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nestlechick
New Member
USA
62 Posts |
 Posted - 08/25/2009 : 4:12:54 PM
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....for the dealer. ( sorry - could not get it all in teh subject line.
See paragrah 2 re: taxable income
This is from auto blog...
As you're aware by now, yesterday's big news was H.R. 3435, the emergency legislation passed by the House of Representatives authorizing an additional $2B for the CARS scrappage scheme. As had been widely reported on Thursday, the clunkers program appeared to have run out of money a lot sooner than anyone had expected, sending legislators in favor of it into a panic. After a period of impassioned floor debate (the Michigan delegation appeared on the verge of a collective nervous breakdown, treating the possible suspension of C4C as the apocalypse), the resolution passed and will head on to the Senate next week for additional debate and a final vote. In the meantime, Cash for Clunkers stays online. For dealers, however, the action in the House wasn't the only important news to come out yesterday.
According to Automotive News, NHTSA -- the government bureaucracy responsible for administering the CARS program -- conducted a webinar for automobile dealers last Monday. During that session, retailers were reportedly told that the federal rebate cash they'd be receiving would be non-taxable. Now, for the buyers trading in so-called clunkers, this is indeed the case. Unfortunately for car dealers, however, it appears that NHTSA got the explanation wrong. In fact, AN reports that the IRS issued an advisory bulletin yesterday confirming that yes, the federal rebates dealerships receive for CARS trades count as taxable gross income.
Apparently, some retailers believed that since their customers weren't getting taxed, neither were they. And if the Automotive News account of events is accurate, it's fairly obvious that NHTSA didn't fully understand the tax implications either when they conducted their webinar. As a result, some dealer smiles around the country are likely turning into frowns this weekend. The money line in the AN piece comes from Richard Heider, a dealer accountant who points out that the CARS cash simply counts as a normal payment to the retailer, and thus is taxable. "What you are dealing with are people who don't understand accounting," he says. Apparently, on all sides of the equation.
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Behind every successful man is a surprised mother in law |
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John Beagle
Advanced Member
USA
10560 Posts |
Posted - 08/25/2009 : 6:04:19 PM
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Doesn't surprise me.
If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. ~Ronald Reagan
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MainStreetMonroe.com is news of, for and by the people of Monroe, Ohio. |
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loroller
Junior Member
USA
273 Posts |
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Posted - 08/25/2009 : 7:40:46 PM
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| it's free money....of course it will be taxed |
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nestlechick
New Member
USA
62 Posts |
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Posted - 08/25/2009 : 10:28:05 PM
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I could see making the rebate taxable to the buyer.
Hard to believe that they are making it taxable income to the dealership. |
Behind every successful man is a surprised mother in law |
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Brandy
Senior Member
USA
5454 Posts |
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Posted - 08/25/2009 : 10:44:12 PM
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Isn't CHANGE good??? Ahhhh...this is the life |
"Be who you are and say what you feel because those who matter won't mind. And those who mind, don't matter." |
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dthor6
New Member
180 Posts |
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Posted - 08/26/2009 : 06:16:21 AM
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| Why wouldn't it be taxable to the dealer? It is income to them. No different then if you were paying them yourself. |
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nestlechick
New Member
USA
62 Posts |
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Posted - 08/26/2009 : 07:04:40 AM
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The rebate was for turning in a vehicle. Thus, that is a rebate to the customer. The benefit of the $3500-4500 goes to the end consumer - it comes right off the price.
Currently, if a dealer accepts a trade in, the buyer pays tax on the difference - thus a tax incentive to buy from a dealer than a private seller.
My guess is that if the dealers had known this before hand, they would have wanted the rebate to go directly to the consumer - thus selling the new vehicle and getting a larger amount from the financing company, thus helping with their cash flow, and letting the buyer deal with the income tax issue.
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Cash for clunkers rebate is taxable income ...
