Taxpayer asks:
Hi,
I heard a car dealer on a radio talk show say that if the consumer owes any federal or state taxes when they buy a C4C car, the dealer is on the hook to get reimbursed by the consumer or eat the difference, because the federal payment will take out the arrearrage before sending out the rebate.
True? And if so, where can I find this in written form? (I am trying to write an article on C4C, but this piece of info is elusive.)
Thanks,
Taxgirl says:
I haven’t heard anything about that. And I don’t believe that it’s true – for a couple of reasons.
One, the paperwork is submitted by the dealer to the NHTSA, not the Internal Revenue Service (IRS), and definitely not to the state revenue department. In fact, the NHTSA goes out of its way in the rule to note that they are not experienced or authorized to deal with taxes.
Two, the rebate is payable to the dealer, not to the individual. The dealer provides the discount at sale, not at reimbursement. If rebates were subject to tax checks, dealers would essentially become responsible for collections of back taxes. That would be messy and cumbersome – not to mention the number of privacy issues involved.
Three, the rule (which you can read in its entirety as a pdf here) clearly states:
For a purchaser, a dealer must collect individual or entity name, address and State or corporate identification number (e.g., driver’s license number, State identification number, corporate tax identification number). This information is used to verify the identity of the purchaser and to confirm no prior participation in the program.
In theory, then, you could simply provide your name, address, and license number. That’s not enough information to run a tax check instantaneously. I mean, the IRS database is good, but it’s not that good.
I think this is either a dealer who doesn’t know what he’s talking about or a scam. I’ve seen a couple of sites (Texas’ Police News is one) that has warned folks away from scams that require “pre-registration” or the release of extremely personal information for the CARS program.
If you’re concerned about what appears to be a scam related to the CARS program, contact the Office of the Inspector General at the U.S. Department of Transportation at (800) 424-9071 or by e-mail at hotline@oig.dot.gov.
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
