Volkswagen Group is Under Senate Investigation

Monday, November 16, 2015
The government is investigating the Volkswagen Group of America about their 2009 Volkswagen AG Jetta that offers a clean diesel model. The green car is believed to get 41 miles per gallon on the highway. However, did the car manufacturer make allegations about this vehicle that was misleading? Many think that the information communicated about the vehicles eligibility for the lean-burn technology motor vehicle credit is misleading.

The car manufacturer has sold approximately 11 million Volkswagen Jetta (2009-2015), Audi A3 (2009-2015), VW Passat (2009-2015), VW Golf (2009-2015), and VW Beetle (2009-2015) with the software for flawed and favorable emission tests.  The investigation suggests that the Internal Revenue Service (IRS) may have issued approximately $51 million in tax incentive credits to consumers of the Volkswagen mentioned above, many of which had flawed emission tests. Currently, the Senate wants is investigating further in order to determine whether Volkswagen made any false representation about the tax credit.  The investigation will also assess if the car manufacturer falsely reported information that permitted its certification for federal tax subsidies.  The government issued certifications are used to claim tax incentives as well as another motor vehicle tax credit.

By law, according to the Energy Policy Act of 2005, consumers of hybrid vehicles are entitled to a tax break. This includes all fuel cell vehicles, alternative fuel vehicles, lean-burn diesel technology vehicles.  However, the IRS has to acknowledge if the auto manufacturer’s vehicles qualify in order to qualify for the tax credit.  Volkswagen did make sure to certify a certain number of their vehicles so that they are eligible for the credit, but they are only a certain 2009 Jetta model sedan and sport wagon.  In addition, the tax credit was allowable for a certain amount of years. The auto manufacturer has admitted that they used defeat devices on vehicles from 2009 to 2015 which can skew emission information.

A consumer who purchased a 2009 VW model vehicle could be eligible for a tax credit in the amount of $1,300 for a taxpayer in the 28% tax bracket. That would amount to approximately a $4,600 tax deduction.  This incentive provides savings to the consumer to purchase a VW instead of a different make and model energy efficient vehicle.

The ongoing investigation is trying to assess if taxpayers mistakenly received benefits because of manipulated information from the Volkswagen Group. If the car manufacturer is guilty, then they will face hefty penalties and possible criminal charges.

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