FEBRUARY 20, 2009
*Special Edition*

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	TO:		CADA Members
	FROM:		Tim Jackson
	RE:		Consumer Tax Incentives in Federal Stimulus Bill, American Recovery and Reinvestment Act of 2009
	DATE:		February 20, 2009
	**IMPORTANT DOCUMENTS:		Click here for a summary of Vehicle Tax Deductions for New Car Purchasers.   Click here to download this memo in .pdf format.

The final federal stimulus bill, signed this week by the President in Denver, included consumer tax incentives for the purchase of new vehicles.  The attached summary provides an overview and various clarifications on the application of these new tax incentives.  A few additional reminders are provided below along with a hypothetical example. 

• Advertising:  A note of caution on advertising:  dealerships are prohibited under Colorado law from advertising that they will pay any tax on behalf of consumers.  
   

• Refrain from giving tax / legal advice to consumers: Dealers should ensure that personnel do not offer to calculate the deduction or estimate savings for individual customers; be especially careful that salespersons are not offering tax or legal advice.
   

• Other tax credits:  As a reminder, there are also federal tax credits for hybrid vehicles still available on select vehicles. For more information on available credits, visit www.hybridcars.com (under Research / Incentives & Laws).  See also http://www.energytaxincentives.org  
   

• Colorado also has state-level alternative fuel Income tax credits.
   

  • See  the Department of Revenue, FYI – Income #9, Alternative Fuel Income Tax Credits, available at: www.colorado.gov/revenue/tax,
    under “FYI Publications” (or contact CADA for a copy)

A hypothetical example is included below to provide a general idea of how this deduction would apply:

Hypothetical  – For illustration purposes only

• $40,000 purchase, 8% estimated state and local sales/use taxes = $3,200 sales/use tax liability
   

  • Individual in a 25% federal income tax bracket could save approximately $800 on federal income taxes and $148 on Colorado state income taxes
     

  • Total possible tax savings = $948.00

 Please contact us with any further questions you may have.

Colorado Automobile Dealers Association
290 East Speer Boulevard Denver, CO  80203
Telephone:  303.831.1722  |  Facsimile: 303.831.4205
www.coloradodealers.org