Disclaimer of Liability
The information in this e-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice,
accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used
as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or
taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular
situation.
The author of the tax articles in this e-newsletter did not intend nor write the advice to be used to avoid any penalty imposed by a
taxing authority, nor may any user/recipient of this document use this document's written tax advice for that purpose. This document's
tax advice was written specifically to support the promotion or marketing of the transaction/matter addressed by the written tax advice.
Therefore, any user/recipient of this document should seek an independent tax professional's advice regarding the user/recipient's
particular circumstances.
The information is provided "as is" with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and
without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for
a particular purpose.
The information in this e-newsletter is for general guidance only, and does not constitute the provision of legal advice, tax advice,
accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used
as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or
taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular
situation.
The author of the tax articles in this e-newsletter did not intend nor write the advice to be used to avoid any penalty imposed by a
taxing authority, nor may any user/recipient of this document use this document's written tax advice for that purpose. This document's
tax advice was written specifically to support the promotion or marketing of the transaction/matter addressed by the written tax advice.
Therefore, any user/recipient of this document should seek an independent tax professional's advice regarding the user/recipient's
particular circumstances.
The information is provided "as is" with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and
without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for
a particular purpose.
| Serving the Central Pennsylvania area since 1981 |
| Robert A. Romako, CPA |
| NEW TAX LAW MAY MEAN BIG BUCKS FOR YOUR OLD CAR |
On June 24, President Obama signed the “Consumer Assistance to Recycle and Save Act”, popularly known as the “Cash for Clunkers”
bill. Why is this important? If you qualify, it may mean the best deal on a new car that you’ll ever get!
The program gives a cash incentive for both individuals and businesses to trade in their old gas hogs for more fuel-efficient vehicles.
Unlike most tax incentives, there is no income limitation on who can qualify for the program – qualification depends solely upon the
vehicle being traded. The incentive is in the form of a voucher worth either $3,500 or $4,500, depending on the type of vehicle being
traded and the fuel efficiency of the new vehicle purchased. But, the new vehicle must be purchased between July 1 and November
1, 2009 to qualify, so time is of the essence.
For cars.
To qualify, the old car must have a Combined Fuel Efficiency (CFE) of no more than 18 miles per gallon. You can check the CFE of your
vehicle at www.fueleconomy.gov. Click on the section entitled “1985-2010 MPG Estimates”, then select your vehicle make, model and
year. To receive a $3,500 voucher, the CFE of your new vehicle must be at least 4 mpg higher than your old car’s, and have a CFE
rating of at least 22 mpg. If the new vehicle’s CFE is at least 10 mpg higher, you qualify for a $4,500 voucher.
For trucks.
The incentive program for trucks is a bit more complicated. First, you must determine to which of the 3 truck categories both your old and
new trucks are assigned.
• Category 1 – a truck having a CFE of at least 18 mpg and under 6,000 pounds gross vehicle weight
• Category 2 – a large van or large pickup as defined by the Treasury Secretary (those between 6,000 and 8,500 pounds gross
vehicle weight)
• Category 3 – a truck defined under USC title 49, Section 32901(a)(19) (those between 8,500 and 10,000 pounds gross vehicle
weight).
The voucher amount is $3,500 if:
1. The new truck is a category 1 truck and its CFE is at least 2 mpg higher than the CFE of the trade-in,
2. The new truck is a category 2 truck that has a CFE of at least 15 mpg and (a) the trade-in is a category 2 truck and the CFE of the
new truck is at least 1 mpg greater than the trade-in, or (b) the trade-in is a category 3 truck of model year 2001 or earlier, or
3. The new truck is a category 3 truck and the trade-in is a category 3 truck of model year 2001 or earlier and is of similar size or is
large than the new truck.
The voucher amount is $4,500 if:
1. The new truck is a category 1 truck with a CFE of at least 5 mpg more than the trade-in, or
2. The new truck is a category 2 truck having a CFE of at least 15 mpg, the CFE of the new truck is at least 2 mpg higher than the
trade-in, and the trade in is a category 2 truck.
For all new vehicles to qualify for the program, the purchaser must be the first titled owner of the vehicle. In other words, used
vehicles –even if they meet the mileage standards – will not qualify. In addition, the manufacturer’s suggested retail price must be $45,000
or less. For the trade-in vehicle (the clunker), the vehicle must be in drivable condition, must have been continually insured and registered
to the same owner for at least 1 year prior to the trade-in, and be less than 25 years old before the trade-in date.
Only one voucher per individual is allowed. In the case of joint owners, only one voucher will be issued. The value of the voucher is not
taxed to either an individual or to a business owner. Note that individuals may also be eligible to claim a deduction for the sales tax paid on
the new vehicle. In addition, there may be a credit for hybrid vehicles or advanced lean-burn fuel technology for the new vehicle. In any
event, if your old vehicle qualifies for the program, and you’ve been thinking about replacing it, act before November 1 to claim your
voucher.
bill. Why is this important? If you qualify, it may mean the best deal on a new car that you’ll ever get!
The program gives a cash incentive for both individuals and businesses to trade in their old gas hogs for more fuel-efficient vehicles.
Unlike most tax incentives, there is no income limitation on who can qualify for the program – qualification depends solely upon the
vehicle being traded. The incentive is in the form of a voucher worth either $3,500 or $4,500, depending on the type of vehicle being
traded and the fuel efficiency of the new vehicle purchased. But, the new vehicle must be purchased between July 1 and November
1, 2009 to qualify, so time is of the essence.
For cars.
To qualify, the old car must have a Combined Fuel Efficiency (CFE) of no more than 18 miles per gallon. You can check the CFE of your
vehicle at www.fueleconomy.gov. Click on the section entitled “1985-2010 MPG Estimates”, then select your vehicle make, model and
year. To receive a $3,500 voucher, the CFE of your new vehicle must be at least 4 mpg higher than your old car’s, and have a CFE
rating of at least 22 mpg. If the new vehicle’s CFE is at least 10 mpg higher, you qualify for a $4,500 voucher.
For trucks.
The incentive program for trucks is a bit more complicated. First, you must determine to which of the 3 truck categories both your old and
new trucks are assigned.
• Category 1 – a truck having a CFE of at least 18 mpg and under 6,000 pounds gross vehicle weight
• Category 2 – a large van or large pickup as defined by the Treasury Secretary (those between 6,000 and 8,500 pounds gross
vehicle weight)
• Category 3 – a truck defined under USC title 49, Section 32901(a)(19) (those between 8,500 and 10,000 pounds gross vehicle
weight).
The voucher amount is $3,500 if:
1. The new truck is a category 1 truck and its CFE is at least 2 mpg higher than the CFE of the trade-in,
2. The new truck is a category 2 truck that has a CFE of at least 15 mpg and (a) the trade-in is a category 2 truck and the CFE of the
new truck is at least 1 mpg greater than the trade-in, or (b) the trade-in is a category 3 truck of model year 2001 or earlier, or
3. The new truck is a category 3 truck and the trade-in is a category 3 truck of model year 2001 or earlier and is of similar size or is
large than the new truck.
The voucher amount is $4,500 if:
1. The new truck is a category 1 truck with a CFE of at least 5 mpg more than the trade-in, or
2. The new truck is a category 2 truck having a CFE of at least 15 mpg, the CFE of the new truck is at least 2 mpg higher than the
trade-in, and the trade in is a category 2 truck.
For all new vehicles to qualify for the program, the purchaser must be the first titled owner of the vehicle. In other words, used
vehicles –even if they meet the mileage standards – will not qualify. In addition, the manufacturer’s suggested retail price must be $45,000
or less. For the trade-in vehicle (the clunker), the vehicle must be in drivable condition, must have been continually insured and registered
to the same owner for at least 1 year prior to the trade-in, and be less than 25 years old before the trade-in date.
Only one voucher per individual is allowed. In the case of joint owners, only one voucher will be issued. The value of the voucher is not
taxed to either an individual or to a business owner. Note that individuals may also be eligible to claim a deduction for the sales tax paid on
the new vehicle. In addition, there may be a credit for hybrid vehicles or advanced lean-burn fuel technology for the new vehicle. In any
event, if your old vehicle qualifies for the program, and you’ve been thinking about replacing it, act before November 1 to claim your
voucher.
| July 2009 Newsletter Article |
| Robert A. Romako, CPA Phone:717.774.3047 |