Consumer Assistance to Recycle and Save (CARS) Program

              The Illinois Department of Revenue has determined the sales tax treat­ment for new vehicles purchased or leased in conjunction with the federal government’s Consumer Assistance to Recycle and Save (CARS) program. The department has determined that for sales tax purposes, the
A CARS’ payment ($3,500 or $4,500) to the dealer is a direct government payment, therefore it is not taxable.
B estimated scrap or salvage value (provided by dealer) for the vehicle eligible under CARS is treated as a trade-in if it is used to reduce the selling price of a new vehicle, therefore it is not taxable.
Combine both A and B amounts and report on Part 6, Line 2 of Form ST-556 (total trade-in credit or value). You must keep the amounts separate in your books and records.
Example:
$ 20,000 Price of eligible new vehicle
— $ 4,500 CARS payment to dealer
— $ 350 Negotiated scrap value estimate used to reduce the selling price of a new vehicle ($400 less $50 administrative fee) on CARS vehicle
--------------
$ 15,150 Amount subject to Illinois sales tax
Using this example, the amount on Part 6, Line 2 is $4,850. The taxable amount on
Line 3 would be $15,150.
Note: Manufacturer or dealer incen­tives remain taxable as provided in Section 130.2125 of the department’s regulations.
Does CARS apply to leased ve­hicles?
Yes. CARS includes the lease of a new vehicle, provided the lease period is at least five years.
Does CARS apply to used ve­hicles?
No. CARS only applies to the purchase or lease of a new vehicle.
Consumer Assistance to Recycle and Save (CARS) program
For information
or forms... Call us at: 1 800 732-8866 or
217 782-3336 Call our TDD
(telecommunications device for the deaf) at:
1 800 544-5304 Write us at:
Illinois Department of Revenue
P.O. Box 19044
Springfield, IL 62794-9044 Visit our web site at: tax.illinois.gov Call our 24-hour
Forms Order Line at:
1 800 356-6302
This bulletin is written to inform you of recent changes; it does not replace statutes, rules and regulations, or court decisions.
Illinois Department of Revenue
Informational Bulletin
Printed by authority of the State of Illinois
7/09
FY 2010-05
July 2009
Brian Hamer
Director of Revenue