Tax Q

I had a simple tax question that I thought I knew the answer to but all the online help was either vague or directed me to ask the IRS directly. So I did just that.

The first call took 25 minutes and ended with the, albeit very nice, IRS agent telling me to call the number I originally called. I had been transferred to the wrong department.

The second call took 47.5 minutes and ended with the, albeit very nice, IRS agent agreeing my question was not answered by the IRS website FAQ. She took my information (email, phone number, and mailing address) and told me someone would have an answer within 15 business days.

Dying to know my question? There is a credit for new car sales tax and I bought out the lease for my car last year. At first glance it seems I do not qualify. However the law eliminates used cars by limiting credit to the first user, which I am. The IRS interprets qualification as the first owner other than the dealership, which I am. The year of the vehicle is specifically not relevant, which was to help dealers market stock remaining on the lot by extending eligibility for this credit to those cars. Leasing a vehicle is not eligible because there is no transfer of ownership, but the purchase of a leased car is not addressed.

I would not claim this credit unless an IRS agent said I qualified. My expectation remains an IRS agent will conclude use under the lease made the vehicle considered used and thereby made me ineligible for this credit... but my question was not answered that way. My purchase may not be in the spirit of the law but if there is a chance it is eligible under the law as written I would like to know rather than forego a chance at income tax savings.

Here is the relevant legal text that defines "new":

...the original use of which commences with the taxpayer.

It is noteworthy that the laws are not always the thing when it comes to the IRS, it is their interpretation of the law. For example, the United States may not have a law written to define marriage, but the IRS explicitly defines it under the instructions for Form 1040 line 2:

For federal tax purposes, a marriage means only a legal union between a man and a woman as husband and wife.

The IRS ignores individual states' laws and the instructions for for community property states specifically overrules the California domestic partners filing practices:

If you are a registered domestic partner in California, the rules discussed in this publication for reporting community income do not apply to you. You must report all wages, salaries, and other compensation received for your personal services on your own return. Therefore, you cannot report half the combined income that you and your domestic partner earned as a married person filing separately does in California.

To challenge IRS rules is to invite legal actions that could invoke the IRS costly penalty for frivolous returns. That is not my intention - I just asked for clarification from the IRS for my seemingly simple question. I'm proceeding without the credit claimed and hopefully the IRS response comes soon.