Some additional follow up on the Cash for Clunkers program. The voucher goes to the dealer, and they are to reduce the price of the vehicle. There is no taxable income to either the buyer or the dealer. The amount of the credit–either $3,500 or $4,500–depends upon the type of vehicle purchased and the difference in the fuel economy between the purchased vehicle and the trade-in. The voucher only applies to new vehicles and does apply to domestic and foreign vehicles. The purchase price for the new fuel efficient vehicle cannot exceed $45,000.

The program begins July 1, 2009 through November 1, 2009. There is $1 billion applied for the program, so conceivably it could end before November 1. The clunker vehicle must have a combined city/highway fuel economy of 18 miles per gallon or less. The vehicle must be drivable, and owned continuously by the same owner for 1 year before trade in and must have been manufactured no more than 25 years before the date of the trade in. The month and year of manufacture appear on the safety standard certification label that is located on the frame or edge of the driver’s door in most vehicles.

You can find the mileage info by going to http://www.fueleconomy.gov/feg/sbs.htm

A lease qualifies as long as the lease period for the new vehicle is at least 5 years.

There is no info available yet as to what qualifies for the $3,500 or $4,500 credit.

Here is one downside of the freebie: Your trade-in must be destroyed according to the new law. Therefore, the value you negotiate with the dealer for the trade-in vehicle is not likely to exceed its scrap value. The law requires the dealer to disclose to you an estimate of the scrap value of your trade-in vehicle. So it truly must be a CLUNKER!

The program is called CARS, and the official website is: http://cars.gov/.  Dealers will be responsible for signing up for the program, and participating dealers will eventually be listed on the government web site.