Uncle Sam Deducting Back Taxes From Cash for Clunkers Dealers' Checks

Robert Farago
by Robert Farago

This e-mail just came over the e-transom from one of TTAC’s Best and Brightest:

This just in. Some dealers are getting their first CARS [a.k.a. Cash for Clunker] reimbursement checks from the government. And they’re short. The checks. Not the bureaucrats. See, if the dealer who submitted a request OWES ANY FEDERAL BACK TAXES, THAT IS DEDUCTED FROM THE DEALER REIMBURSEMENT AMOUNT. Yep. If BillyBob Motors owes the government fifteen-hundred, the dealer gets a check from Obama Money Bags for, um, carry the five, three thousand. If BillyBob owes more than forty-five hundred in federal taxes, he gets back . . . nada.

UPDATE: DOT Spokesman Ray Tyson says the IRS “may” withhold money from Cash for Clunkers dealers’ payments should the dealer owe the federal government back taxes. I’ve heard from a dealer to whom this has happened. I have amended the text of the e-mail above and removed the “Wild Ass Rumor” designation.

Robert Farago
Robert Farago

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  • ChuckR ChuckR on Aug 10, 2009

    70 Chevelle ss454 Can't you rat out the property tax deadbeats? As someone who didn't vote for the Won, I'd be all over that even if I had to PAY a fee to complain. Happens here in RI - dropping the dime that is. Personal property tax on cars is stupid. I see FL plates every day and the abuse of dealer plates was epic until they finally cracked down. Our mil rate is typically quite high and until they started excluding some of the car's base value, it was a real ding. Until I moved to a relatively low mil rate location, I never had a really nice car...

  • Bleach Bleach on Aug 10, 2009

    Sure it's fine for the IRS to collect from deadbeats, but that assumes the IRS' records are correct. That's not something I would count on.

  • Anonymous Anonymous on Aug 10, 2009

    I sent a similar tip to RF over the weekend, but it was about dealers not yet receiving their C4C funds from the government, their lots being filled with "sold" cars they couldn't deliver. We were out to dinner with a couple C4C'd their Exploder for a RAV-4, and while the paperwork was done the car sat on the lot because the gov't payment hadn't arrived.

  • John Horner John Horner on Aug 11, 2009

    You would be shocked how many businesses owe employee withholding taxes to the state and federal governments. You might think that when your paystub says so many dollars were withheld in payment of your income taxes that this would mean the money has been sent in. Not necessarily. The actual payment of those monies from the employer to the government happens on a different schedule, and many employers who are having cash flow problems let themselves get behind. The real kicker is that if the employer never turns over the money they withheld to the government, the employee can still be held liable for the missing taxes. I wonder how many of the recently deceased dealers left that nightmare behind for their ex-employees. Anyway, I have no problem with the feds not handing over C4C payments if a dealer has equivalent legitimate back taxes due. In fact, we would be reading horror stories about it if the feds were giving cash to dealers who actually owed the feds money.