CAR Allowance Rebate System - "Cash for Clunkers"
For purposes of Wisconsin's sales and use tax laws, the amount of the electronic voucher applied by the car dealer under the "CARS" program as a partial payment or down payment towards a person's purchase of a new fuel efficient vehicle is NOT subject to Wisconsin sales or use tax.
The Consumer Assistance to Recycle and Save Act of 2009, enacted into federal law on June 24, 2009, provides for the "Consumer Assistance to Recycle and Save Program." This program is also known as the "Car Allowance Rebate System" or "CARS."
Under the CARS program, the National Highway Traffic Safety Administration (NHTSA) will issue an electronic voucher in the amount of $3,500 or $4,500, to offset the purchase price or lease price of the purchase or lease of a new fuel efficient vehicle upon the surrender of an eligible trade-in vehicle to a dealer participating in the CARS program. For more information on the CARS program visit http://www.cars.gov/.
The participating dealer is required to apply the amount of the voucher as a partial payment or down payment towards the purchase or lease of any new fuel efficient automobile offered for sale or lease by that dealer.
The dealer is required to transfer any trade-in vehicle accepted under the CARS program to an entity for disposal.
After the sale of the new automobile is completed, the dealer will receive an electronic payment from NHTSA for the voucher amount which the dealer allowed to the purchaser as a partial payment or down payment on the purchase of the new fuel efficient vehicle.
For purposes of Wisconsin's sales and use taxes, the amount of the voucher issued by NHTSA is not subject to Wisconsin sales or use taxes. The amount of the voucher that is paid directly to the car dealer from NHTSA, a federal government agency, is not subject to Wisconsin sales or use tax since this part of the sale is considered a sale to the federal government.
Note to Car Dealers: According to the Wisconsin Automobile and Truck Dealer's Association, the amount of the voucher may be entered on the Motor Vehicle Purchase Contract in Box 1, Line c, for "Discounts." The word "CARS" should be entered on the dotted line before the amount of the voucher, and an entry in the "Other Conditions of Sale" section should read as follows: "Purchase price reduced by the Car Allowance Rebate System."
Last updated July 27, 2009