The German automaker admitted that it manipulated diesel-emissions control systems in as many as 482,000 diesel vehicles sold in the U.S. The vehicles include the 2009-'15 Volkswagen Jetta TDI and 2012-'15 Volkswagen Beetle TDI.
The manipulated vehicles qualified for energy-efficient tax benefits.
The Senate panel said Volkswagen's use of so-called "defeat devices," which skirt emissions regulations, affect eligibility of Volkswagen vehicles for the lean-burn technology motor vehicle tax credit.
Volkswagen still has not announced a recall fix for the affected vehicles.
"This activity raises questions of whether Volkswagen made false representations to the U.S. government in its certification for federal tax subsidies," wrote Senate Finance Chairman Orrin Hatch (R-Utah) and ranking Democrat Ron Wyden of Oregon, in a letter published on Tuesday to VW CEO Matthias Muller and VW's U.S. chief Michael Horn.
The 2009 Volkswagen Jetta TDI sedan and SportWagen qualified for $1,300 in tax credits per vehicle, along with other 2010 models that were approved for the tax credit.
The panel gave Volkswagen an October 30 deadline for "all certifications and quarterly reports filed by Volkswagen related to the eligibility of Volkswagen vehicles for the advanced lean-burn technology motor vehicle credit."
Edmunds says: U.S. taxpayers footed the bill when it came to giving VW owners about $50 million in tax credits to buy "clean diesel" vehicles. Lawmakers now want to know if this was a legitimate use of taxpayer money.