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Old 01-22-2009, 10:03 AM   #1
XDCX
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Default Sales Tax on Manufacturer Rebates

Kudos to a North Dakota Senator who has introduced legislation that would exempt Manufacturer Rebates from Sales Tax.

Like many states, North Dakota currently charges Sales Tax on the price of the vehicle before any rebates are deducted. Given that some consumer rebates can reach $8,000 or more, that is an unwarranted tax burden.

Here's a link to the news report: http://www.forbes.com/feeds/ap/2009/...ap5952022.html

Are there any other states that provide a Sales Tax exemption for Manufacturer Rebates?
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Old 01-22-2009, 10:52 AM   #2
dafuzz1956
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Interesting comment on the employee pricing. In Wisconsin we have to tax the rebate and the dlr commission on employee price's. So if the reimbersement to the dealer is $1000.00 we have to tax that just like any other rebate.
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Old 01-22-2009, 12:33 PM   #3
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Originally Posted by dafuzz1956 View Post
Interesting comment on the employee pricing. In Wisconsin we have to tax the rebate and the dlr commission on employee price's. So if the reimbersement to the dealer is $1000.00 we have to tax that just like any other rebate.
Wow, Wisconsin's playing hardball.

I didn't realize that any states were collecting Sales Tax on the Employee Pricing payment. That's getting dangerously close to collecting Sales Tax on Dealer Cash.

I hope the legislation in North Dakota passes - maybe it will put pressure on other states to do the right thing. (OK, I know that I'm dreaming....)
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Old 01-22-2009, 03:18 PM   #4
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Yup, the CHEESE HEADSthink of it as a rebate, remember I am originally from Wash DC.
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Old 01-23-2009, 05:49 AM   #5
okcarl
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It would be fantastic to eliminate this tax. I know we are always having to explain to people why their taxes are higher than they were thinking they would be.
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Old 01-23-2009, 10:01 AM   #6
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I know we are always having to explain to people why their taxes are higher than they were thinking they would be.
In Washington state the Sales Tax for vehicles is almost 10%. It can be a real issue when you're $10/month away from closing a car deal and you realize that most of spread would go away if you didn't have to tax the rebate.

That's one of the reasons why I've always favored Dealer Cash - the dollars go further because they're not subject to Sales Tax.
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Old 01-23-2009, 10:37 AM   #7
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That's one of the reasons why I've always favored Dealer Cash - the dollars go further because they're not subject to Sales Tax.
I agree on the dealer cash issue. Not only from a tax point of view, but also in the deal structure itself. Most of our customers look at an $8000 rebate and their response is... "That's from the manufacture. Now if you'll cut another $8000 out of dealer profit maybe we can have a deal." They think your making several thousand dollars on every sale, and with the message the manufacture is sending it's hard to blame the customer.
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Old 01-23-2009, 11:59 AM   #8
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They think your making several thousand dollars on every sale, and with the message the manufacture is sending it's hard to blame the customer.
That's a great point - the big rebates do give the impression that there must be a huge margin between Invoice and MSRP.

The other nice thing with Dealer Cash is that it makes it so much easier to structure a deal - you can apply the money toward the trade, toward lowering the price of the vehicle or toward profit.
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Old 01-23-2009, 08:01 PM   #9
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What is profit ?
Some days i feel as if that notion does not exist any more!
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Old 01-23-2009, 08:52 PM   #10
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You know, states have to get their tax revenues from somewhere. I'm not sure this would pass in states that are already strapped for cash. I agree it is an unwarranted tax burden, but what about schools and roads?
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Old 01-24-2009, 10:41 AM   #11
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You know, states have to get their tax revenues from somewhere. I'm not sure this would pass in states that are already strapped for cash. I agree it is an unwarranted tax burden, but what about schools and roads?
You make an excellent point - now is not a good time to be asking for tax relief.

That said, if you don't ask you don't get. I remember in the old days you never received credit for your trade vehicle when they calculated Sales Tax in Washington. You could trade in a $15K car on a $20K car and you'd still have to pay Sales Tax on $20K. The law was eventually changed.

Concerning the roads a schools, I'm all for them, I just want the tax structure to be fair and logical.
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Old 01-24-2009, 10:45 AM   #12
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You know, states have to get their tax revenues from somewhere. I'm not sure this would pass in states that are already strapped for cash. I agree it is an unwarranted tax burden, but what about schools and roads?
The great state of Wisconsin had discussions of taxing the sale price prior to trade, or using the MSRP as a tax point. I really don't think it will happen though.
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Old 01-24-2009, 09:02 PM   #13
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I've had experience in Wisconsin. Their attention for detail within their structure for selling cars seems to be right up their with my favorite state, California. Lots of rules.
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Old 01-25-2009, 10:54 AM   #14
jules4jeeps
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We tax everything but the holdback, or stairstep money...even the VPA allowance ($200/$400)...alot of dealers in our market (chicago metro) don't, but we do cross all our T's... its just frustrating to compete with people who don't.
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Old 01-25-2009, 12:10 PM   #15
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...even the VPA allowance ($200/$400)...
its just frustrating to compete with people who don't.
I wouldn't even know how to tax an internal/wholesale incentive???

The way States are try'n to generate revenue, I'd mail in a letter to state rev. dept. on that chit. Hell, I'd copy the letter and mail it in every week for a couple months... someone is bound to get the point and go in for an audit.
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