“Cash for Clunkers” Trade-In Vouchers

by

Via Spidell Publishing

On June 24, 2009, the President signed the Consumer Assistance to Recycle and Save Act of 2009 (H.R. 2346), commonly known as “Cash for Clunkers.” Car dealerships that register for this voluntary program will receive vouchers for qualifying trade-ins on the purchase of new vehicles where the fuel efficiency of the new car exceeds the fuel efficiency of the trade-in by specified amounts. The voucher amounts will be $3,500 or $4,500, depending on the increase in fuel efficiency and are to be treated as the down payment on the purchase or part of the down payment. The Act is effective for purchases made between July 1, 2009, and November 1, 2009.

Under the Act, the voucher is not treated as gross income of the purchaser. We believe that unless the Legislature enacts conforming legislation, the voucher will be treated as gross income for California purposes.

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