Senate Approves “Cash for Clunkers” Program

June 19, 2009 by: The Tax Man

The Senate on June 18 approved a proposal known as the “cash for clunkers” program, which would provide $1 billion in tax-free vouchers to automobile dealers who participate in the new program aimed at revitalizing sagging vehicle sales. The program

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vouchers, worth $3,500 or $4,500, will be given to dealers when consumers trade in an old vehicle for one with higher fuel efficiency and will not be considered taxable income for the purchaser.

The program is also designed to remove gas guzzling, environmentally outdated automobiles from the roads as well as boost sales for economically depressed automobile dealers. The bill limits the number of vouchers to one per customer, including joint registered owners of a single eligible trade-in vehicle, and requires a dealer to certify that he will transfer the vehicle and its title to an entity that will ensure that the vehicle will be crushed or shredded within the program period, and has not been, and will not be, sold, leased, exchanged, or otherwise disposed of for use as an automobile.