Cash for Clunkers vouchers excluded from income

Taxpayers who took advantage of the "Cash for Clunkers" program should be aware that the $3,500 and $4,500 vouchers will not be regarded as income for state or federal tax purposes.

Cash for Clunkers is the common name for the program enacted as the Consumer Assistance to Recycle and Save Act of 2009 (CARS). Under the program, vouchers in the amount of $3,500 and $4,500 were issued to offset the purchase or lease price of qualifying new fuel-efficient vehicles upon surrender of eligible trade-in vehicles.

According to the CARS law, any vouchers issued under the program will not be considered in the gross income calculation of the purchaser of the vehicle. The Missouri Department of Revenue (MDOR) has indicated it will likewise exclude the vouchers from gross income.

MDOR also indicates that the amount of the vouchers should be shown as a trade-in, and sales tax is calculated on the net amount of the purchase price less the trade-in/voucher value. Sales tax should not be calculated with the $3,500 or $4,500 included. Dealers will receive the funds for the amount of the voucher directly from the federal government.

The CARS program ended on August 24, 2009, and no new sales will qualify for the program after that date.

If you have any questions regarding the tax treatment of the Cash for Clunkers program, please contact your Williams-Keepers LLC advisor at (573) 442-6171 or (573) 635-6196.

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