Cash for Clunkers - Good or Bad Idea?

kathyc2

link title

See link validating that the C4C rebate is not subject to IN sales tax.

The rebate will not be taxable as income for federal or IN tax.

Also, you will be able to take a deduction for the sales tax you paid on your 2009 federal return.

I see you are from IN, but are you trying to figure out what is going on with your deal or responding to a news report?

stever

The IRS makes regs but not laws. They'd have a hard time regulating around the Clunker law:

"(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."

pdf copy of the law

kathyc2

This report seems to be causing quite a commotion. It not really clear from it, but it sounds like there may be a tax on SD, and people are making it out to be federal.

Can't believe everything on Drudge report.

kathyc2

The IRS makes regs but not laws

Good job, Steve. I'm impressed!

stever

Gary just likes to make me work and look up links all the time. :P

Best be careful, or I'll link you to the real Drudge Retort. It never lies.

(Pretty lax of Matt not to have grabbed that domain name.)

mikefm58

This report seems to be causing quite a commotion. It not really clear from it, but it sounds like there may be a tax on SD, and people are making it out to be federal.

I can think of 3 taxes involved, Federal income, State income, and State sales tax.

Federal income - pretty clear according to the C4C law that there will be no federal income tax involved.

State income - I've been in Florida for 15 yrs and haven't had this since then, but if I recall from my days in NY, the state income tax form had you copy the dollar amounts right from the federal income tax form, so it would also not be taxable here. It may have changed since and other states may be different.

State sales tax - My guess is that you would be paying sales tax on the gross amount of the purchase before any rebates were deducted, not sure so I may be wrong here.

greanpea68

Thank you for letting us use this spot to give out this information.
Over 100 ideas. There are no franchises or turnkeys on the list.

I don't really believe they let you use this space for advertising. It is only because it is a Friday and the hosts may be hung over

GP

imidazol97

>It is only because it is a Friday and the hosts may be hung over

Errr, make that Saturday!

kathyc2

It is only because it is a Friday and the hosts may be hung over

You must have had a really good time to have lost a day! :confuse:

stever

I'm a night owl, but the spam at 2:51 am sometimes slips by.

Mr_Shiftright

What? You left your post?!! :P

dave8697

I was resopnding to a news report.
When I hear that most C4C participants are mid income earners and then I hear the rebate is considered income all of a sudden. Then I hear how the only way to throw water on the deficit fire of the US is to tax middle America more, I just assumed the tax increase was true. After all, this is the one opportunity Obama has to tax us more with also being able to defend that it is not a tax increase that he pledged 700 times not to give us. He could argue that it is just a rebate reduction and get away with it.

Mr_Shiftright

Well we are taxed all the time in various ways. A .20 jump per week in gas prices, or a jump in food prices---that's just like a tax, done a different way, and even more arbitrarily. The indirect result of government action. You've been getting "higher taxes" for decades now but it's not called that.

Money out of your pocket for nothing gained? What else can you call it?

eeeo

If you're haggling over $100 purchase price that could change your payments $1.75 to $2.50 depending on rate and term...then you're really cutting it close (I have $325 in my budget but not $327.50...don't want to give up that McDonald's McDouble and small fries once a month!) If it's $100 a month on payment that's $4K to $6K in price and you're on the wrong car...

stever

Watch the dimes and the dollars will take care of themselves.

Anyone who prices out a car based on the payment amount instead of the cost of the car probably deserves what they get though. :sick:

(ok, I've done my duty as straight man watching the dimes - let fly with your Congressional shots. :-))

british_rover

Fox news gets things wrong? Say it isn't so. Just ruin my faith in humanity why don't you.......

Man do we need an eyeroll emototorcon.

Of course you have to pay sales tax on thr rebate if your state makes rebates taxable.

stever

Congrats on the new "humanity."

I'm way partial to rivers too.

(The is sort of an eyeroll...).

gagrice

During the month long program, Billion Automotive sold close to a thousand vehicles but has only been reimbursed for 272 of them. Vern Eide sold over 200 cars and has only been paid for 27 of them, and that's fueling lots of concerns in the auto industry.

Billion Automotive cashed in during Cash for Clunkers, but owner Dave Billion is still waiting for the rest of his money from the government run program, $3.2 million.

"I wonder how long they'd wait if I owed them $3.2 million. I think they'd be at my door or at least my banker's door," Billion said.

Even though Billion is beginning to get some of his reimbursement money, he's still concerned because he says there doesn't seem to be any rhyme or reason to the program.

When Cash for Clunkers was first announced, dealers were supposed to be reimbursed within 10 days of a sale. Billion says that hasn't happened.

"The program started in July and we haven't gotten paid for cars we sold back then, but then on the other hand we got paid for a car we sold last week. They don't have an accurate format. It's not like they're taking the first deals that were submitted and working those. I don't know how they're doing it, no idea. I know it's very random" Billion said.

Plus, he's had problems getting some vehicles qualified.

"We had a situation where we had a submission, they rejected it for multiple reasons. We didn't see anything wrong with it, so we resubmitted it. They rejected, we resubmitted it. They rejected it, seven times and finally they paid it, and we never changed a single thing on it," Billion said.

http://www.keloland.com/News/NewsDetail6376.cfm?Id=89419

That is why 1000s of doctors will not accept Medicare patients. It will be getting worse.

fushigi

"When Cash for Clunkers was first announced, dealers were supposed to be reimbursed within 10 days of a sale."

Wrong. Reimbursement was supposed to be within 10 days of an accepted submission. What other facts did the author get wrong?

Don't get me wrong; it appears the gov't is not living up to the promise of a 10 day payback. But the article does not have all the facts straight.

Re: Medicare. That's out of scope of this forum, but the main reason some doctors dislike it is because Medicare doesn't pay as much for services as some doctors want to charge. Second, bills submitted to Medicare require complete diagnostic coding; a lot of doctor's offices are lax in supplying the right (or even any) codes to get things covered. My wife deals with that problem almost every day. Delayed payment is further down the list; after all insurance companies aren't necessarily all that timely when it comes to making payments (look at UHC's track record if you want evidence).

gagrice

How about this from CBS Chicago!

Aug 31, 2009 5:55 pm US/Central
Car Dealers Still Waiting On 'Clunkers' Cash

Here's the figure: $2.878 billion. That's how much money the government owes car dealers for the "Cash for Clunkers" program.

More than $200 million of that is owed to dealers in Illinois and Indiana, so CBS 2's Mai Martinez checked with some of them to see how much money they've collected from Uncle Sam.

Now that the popular program has ended, many dealerships are asking the federal government to "show me the money."

"Out of 142 deals they owe us for, we've gotten paid on seven," Lou Tornabeni of Ettleson Hyundai said.

"We had 102 cash for clunkers," Carm Scarpace of Westfield Ford said. "We've been paid for one."

With each Cash for Clunkers deal worth between $3,500 and $4,500, many dealerships are anxiously awaiting their government payday.

Roberts says his dealership can handle the cash crunch, but others may not be as lucky, especially if they didn't follow the government's strict guidelines for the program.

"We know of one dealer that sold 40 cars under the Cash for Clunkers programs, and out of those 40 cars, he's expecting to get paid on eight," Roberts said.

But even those who did follow the guidelines say they won't rest easy until they have the cash in hand. For Westfield Ford, that's about $400,000.

http://cbs2chicago.com/local/Cash.for.clunkers.2.1155470.html

Maybe they will issue IOUs like CA is doing. I find no excuse for having to resubmit the same paper work multiple times. That is purely incompetence on the Federal end. Or not paying the dealers in the order the paperwork was submitted. My understanding is the rejections did not include any explanation, why they were rejected. I know some here would give our Federal Government a high rating no matter what the circumstances. I outgrew that naivete 50 years ago.

ateixeira

It's hard to feel sorry for Billionaire Auto.

Mr_Shiftright

Interesting article that deflates the argument that C4C hurts the collector car market:

http://www.sportscarmarket.com/Shifting-Gears/2009/October/

fintail

You mean people aren't scrapping their GNXs and vintage M6s, and are instead scrapping clapped out 1999 Durangos and worn out 1988 Econolines? Say it aint so!

stephen987

""We know of one dealer that sold 40 cars under the Cash for Clunkers programs, and out of those 40 cars, he's expecting to get paid on eight," Roberts said. "

That's a moronic statement. The dealer should be expecting payment on the deals that qualified, and only on those deals. How many is that? 8? 40? Does the dealer even know? Did the reporter even think to ask?

gagrice

All good questions. My take exactly. I would be chopping some heads at the dealership if they were no more sure of the clunker deals than that.

andres3

8 for 40 isn't even going to cut it as a batting average in baseball, let alone making money as a car dealer with C4C.

kdhspyder

Well as I mentioned previously there is no excuse for incompetence. We did more, far more C4C deals than any of the referenced compnanies in your post and we're getting paid regularly on all of our submissions.

On top of that the major vehicle makers are funding this float on behalf of the dealers. So in fact we're not out anything. Keep looking for the dark cloud.

gagrice

Congratulations for taking in over 1000 clunkers. Hope you get all your money by Friday.

kdhspyder

Not the first post...the one I responded to. Still there's no reason for these guys to be whining unless they've screwed up somehow. It doesn't matter whether we get the money by this Friday, next Friday or the one after that. It all will arrive in due course.

vinnyny

Thank you fellow Americans for sticking us with the most idiotic administration in the history of the United States. $800 billion stimulus package with almost ZERO stimulus in 2009. Our most reliable ally, Great Britain, releasing convicted terrorists for humanitarian concerns. CIA interrogators being investigated for using harsh methods to question murderous terrorists. Cap and Trade (aka the India/China Economic Improvement Act). Government-run health care. Now a program that pays you up to $4500 to trade your car for one that gets just 4 mpg more. Why not just pay us to "inflate tires properly"? Where will this lunacy end?

Yup. You "Did It"!

gagrice

Still there's no reason for these guys to be whining

I think submitting the same documentation 7 times before it is approved is good reason to be ticked. Unless the people you have doing the submitting are just there because they like hanging out at a car agency. Time is money and the Feds do not respect that. Maybe your dealership was just lucky and everything went as expected. It does not look like that is universal. This is all over the national news. I don't have to look for a black cloud. This Congress and President are under the biggest black cloud in decades. Even if you give them half a brownie point for C4C it does not erase the mess they are making of the economy.

srs_49

I think submitting the same documentation 7 times before it is approved is good reason to be ticked. Unless the people you have doing the submitting are just there because they like hanging out at a car agency. Time is money and the Feds do not respect that.

I think anyone who deals with the government realizes that the feds don't do ANYTHING in 10 days, particularly when it involves handing out money. All the paperwork, and I do mean ALL of of it has to be correct with no missing items or inconsistencies. Even when everything is 100% correct, I would be surprised if many of the refunds start showing up in less than 30 days.

The feds hold all of the cards. If you want to deal with them, then you have to learn to accept that reality.

kdhspyder

Again those that can't get it done deserve what they've sowed. As competitors all I can wish them is continued difficulties. We're on to new challenges.

Black cloud? Huh? Maybe you're living under a black cloud but not around here. We just went through one of the best 6 week periods ever and most of the buyers were ones that we would never have seen in normal times. Now we're focusing on the usual buyers that had to sit out the C4C goldrush.

Don't extend your personal negativism to the rest of the country when it's not there. As I've said before, if the C4C program is indicative of the types of programs coming down the road ..... sign me up for all of them.

The Fed doesn't share in your negativism....Fed is more confident of the Recession ending...the stimulus and normal forces must be working. Chin up.

AutoNation's perspective...Clunker program put the auto industry on the road to recovery
Cash for Clunkers was "one of the most successful stimulus programs of all time" that has helped the auto industry on its road to recovery, AutoNation CEO Mike Jackson told CNBC.

Another view...
The government's "Cash for Clunkers" program was "ingenious" because it coaxed wary consumers into re-leveraging their personal balance sheet, Doug Dachille, CEO of investment firm First Principles Capital Management told CNBC. ....link

If you focus on the negative then you'll see mostly negative aspects of everything.

vinnyny

Sorry guys--didn't mean to spark this kind of political debate on an automobile forum. But I guess you're all just being paid by the new "right wing conspiracy" groups to argue about it anyway.

The bottom line on C4C is that anytime somebody gets something for nothing, somebody else pays for it. Some privileged group gets a payday while others suffer. In this case we'll be paying for the boondoggle through the impending higher taxes. Some of us will help cover this latest "free lunch" program when non-clunker owners are stuck paying higher prices due to the artificially inflated demand. Fortunately, the inflation will only be temporary--unless the "Chosen One" pushes another round of crack...

kdhspyder

Sorry this is false vinny. You will not be charged some 'clunker tax' in the future. The program largely pays for itself. And even if you did have to pay for it next year your personal part would come to about $6 or $7 in total....maybe less.

There is nobody, except the clowns on TV and radio that only want to incite the unwashed masses, who is talking about a 'clunker tax'. In fact the biggest 'payers', the ones that will pay back a good part of the borrowed money are the ones that are benefitting the most from the program. If by chance you ever did have to pay something to pay off the Federal monies being borrowed your part would probably come to about the same as your tip your barber.

You can hate Obama all you want but he has little or nothing to do with this. Just try - try a little - to keep the discussion about facts alone, not about fears about bogeymen under the bed.

dave8697

the worst thing about spending someone else's money is when you run out.

fintail

Where was the whine during the past 2 administrations where far more was being wasted with painfully few of the benefits being reaped by average Americans?

I'm still waiting for the second place finishers (and their supporters) of last November to ante up some superior ideas. As federal programs go, this was perhaps the least harmful in memory.

Mr_Shiftright

A recent survey showed that about 90% of what detractors of Obama's health initiative believed was in the proposal was not even in the proposal. In other words, they didn't even take the time to study it.

I did notice a similarity to objections about C4C---those who participated and read the rules knew a great deal more than those that didn't, and were much more agreeable to it, and many (but not all) who objected to C4C had some pretty wild misconceptions about it.

No matter where you stand, it's always good to become as informed as you can.

No reason why these government programs can't be addressed rationally rather than emotionally.

As Mark Twain said "People who don't read books have no advantage over people who can't read".

gagrice

Will this happen with some of the clunkers in the USA?

Automotive "Methadone Program" (AKA Cash for Clunkers) Leads to Relapse in Germany

While the spotlight has recently shown brightly on the US iteration of the Cash for Clunkers program, Germany—whose program Abwrackprämie or "wreck rebate"—has been going at it since January. According to a NY Times article, Germany has dwarfed the US’s efforts, with a $7 billion dollar budget and timeframe through the end of the year.

All this is swell except for one detail: many of the polluting cars are not being scrapped.

Unlike the US, which has taken pains to prevent the cars from falling into the wrong hands by injecting sodium silicate into the oil pan, the German program has allowed the still operating cars to be dropped off at their nearest junkyard. 50K of these dirty and moribund cars have reportedly avoided demolition, according Ronald Schulze, an expert with the Association of Criminal Investigators. The cars are being sold on the black market and shipped to Africa, Eastern Europe and sometimes ending up back on the road in Germany.

http://www.treehugger.com/files/2009/08/automotive-methadone-program-aka-cash-fo- r-clunkers-relapses-in-germany.php

What would stop these clunkers from being loaded into empty containers and shipped to far away lands? Dealers that are getting tired of waiting for the money could be persuaded to look the other way as they get smuggled out of the country. Not that difficult it seems as 1000s of stolen vehicles end up in containers going to other countries.

ateixeira

First people complain that C4C was too slow and bureacratic, then people complain that Germany's was too flexible and some cars escaped salvage.

Which do you prefer? At least pick a side.

Otherwise you're just complaining about everything.

Which is what this thread has become.

Not targeting you specifically, Gary, just the Doomsday mood in this thread.

gagrice

I am not sure the Germans were any faster paying the dealers. The point being who is watching these 690K vehicles having their engines destroyed? Do you think the owners of the dealerships are out there in the 90 degree sun making sure each one quits running? It has nothing to do with doomsday. It has to do with administration. Personally I don't care if a decent running 2000 Explorer makes it to Cuba and replaces a 1962 Chevy. That would be better for the environment. Something this bill was vaguely supposed to address. It has nothing to do with taking sides. I have always felt the program was just more corporate welfare. Something we have an over abundance of in this country.

kansasamy

I work at Midway Motors in McPherson Kansas and we submitted 43 deals and have only been paid on 3. We gave all our customers their new cars and complied with all the rules and we are still waiting to get paid.

The NHTSA's implementation of this program has been the real "clunker".

vinnyny

You will not be charged some 'clunker tax' in the future. The program largely pays for itself. And even if you did have to pay for it next year your personal part would come to about $6 or $7 in total....maybe less.
Please explain how the program largely pays for itself. And please don't get into some silly diatribe about how the extra 5-7 mpg per new vehicle will help lower fuel costs...blah blah blah....resulting in lower interest rates...yada yada...resulting in new taxes of only$6 or $7 in total per taxpayer. Even at $6-7, you're still advocating a socialist policy that makes all of us pay for non-essential benefits for a privileged group.

The bottom line is that if the federal government pays for it, we taxpayers are actually going to pay for it one way or another. That's the part you libs miss every time.

By the way, I actually support the idea of a program like C4C because I can see the benefits of encouraging the purchase of cleaner running, higher mpg vehicles, while protecting American jobs at the same time. Where I have a problem with the program is that it should have been used for the betterment of Americans (as opposed to foreign car makers). I also don't like the fact that anyone driving a junker could get the cash directly from the dealer--too much opportunity for tomfoolery. How would I make it better? 1) Require that the new car/truck be labeled a "domestic" (as designated on the Monroney sticker) so that American jobs would be protected. 2) Take the dealer out of the process by making him junk the clunkers and then issue a certificate verifying that the transaction met the C4C terms. The certificate would be presented with one's tax return for a tax credit--just like with Hybrid and alternative fuel cars. This way, it wouldn't be so easy for the dealers to steal half the rebate right up front (and we'd eliminate the bureaucracy of applying to get their upfront money back).

Sorry for the bold and italics, I couldn't eliminate it.

stever

"Bronco Motors rounded up over 100 of its "Cash for Clunkers" vehicles traded in by customers at the site of its future dealership next to Bronco Motors Nissan at the Idaho Center Auto Mall.

“We had a bunch of these cars just sitting around waiting to be recycled,” Petersen said, “so we thought we would do something fun with them. It was a unique and visible way for us to show our support of Boise State.”

Clunkers used in big display of support for Broncos (KTVB)



(Maybe next year Ducks fans).

100chuck

So far, Whipple has accepted about 169 "clunkers," though in coming weeks, he expects at least 200 more.

Customers are pouring in as the cars are disassembled and the parts put up for sale -- some for as much as 50 percent off, Whipple said.

"We haven't done any advertising and our business has absolutely at least tripled, if not more, every day for at least the last 15 days," he said. "It started out as a trickle, and now it's like a flood."

http://www.mlive.com/news/muskegon/index.ssf/2009/09/dealers_parts_suppliers_sti- ll_dealing_with_clunkers.html

gagrice

Looking at the bright side. These clunkers could keep other clunkers alive for many more years. I put that in the positive column for C4C. I would think sending the rust free body parts from the SW to the Midwest & NE would be a real good business venture.

fintail

It's probably not a bad time to be running a scrapyard. Lots of relatively modern parts are going to be hitting the system - and a lot of them will find buyers. Another positive side effect of a relatively inexpensive program.

kernick

I think if I was that couple that couldn't register my car, I'd file a small-claims case against them for holding the paperwork. The car dealer should provide them with some sort of loaner, or pay for a rental for them.

http://www.wmur.com/money/20697636/detail.html

Claires

Folks, I've removed a number of posts that were pulling the discussion away from the topic at hand. Feel free to email me if you have any questions.

ClaireS, Host
Automotive News & Views | Coupes & Convertibles

imidazol97

>sending the rust free body parts

A lot of clunkers still residing on back lots of local dealers don't appear to be rust free nor do the body parts appear to have much potential for reuse other than new steel.

>These clunkers could keep other clunkers alive for many more years

Correct me if I'm wrong (as if Edmunds posters wouldn't miss a chance!!!!) but aren't the scrape yards required to get rid of the carcass after 6 mos or a year? Does that mean they strip all they thing they might need and keep it? Or does that mean any unsold parts have to go to crusher heaven?