the tax credit.

This may well make that dealer guilty of fraud; however, it may also have consequences for the consumer who buys the Chevrolet Volt in good faith and then unwittingly files for the federal tax credit for a second time.

Increasing the temptation for a dealer reselling the Volt, or any vehicle qualifying for a federal tax credit for that matter, not to inform a buyer that the tax credit has already been claimed is that the Internal Reveue Service claim form in no way specifically identifies the vehicle.

Like so many government handouts, this tax-credit system can be gamed.

Volt owners use IRS Form 8936 to apply for the tax credit. Nowhere on the form does the filer enter the Volt's Vehicle Identification Number.

The VIN is the long series of letters and numbers located on the dashboard at the bottom of the windshield on the driver's side. Every vehicle built has one, and it is unique to that vehicle.

So, it is possible to reapply for the federal tax credit several times for the same vehicle as it changes hands and is retitled.

Only an IRS audit would expose the duplications.

If that should happen, though, the "I didn't know" defense will probably fall on deaf IRS ears.

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