Auto dealers across the nation have been benefiting from the “Cash for Clunkers” stimulus program–selling more fuel efficiency cars in exchange for fuel-guzzling “clunkers.”
Not only are average consumers loving the $4,500 non-taxable cash vouchers from trading in their old cars for new ones, auto dealers can also benefit above and beyond the mere increase in sales. In order to auto dealers to save money and avoid serious IRS tax problems, they must accurately account for the taxability of the credit amount they receive from the “Cash for Clunkers” program.
Auto dealers are required to include the full amount of the auto stimulus voucher in addition to any value left from the traded-in “clunkers” as a part of the dealership’s income. Fortunately, dealerships can offset regular and additional business expenses from participating in the program–such as the cost of disposing of the “clunkers.”
The best way for auto dealerships to ensure that they receive the full amount of their tax deductions is to keep clear and consistent documentation of all transactions including gross receipts from the sales of new vehicles and any expenses incurred. Proper record keeping will help any business or individual get the tax help they need while making sure they avoid additional IRS penalties.
In times like this when the number of IRS audits for small businesses is on the rise, having strong and accurate records will prevent IRS tax problems such as back taxes, unsubstantiated tax deductions, and IRS penalties.
If you find yourself in IRS trouble, you are entitled to get professional tax help. You can get help from our specialized staff of tax attorneys, CPAs, EAs and tax professionals at TRS. Visit Tax Resolution Services for a free income tax relief consultation or call us at 866-IRS-PROBLEMS (1-866-477-7762).
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