Started noticing sputtering on lower rpm's, later on started to smell fuel, I ignored it as I thought it was from other vehicles as I was driving around the city streets. Since the sputtering came on intermittently and the strong smell of fuel wasn't going away I decided to stop and check the vehicle. That's when I noticed a leak (strong dripping) of fuel on the right rear wheel well, with the liner being soaked! I couldn't access or tell whether a fuel line ruptured since you couldn't see it from the wheel well. I decided then to start driving home, but was worried that if it continued leaking it'll be a fire hazard, so I called the dealer service department if they can take it in overnight for them to check it out.

Most of the way over was unremarkable, but on the last mile where there was an uphill segment of about 5% gradient, the car started bogging down so much that I had to drive to the shoulder lane. I had to stop multiple times as the car stalled 3-4 times up the hill. Stopping and restarting seemed to work for a few yards before I had to do the same thing again until I made it up the hill and into the dealership. By the time I got to the dealership for the technician to check the leak, the leaking had stopped but they could still see the wet marks on the wheel well.

This is what the technician wrote the next day after they did a diagnostic on it:

Customer states leaking fuel onto right rear wheel well, also the vehicle is bogging down and barely made it up H2, performed inspection; unable to duplicate customer concern at this time, performed diagnostic scan; found fault code P0087; fuel rail/system pressure - too low, performed inspection of right rear wheel well; found signs of liquid leaking, removed right rear wheel and wheel liner, disconnected evap lines and removed evap canister; found evap canister saturated with fuel which would explain fuel leaking out on right rear of vehicle and causing engine to bog down by the unmetered fuel entering the engine from the N80 valve, found fuel tank internally failed, recommend replacing fuel tank, evap canister, purge valve, and clean out evap lines.

Parts: $2261 Labor: $1059

This was outside of warranty I've had the car for 46 months and have 32K miles on it. Working with VW to cut the cost of the repair down, since this shouldn't be a part that breaks this early on and it being a non moving part. I'll update as soon as I hear back from VW Customer Care.