Senators Probe Whether VW Misled IRS On More Than $50 Million In Tax Credits

The embattled German automaker might have another big, expensive problem on its hands.

WASHINGTON -- Senate Finance Committee Chairman Orrin Hatch (R-Utah) and ranking member Ron Wyden (D-Ore.) want to know if Volkswagen lied to the federal government in order to secure tax credits for vehicles that did not actually meet low-emission standards. 

Last month, the Environmental Protection Agency busted Volkswagen for installing "defeat devices" in up to 482,000 vehicles, allowing them to meet emissions qualifications during testing even if they far exceeded those limits in everyday use. 

In a letter to Volkswagen's international and U.S. chief executives, the senators say the company certified to the Internal Revenue Services that some of its 2009 and 2010 model-year vehicles were eligible for a $1,300 tax credit under the 2005 Alternative Motor Vehicle Tax Credit, which is given to individuals who purchase new vehicles that meet certain emission and fuel economy standards. (The amount of the tax credit was later reduced.) 

Hatch and Wyden say sales data indicates that 60,000 of these VW vehicles were sold in the U.S., and that "well over" $50 million in tax credits were handed out to people whose vehicles supposedly qualified for the credits but actually came with these defeat devices.

"This activity raises questions of whether Volkswagen made false representations to the U.S. government in its certification for federal tax subsidies," the senators write.

They are requesting information, communications and documents from the company over the period of January 2007 through December 2011.

Volkswagen's top brass will also be in the congressional hot seat on Thursday, when the CEO for the company's American division, Michael Horn, is slated to appear before the House Energy and Commerce Committee's Subcommittee on Oversight and Investigations. Top EPA officials are also expected to testify.