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  If dealer is offering their own discount, is the dealer's discount subject to sales and use taxes?
  Question
 

Q. If a participating dealer offers its own discount on vehicles in addition to the CARS discount, is the dealer's discount subject to sales and use taxes?

  Answer
 

NOTE: The federal CARS Program officially ended on August 25, 2009

A. No. The dealer's discount is not included in the sales price for Connecticut sales and use tax purposes and thus is not taxable. See Policy Statement 2007(5), Sales Tax Treatment of Coupons, Scan Cards, Cash Equivalents, Promotional Items, and Rebates.

Example: Here is how the Connecticut sales and use tax is calculated in a situation where a consumer trading in a vehicle to purchase a new one qualifies for a $3500 CARS discount and the dealer offers a $1,000 discount:

Purchase price of new motor vehicle

$20,000.00

Allowable CARS discount

-$3,500.00

Dealer's discount

-$1,000.00

Reduced purchase price of motor vehicle

$15,500.00

Connecticut sales tax - ($15,500 x .0635 = $930)

+ $ 984.25

Total

$16,484.25

(Updated: 2015)

$Disclaimer

 
 
 
  
 
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