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Automotive News – Nothing is ever as simple as it seems. One prime example is the government's newly minted "Cash for Clunkers" program, or CARS (Car Allowance Rebate System) that launched yesterday.
As the rebate program kicks into gear, dealers that are hoping to cash in are facing a new worry. But according to Automotive News, they may end up having to pay federal and/or state taxes on the rebate money they receive from the federal government. It seems that the lobbyists and congressional aides who actually wrote the bill neglected to address the issue of whether the rebates count as income for dealers.
In the end, the bill passed by Congress explicitly states that the rebates don't count as income for consumers. As for the dealers, oops! Nothing in the rules published by the National Traffic Safety Administration or the law says anything one way or the other, which means that the Internal Revenue Service and individual states will have to make the call. Some dealers are already setting aside cash just in case they end up having to pay.
Well if its part of the profits from a car what does it matter whether the dealer made the money from the government orfro the coutomer on the sale. Its still part of gross. To teh consumer its lie a trade amount given whxcih is not taxable.I can't believe that dealers would think that just because part of the profit they made is from the government it would be tax free.
Well if its part of the profits from a car what does it matter whether the dealer made the money from the government orfro the coutomer on the sale. Its still part of gross. To teh consumer its lie a trade amount given whxcih is not taxable.I can't believe that dealers would think that just because part of the profit they made is from the government it would be tax free.
How in the world is it profit for the dealership????????
In Illinois the CARS rebate is after the sales tax has been added, so instead of getting a down payment of $4500 from a consumer, they are receiving it from the government, thus the profit to the dealer. In other words, the dealers are making the same amount of profit with or without the Cash for Clunkers, so it would make sense that they pay taxes on it.
In Illinois the CARS rebate is after the sales tax has been added, so instead of getting a down payment of $4500 from a consumer, they are receiving it from the government, thus the profit to the dealer. In other words, the dealers are making the same amount of profit with or without the Cash for Clunkers, so it would make sense that they pay taxes on it.
It's not profit to the dealer, they still have to give the amount of the CARS money to the purchaser. They are simply getting reimbursed from the government.
Never underestimate the stupidity of the federal government. And you want these jokers to be in charge of YOUR health care???
I can't see why they would have to pay taxes, it's not income.
Huh?
A dealer sells a vehicle to a customer. The dealer usually gets (1) a trade-in (worth something) and (2) payment from the buyer (and/or lien holder).
With the CARS program, a dealer sells a vehicle to a customer. The dealer gets (1) a trade-in (worth whatever in salvage) and (2) partial payment from the buyer (and/or lien holder) and (3) the rest of the payment from the federal government.
In both cases, the dealer gets money. That's income - doesn't matter that some comes from the federal government.
Whether it's profit or not is a totally different question.
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