Cash for clunkers over?

[jackri]

There is one little bitty HUGE thing all these people haven't heard about "cash for clunkers".
That 4500 bucks (or up to it) is considered TAXABLE INCOME and whoever used it will be paying taxes on that money at the end of the year... so.... the 4500 isn't as good as it sounds, of course other than the fact it used taxpayer money.
Hmm how come they didn't advertise that part?

 

[zman1]

Originally Posted by mantisman51
http:///forum/post/3123387
Here in Az, you only pay sales tax on the amount after trade-in and private buyers don't pay sales tax, at all. Too bad there are so many other states ran by crooks who rob by taxation.
Lookout for the conservative nanny state actions!
Capitol Media Services
Tucson, Arizona | Published: 08.26.2009
The next time you buy a used car from a guy up the block, the state may take a bite. State lawmakers are weighing a proposal by the Arizona Automobile Dealers Association to require anyone who sells a used car or truck to collect the state's 5.6 percent sales tax, the same as dealers have to.The move could bring a fight — and not just at the Capitol.
Lawmakers instituted a similar tax in 1984. But faced with a voter revolt and an initiative drive to kill the levy, they quietly repealed it themselves two years later.
But Bobbi Sparrow, president of the dealers' group, said the idea has something going for it now that it did not more than two decades ago: The state desperately needs the money to balance its books. And Sparrow figures the tax could bring in $94 million a year.

 

[bionicarm]

Originally Posted by jackri
http:///forum/post/3124081
There is one little bitty HUGE thing all these people haven't heard about "cash for clunkers".
That 4500 bucks (or up to it) is considered TAXABLE INCOME and whoever used it will be paying taxes on that money at the end of the year... so.... the 4500 isn't as good as it sounds, of course other than the fact it used taxpayer money.
Hmm how come they didn't advertise that part?
This is an incorrect statement. The Federal Government has already stated that the amount awarded during the sale of a 'cash for clunkers' deal is not considered taxable income for either the dealer, or the individual purchasing the new car. If it were true, that would have to be disclosed at the time of the transaction, which it isn't (I know because I bought a car during this deal).

 

[jackri]

K, the quick clip I caught on Fox News lied to me then if that's true
Now I have to research it to find out for sure

 

[jackri]

You're right...
(2)
FOR PURPOSES OF TAXATION- A voucher issued under the program or any payment made for such a voucher pursuant to subsection (a)(3) shall not be considered as gross income of the purchaser of a vehicle for purposes of the Internal Revenue Code of 1986.
Makes me want to relisten to what I heard in that Fox clip to make sure what I thought I heard.. Oh well my mistake

 

[uneverno]

Originally Posted by bionicarm
http:///forum/post/3124118
This is an incorrect statement. The Federal Government has already stated that the amount awarded during the sale of a 'cash for clunkers' deal is not considered taxable income for either the dealer, or the individual purchasing the new car. If it were true, that would have to be disclosed at the time of the transaction, which it isn't (I know because I bought a car during this deal).
In CA, it is considered taxable. The Fed has said it isn't - i.e. the argument is that Federal code supercedes State law. This has caused major problems for both auto dealers and consumers out here.
By Federal mandate, dealers will not be reimbursed if they deduct taxes from the rebate. By State mandate they have to. Hmmm......
"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
Perhaps another chip away at the 10th?

 

[bionicarm]

Originally Posted by jackri
http:///forum/post/3124479
You're right...
(2)
FOR PURPOSES OF TAXATION- A voucher issued under the program or any payment made for such a voucher pursuant to subsection (a)(3) shall not be considered as gross income of the purchaser of a vehicle for purposes of the Internal Revenue Code of 1986.
Makes me want to relisten to what I heard in that Fox clip to make sure what I thought I heard.. Oh well my mistake
Your first problem was listening to Fox News in the first place.

 

[bionicarm]

Originally Posted by uneverno
http:///forum/post/3124483
In CA, it is considered taxable. The Fed has said it isn't - i.e. the argument is that Federal code supercedes State law. This has caused major problems for both auto dealers and consumers out here.
By Federal mandate, dealers will not be reimbursed if they deduct taxes from the rebate. By State mandate they have to. Hmmm......
"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
Perhaps another chip away at the 10th?
Was this State Tax disclosed at the time of the deal? If not, I don't see how the State could legally send them a bill. We don't have State Taxes here in Texas, so that wasn't an issue for me. I had to pay the sales tax on the cost of my vehicle AFTER they deducted the $4500 from the top.

 

[uneverno]

We have both state income and sales taxes here. The sales tax is calculated based on the actual transaction price, post rebate, etc. The rebate itself, however is separately taxable as income. This is the case on any sort of rebate offered whether by the Fed or the manufacturer.
The state won't send a bill - the taxes must be paid at the time of sale, like sales tax would be.
The Fed is saying that they won't reimburse dealers who tax the rebate. The State will come after them if they don't. The situation has put dealers, esp. small ones, between a rock and a hard place: Either tax the rebate, sell the car at a substantial loss, and take it up w/ the Fed - assuming you have the capital to float for that long - or don't tax it and fight State fines, or worse.

 

[reefraff]

It is up to individual states law as to whether or not you would pay sales tax on the voucher money.

 

[fishtaco]

I saw a used car lot that had a whole line of pile of crap clunkers out front being advertised as such. So buy a car that can barely run and probably cost 50 dollars at an auction, then sell it for 500.00 dollars to someone who will trade it in on a new car?
Fishtaco

 

[dragonzim]

Originally Posted by Fishtaco
http:///forum/post/3125878
I saw a used car lot that had a whole line of pile of crap clunkers out front being advertised as such. So buy a car that can barely run and probably cost 50 dollars at an auction, then sell it for 500.00 dollars to someone who will trade it in on a new car?
Fishtaco
Sounds like a brilliant marketing plan on their part!

 

[bionicarm]

Originally Posted by Fishtaco
http:///forum/post/3125878
I saw a used car lot that had a whole line of pile of crap clunkers out front being advertised as such. So buy a car that can barely run and probably cost 50 dollars at an auction, then sell it for 500.00 dollars to someone who will trade it in on a new car?
Fishtaco
Those cars wouldn't have qualified for the program. In order to get the deal, you had to show proof that the car was registered in your name for the last 12 months, and you also had to have the vehicle insured under your name for the last 12 months. The Feds figured that one out before the program even started.

 

[fishtaco]

I wonder how many people who where dreaming of a new car now have one of those clunkers they found out they can't get rid of. LOL