General Motors has been locked in a dispute with the Treasury and IRS over what qualifies as an SUV. The automaker argues that its large, high-end vehicles should be classified as SUVs, while the government believes they are luxury cars and subject to higher taxes. The differences have caused GM to lose billions in potential tax credits and deductions since 2018. In this article, we’ll take a closer look at GM’s argument for why its larger vehicles should be considered SUVs and examine how the debate could potentially impact GM’s bottom line. We’ll also explore some of the alternatives that the manufacturer is considering if the IRS does not change its stance on classifying these vehicles.

SUV Definition Controversy

The SUV definition controversy began when the Treasury and IRS said that GM had failed to properly classify some of its vehicles as SUVs. This meant that GM would have to pay higher taxes on these vehicles. GM disagreed with the government’s classification and argued that its vehicles were indeed SUVs. The matter was eventually resolved, but it highlights the confusion that can exist around what constitutes an SUV.

The Treasury & IRS’ Position

The Treasury and IRS have long held the position that GM’s SUV models do not qualify for the fuel-efficiency tax credit. This is because the vehicles do not meet the criteria for light trucks, which are required to have a cargo area of at least six cubic feet. The credit is designed to encourage production of more fuel-efficient vehicles.

GM has disagreed with this interpretation, arguing that its SUVs should be eligible for the credit because they have a cargo area of more than six cubic feet. The automaker has also pointed out that many of its SUV models are built on the same platform as its trucks and should therefore be classified as trucks.

The debate between GM and the Treasury/IRS came to a head in 2016 when GM filed a lawsuit seeking to overturn the agency’s decision. A federal judge ruled in favor of GM, but the case is currently on appeal.

How This Affects SUV owner

Some SUV owners may be surprised to learn that their vehicle may not be considered an SUV by the government. That’s because the definition of an SUV has changed over time, and the government’s definition is different than GM’s.

The discrepancy between GM and the government’s definition of an SUV affects how certain tax rules are applied. For example, the IRS considers any vehicle with a gross vehicle weight rating (GVWR) of over 6,000 pounds to be an SUV. This means that SUVs are subject to a higher gas guzzler tax.

GM disagrees with this classification, arguing that many SUVs don’t actually meet the criteria for being a gas guzzler. As a result, GM has been lobbying the government to change the definition of an SUV. So far, these efforts have been unsuccessful.

The disagreement between GM and the government over what constitutes an SUV affects a small number of vehicles, but it’s something to be aware of if you own one of these vehicles. If you have any questions about how this issue might affect you, please consult your tax advisor.