A top Treasury Department official on Thursday denied assertions from Sen. Joe Manchin III that the administration is violating electric vehicle tax credit provisions in the Inflation Reduction Act.
Treasury operates under temporary tax rules that Mr. Manchin, chairman of the Senate Energy Committee and lead author of the IRA, says are intentionally loosening — or outright disregarding — requirements that EV components be domestically sourced and manufactured.
The West Virginia Democrat suggested it’s an illegal scheme to prop up sluggish sales and make more models eligible for $7,500 tax credits.
“It is normal for us to do that when it comes to the tax code,” Treasury Department Deputy Secretary Adewale Adeyemo testified to the panel during a hearing. “Whenever you have a tax policy, we often propose rules and allow taxpayers to rely on those proposed rules while we collect comments and finalize those rules.”
The problem, argued Mr. Manchin, is that the administration has indicated the rules may not be finalized until at least 2027, a move that could let automakers continue sourcing batteries and other EV components from foreign foes like China.
“I cannot think of any other federal agency that operates this way,” Mr. Manchin said. “We’ve never seen anything like this.”
He questioned whether the Treasury Department was trying to avoid legal challenges by operating under such proposed rules.
Though increasing year over year, EV sales are on track to fall short of an Environmental Protection Agency proposal to force up to two-thirds of new vehicles sold by 2032 to be electric. More than a dozen Democratic-run states are going a step further by adopting rules that will phase out sales of new gas-powered cars by 2035.
Mr. Manchin accused the administration of “unlawful” conduct.
“I’m willing to go to court, because implementing the law faithfully is that important to our energy security and restoring American leadership in manufacturing,” he said.
Mr. Adeyemo would not commit to a timeline for finalizing its tax credit rule. He countered that automakers are already struggling to meet the current domestic sourcing requirements that slashed the number of EVs on the market eligible for the tax credit from more than 40 models to 13.
“What we’ve asked for is that stakeholders like you provide comments that will then put us in a position to revise and finalize a rule as soon as possible,” Mr. Adeyemo said.
• Ramsey Touchberry can be reached at rtouchberry@washingtontimes.com.
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