Archive for July, 2009

House Passes Bill to Prolong 'Cash for Clunkers'

The U.S. House of Representatives passed a bill Friday afternoon to give the popular, week-old Car Allowance Rebate System (CARS) program, or “Cash for Clunkers”, an additional $2 billion.  The program, which provides credits for the owners of old gas guzzlers to purchase newer, more fuel-efficient cars, had almost run through its initial $1 billion allotment.

Today’s congressional action would give the CARS program a chance to continue through its November 1 expiration date.

The money will come from funds in the already-passed economic stimulus package that were intended for energy loan guarantees. Congress will seek to replenish the energy program at a later date.

“If you were planning on going to buy a car this weekend, using this program, this program continues to run,” White House press secretary Robert Gibbs said Friday. “If you meet the requirements of the program, the certificates will be honored.”

Senate leaders hope to bring the bill up next week. Conservatives who opposed both the original cash for clunkers program and the stimulus package as a whole may seek to slow the process, as might liberals who want the program’s mileage standards to be revised upwards.

Two members of the Michigan congressional delegation said the administration had told them it would continue to honor exchanges made under the program “until further notice.”

Lawmakers also want problems fixed in the way the program has been administered and and to ensure auto dealers are being reimbursed in a timely fashion. Technical glitches have made it difficult for the administration to know exactly how many exchanges have taken place and how much money has been paid out to date.

Previous Tax Topics entries about the CARS program:

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LDR News Release – Investigation of antique car sales results in felony arrest

An Opelousas man was arrested on five felony counts of filing false public records and theft by fraud in connection with an investigation into the sale of antique automobiles, the Louisiana Department of Revenue (LDR) announced Thursday.

Kenneth O. Fakouri (2227 George Drive Opelousas, LA 70570) was arrested by Louisiana State Police (LSP) following a joint investigation by LSP and the Criminal Investigations Division of LDR. He was taken into custody on warrants issued by the 24th Judicial District Court in Jefferson Parish and the 27th Judicial District Court in St. Landry Parish.

LDR investigators received information from an informant that Fakouri had conspired to underpay the sales taxes due on the purchase of two antique show cars: a 1941 Willys; and a 1955 Chevrolet Bel Air. Despite having paid $100 thousand for each vehicle, as demonstrated by the bills of sale, Fakouri filed registration documents listing a sale price of $500.00. The alleged fraud deprived the state and parish governments of more than $19 thousand of sales tax revenue.

LDR reported the allegations to State Police investigators with LSP Troop I in Lafayette, who took Fakouri into custody on July 28, 2009. His arrest warrants outline the charges as:

  • Filing False Public Records (3 counts);
  • Theft by Fraud in the amount of $9,452.05;
  • Theft by Fraud in the amount of $9,404.10.

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'Cash for Clunkers' possibly suspended

The federal government might discontinue its popular Car Allowance Rebate System (CARS) program, known also as Cash for Clunkers.  The program provides a credit for owners of older gas guzzlers to purchase newer, more fuel-efficient vehicles.

But the program has proved so popular,  that it may be at risk of depleting its $1 billion allotment more quickly than anticipated.

Transportation Department officials called lawmakers earlier Thursday to alert them of plans to suspend the program as early as Friday. But a White House official said later the program had not been suspended and they were reviewing their options to keep the program funded.

White House press secretary Robert Gibbs said they were working to “assess the situation facing what is obviously an incredibly popular program. Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to date will be honored.”

Dubbed the Car Allowance Rebate System, or CARS, the program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle, in exchange for scrapping their old vehicle. Congress last month approved the plan to boost auto sales and remove some inefficient cars and trucks from the roads.

The program was scheduled to last through Nov. 1 or until the money ran out, but few predicted it would be depleted in days. Through late Wednesday, 22,782 vehicles had been purchased through CARS and nearly $96 million had been spent.

But dealers raised concerns about large backlogs in the processing of the deals in the government system. A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by the government, or nearly 13 trades per store.

It suggested that with about 23,000 dealers taking part in the program, car dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.

Previously, LDR distributed guidance on how Louisiana sales tax law applies to the CARS program.

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EDITORIAL: 'Tax day for storm victims'

This Times-Picayune editorial reminds Gulf Coast residents of today’s federal filing deadline Katrina & Rita rebuilding grants.

Gulf Coast residents who need to amend their 2005 tax returns to avoid paying income taxes on rebuilding grants had better hurry. The deadline to amend the 2005 filing is today.

Tens of thousands of people lowered their tax bills after Hurricanes Katrina and Rita by claiming a casualty loss from the storms. But many subsequently found themselves in a higher-than-expected tax bracket when the federal government decided to tax as income the rebuilding grants from programs like Louisiana’s Road Home.

Visit IRS.gov for more information about the hurricane grant guidelines.

To qualify for this relief, these amended returns must be filed by July 30, 2009, and the entire resulting tax due paid by July 30, 2010, in most cases. The notice also provides special instructions for those taxpayers who have already filed an amended return.

Taxpayers should write the words, “Hurricane Grant Relief” in dark, bold letters at the top of their amended return, Form 1040X, and mail it to: Internal Revenue Service Center, Austin, TX 73301-0255. Amended returns cannot be filed electronically.

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Revenue Information Bulletin 09-018: 'Federal Cash for Clunkers Program'

Revenue Information Bulletin No. 09-018
July 28, 2009
Sales Tax

Computation of the State Sales Tax on Vehicle Transactions under the Federal “Cash for Clunkers” Program

On June 24, 2009 President Obama signed into law the Consumer Assistance to Recycle and Save (CARS) Act of 2009. This act establishes the “Cash for Clunkers” program, under which the United States Government will provide $3,500 or $4,500 to offset the purchase or lease price of a more fuel efficient vehicle upon the trade-in of an eligible vehicle.

The program requires that, in order for consumers to receive the monetary credit toward the purchase or lease of eligible new fuel-efficient vehicles, they must surrender their old, less fuel-efficient vehicles. The payments to consumers on vehicle purchases under this program will be treated as dealer allowances for vehicle trade-ins on the purchase of new vehicles and are not subject to the state sales tax.

An example is as follows:

 

 Sales Price of Vehicle

 

 $25,000

 

 Less: Federal Program Payment

 

 4,500

 

 Amount Subject to State Sales Tax

 

 $20,500

Under the state sales tax law, qualified vehicle lessors who acquire vehicles for leasing under this program will not be required to pay sales taxes on their acquisitions of the vehicles. The federal payments that are applied to consumer leases as capitalized cost reductions will be considered as taxable “gross proceeds” from leasing and renting.

Questions concerning this matter can be directed to the Department of Revenue’s Taxpayer Services Division at 225.219.7356.

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Report: States saw significant revenue decline in first quarter

A report from the Nelson A. Rockefeller Institute on Government says states experienced ”widespread and sharp declines”  in tax revenue in the first quarter of 2009.

From the highlights:

  • Total state tax revenue fell by 12.6 percent in the first quarter of 2009, compared to the same quarter a year earlier, based on data for 47 early-reporting states. Forty-five of these states had declines in total tax collections.
  • Personal income tax revenue fell sharply and represented the bulk of the decline, with a 15.8 percent year-over-year decrease. This is the largest such decline since 2002.
  •  Sales tax collections continued their fall with a decline of 7.6 percent, while corporate tax collections dropped 16.2 percent. This is the second quarter in a row that revenue from all three major sources declined.
  •  Many states are already reporting even further revenue shortfalls in the second quarter of 2009 on personal income tax returns due in April.
  •  The employment picture for the quarter was sharply and broadly negative. The number of jobs fell in every one of the 50 states, and most showed declines of more than 1 percent compared to the previous quarter.

Read the full report (.pdf) here.

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'Commission to find ways to cut state government'

A legislatively-created panel intended to develop a plan for shrinking state government will hold its first meeting on July 27.

The first meeting is expected to be organizational and will elect officers and set a course for work.

The new law calls for the panel to make its initial report to lawmakers and the governor no later than Dec. 15. The commission must prepare its recommendations on reorganizing state government by Jan. 4. Legislative committees must review the plans for possible reorganization by Feb. 1 for possible action at next year’s legislative session.

The Commission on Streamlining Government is charged with examining each state agency’s activities, functions, programs, services, powers and responsibilities to determine which ones can be eliminated, streamlined, consolidated or possibly turned over to the private sector.

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Notice of Intent – Point of Sale for Jurisdiction Where Sales and/or Use Tax Is Due

This is a reminder of a public hearing that the Louisiana Department of Revenue will conduct on July 30, 2009, concerning a proposed rule for determining the taxing jurisdiction where sales or use taxes are due.

The Notice of Intent to promulgate LAC 61:I.4313 can be accessed from the department’s web site.
 
Interested persons may submit data, views, or arguments concerning the proposed rule in writing to Raymond E. Tangney, Senior Policy Consultant, Policy Services Division, P.O. Box 44098, Baton Rouge, LA 70804-4098 or by fax to (225) 219-2759. All comments must be submitted by 4:30 p.m. on Wednesday, July 29, 2009.
 
The public hearing on this proposed rule will be conducted at 2:30 p.m. on Thursday, July 30, 2009, in the River Conference Room on the 7th floor of the LaSalle Building, 617 North Third Street, Baton Rouge, LA 70802. 

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RIB 09-017-A: Annual Sales Tax Holiday FAQs

The Policy Services Division of the Louisiana Department of Revenue (LDR) has issued a Revenue Information Bulletin (RIB) concerning the annual two-day state sales tax holiday that will be conducted on August 7-8, 2009.

Revenue Information Bulletin No. 09-017-A presents answers to frequently-asked questions that LDR has received regarding the sales tax holiday.


A Revenue Information Bulletin (RIB) is issued under the authority of LAC 61:III.101(D). A RIB is an informal statement of information issued for the public and employees that is general in nature. A RIB does not have the force and effect of law and is not binding on the public or on the Louisiana Department of Revenue.

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RIB 09-017: Annual State Sales Tax Holiday Scheduled Friday, August 7, and Saturday, August 8, 2009

The Policy Services Division of the Louisiana Department of Revenue has issued a Revenue Information Bulletin (RIB) concerning the annual two-day state sales tax holiday that will be conducted on August 7-8, 2009.

Revenue Information Bulletin No. 09-017 discusses the purchases that are eligible for state sales tax exemption during the holiday, the purchases that are not eligible, as well as the conditions and special provisions related to the holiday.


A Revenue Information Bulletin (RIB) is issued under the authority of LAC 61:III.101(D). A RIB is an informal statement of information issued for the public and employees that is general in nature. A RIB does not have the force and effect of law and is not binding on the public or on the Louisiana Department of Revenue.

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