IRS Backlog Crisis: How Tax Delays Are Slamming the Brakes on U.S. EV Sales

The electric vehicle revolution just hit a massive roadblock—and it's parked squarely at the IRS.

Paperwork Purgatory

Dealers across America are watching EV inventories gather dust as tax credit processing delays create a financing nightmare. The system designed to boost clean energy adoption is now actively throttling it.

Showroom Standstill

Prospective buyers walk away when promised incentives get stuck in bureaucratic limbo. Without those crucial price reductions, sticker shock sends consumers right back to gas-powered alternatives.

The Compliance Quagmire

Meanwhile, dealerships juggle inventory financing costs while waiting months for government reimbursements. The irony? A program meant to accelerate the energy transition is now creating cash flow crises for the very businesses driving it forward.

Another brilliant government solution—creating more paperwork than progress while the climate clock keeps ticking. Maybe they should try implementing blockchain tracking instead of relying on 1970s-era processing systems.

Dealers front money while payments stall

Jesse Lore, who runs Green Wave Electric Vehicles in North Hampton, New Hampshire, said the IRS owes him nearly $100,000. He’s still giving customers the rebate upfront, even though twelve applications he submitted after September 15 are still pending.

“We’re continuing to pay the tax credit, though with a lot of anxiety,” Jesse said. “We’re in the dark.” Only three of his applications got approved last Thursday, and none of them have been paid yet. Jesse even showed screenshots of the transactions to CNBC, allegedly.

Here’s how it works: dealers apply through the Energy Credits Online portal after selling an EV to a qualifying buyer. If the IRS gives the green light, they’re supposed to reimburse the dealer. That’s what happened before mid-September, approvals came in fast, and payments followed. Now? Nothing. No clear answers. No time-of-sale reports. No phone calls answered. Just more waiting.

Robyn Capehart, a spokesperson for the IRS, claimed the review process has always been part of the system. “Any submissions through the Energy Credits Online portal have always been subject to IRS review and approval,” Robyn wrote in an email.

She added that once the agency approves a report, the vehicle is eligible, even if the approval came after a delay. The WHITE House confirmed all valid claims submitted before the September 30 deadline will still be honored, but gave no reason for the holdup.

Sales drop as uncertainty grows

Dealers like Gary Pretzfeld, who co-owns AutoTrust USA in Miramar, Florida, said they’ve been left holding the bag. He said he’s floated about $80,000 to $90,000 in rebates this month, but hasn’t been paid. “There are definitely some dealers who can’t afford to do it this way,” Gary said.

He explained that two of his applications, submitted September 16 and 17, finally got approved, but no money has landed yet. “The timeline is now longer, and it’s murkier,” Gary said. “That’s the part that’s freaking everyone out.”

Other dealers have simply stopped offering the rebate. Jesse said he knows sellers telling customers they can’t even take the car home until the IRS pays up. Some dealerships won’t risk it anymore. They’re either holding cars hostage or walking away from the program entirely.

The problem is bigger than just the cash flow. Al Salas, the CEO of Eco Auto, which sells EVs in Massachusetts and Washington, said the upfront rebate made a real difference to buyers. He’s expanding to Florida, Georgia, and New Jersey, and now he’s also stuck.

“As dealers, it’s a really unfortunate situation, because we are fronting the money,” Al said. He’s currently waiting on $50,000 in credits. Without that instant rebate, customers can end up paying $80 to $100 more each month on a five-year loan for a used EV.

And claiming the credit later isn’t even a guarantee. Buyers need a tax liability to qualify when filing next year. That’s not required when the rebate is given at the time of sale, which made the program so appealing to many buyers in the first place.

The National Automobile Dealers Association is hearing the same thing from its members. “Anecdotally, we have heard some dealers report that recent submissions have been placed in pending status since last week,” said spokesperson Amy Hunter Wright. She added that NADA is also working with the IRS and Treasury, and so far, the agencies have been “cooperative.”

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