Friday, August 28, 2009
Following up on Wednesday's post, Tax for Clunkers: Jim Maule (Villanova) elaborates in State Tax Consequences of Cash-for-Clunkers:
Although the IRS has made it clear, following the language of the enacting statute, that the amounts paid by the government to auto dealers as part of the cash-for-clunkers program is gross income to the dealers but not the purchasers, there are some important questions to be answered with respect to the state tax consequences of the program. ...
Jim notes that states differ over whether the $3,500 and $4,500 payments under the Car Allowance Rebate System (CARS) are subject to sales tax.
States which exclude CARS payments from sales tax:
States which subject CARS payments to sales tax:
- New Jersey
- New York
- Rhode Island
- South Dakota
LexisNexis has this detailed chart on the sales tax treatment of the CARS payments in the fifty states.