So, Who’s Ready To Pay Taxes On Their Cash For Clunkers Subsidy?

Proof • August 26, 2009

The Cash For Clunkers program is adding to the activity at treasurers’ offices all around South Dakota. First, people were asking for proof of ownership, so they could show they owned their vehicle for a full year, allowing them to cash it in. Now, they’ll be returning to register their new vehicle. And when they do, new owners need to bring every bit of paperwork provided to them by their dealer.
“That means they need their title, their damage disclosure, their bill of sale and the dealers have 30 days to get that to them,” Minnehaha County Treasurer Pam Nelson said.
But many of those cashing in on the clunkers program are surprised when they get to the treasurer’s office windows. That’s because the government’s rebate of up to $4500 dollars for every clunker is taxable.
“They didn’t realize that would be taxable. A lot of people don’t realize that. So they’re not happy and kind of surprised when they find that out,” Nelson said.

So we deficit spent $3 billion of our grandchildren’s tax dollars on a subsidy program that didn’t create new sales so much as it changed the date of sales from later to now. Something that will result in a slump in car sales for at least the next several months, if not longer.
And now you have to pay taxes on that subsidized portion of your vehicle purchase.
Hope for change.

Tags: Asshats, Domestic Issues, Politics

http://Array Buzz

270 bucks, wow.
tom

same thing in Nebraska according to my brother in law who lives there
conundrum

$4500 for $270 good deal.
conundrum

It was a sale and like all sales it shifted buying patterns
so the next few months will be really lean.
http://www.valleydeals.com/cgi-bin/board2/YaBB.pl Kevin

http://www.moviewavs.com/php/sounds/?id=bst&media=MP3S&type=Movies&movie=Its_A_Mad_Mad_Mad_Mad_World&quote=paytaxes.txt&file=paytaxes.mp3
http://www.gossipthread.com/ gossipthread

$4500 for $270 doesn’t sound like a bad deal to me. It is unfortunate for the people who were not aware of the tax though.
rog

What did you expect in a deal from the govt? The dealers thought it was free money also. I know of a lot of dealers that would have nothing to do with this disaster. Too bad for people who thought they were going to get a good deal. Trashed a good car to go into debt.
rog

The $4500 is our tax money, they give it away and tax it…twice.
God damn geniuses.
Headward

$4500 for $270 good deal.

Not really when you consider some of the trades are worth something and that trade-in would have knocked down the taxable price.

So for some trade-ins, it was a good deal but for others it was a horrible deal.
Brent

1) Consumers get stiffed because they get forced to pay sales tax on the $4,500.

2) Consumers are not going to be assessed federal income taxes on the $4,500. However, it is likely that they will be assessed state income taxes on the $4,500.

3) Dealers were told, by the government bureaucracy in charge of the program, that they were not going to get taxed, but that was incorrect. They are going to get taxed and thus have to pay for it this quarter, subject to the regular interest and penalties if they don’t, which will be more difficult since the government is already costing them a fortune by taking its sweet time paying up.
http://willnevergiveup.wordpress.com/ willnevergiveup

I was crunching the numbers and I don’t believe the statement that they came in below the $3B mark is correct (technically).

I don’t think the government included it’s admin. costs in the final tally.

This wasn’t about greening up the country or they would have “recycled” the used cars. This was about getting rid of the 2009 automotive stock.

Imagine the “carabon footprint” the manufacture of new cars AND the destruction of the old cars has created?

If it was about efficiency — why not accept the REALLY old cars that create more pollution?

I wonder what other “issues” are going to surface beyond getting clipped for taxes?
http://www.valleydeals.com/cgi-bin/board2/YaBB.pl Kevin

At least the value of my eleven year old SUV went up in value.
jpe

Tax accountant weighing in:

It’s not taxable (income tax, anyways). The cash for clunkers statute excludes the value of the voucher from federal gross income. All states w/ a few exceptions (PA & NJ are the only that come to mind) compute tax based on your federal gross income (w/ some additions and subtractions specifically laid out in the law).

So there’s no federal income tax on the vouchers, and because of that there’s no state income tax on it. (that’s a certainty in 48/50 states. It’s an interesting question whether PA & NJ would tax it. I highly doubt it, but it’s theoretically possible)
Brent

So there’s no federal income tax on the vouchers, and because of that there’s no state income tax on it. (that’s a certainty in 48/50 states. It’s an interesting question whether PA & NJ would tax it. I highly doubt it, but it’s theoretically possible)

That’s true, but I would expect that some states (if only two) would tax it under ordinary circumstances. Since the program has gotten lots of attention, I would assume every state is going to scramble to make sure they don’t count it as taxable income.

Nonetheless, this adds to the nightmare of this program. It is unbelievably stupid, yet popular.

SayAnythingBlog.com

So, Who’s Ready To Pay Taxes On Their Cash For Clunkers Subsidy?

Create a SAB Readerblog

Recent Comments