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Shaheen fought to make new auto purchase tax credit available in states without sales tax

(Washington, D.C.) - U.S. Senator Jeanne Shaheen today applauded a decision by the U.S. Department of Treasury to make a tax credit for new auto purchases enacted in the American Recovery and Reinvestment Act of 2009 (ARRA) available in states such as New Hampshire that do not have a state sales tax. Shaheen has been fighting for this fix since the legislation passed in February.

"Today's announcement will help boost auto sales in New Hampshire, which is great news for auto dealers and anyone looking to buy a new car," said Shaheen. "With all Americans struggling to make ends meet in this tough economy and the many challenges auto dealers face today, this is a crucial fix to support New Hampshire consumers and auto dealers and to help revive our economy."

"This is great news for New Hampshire auto dealers and consumers, and I commend Senator Shaheen for fighting to make sure New Hampshire benefits from this tax credit," said President of the New Hampshire Auto Dealers Association Peter McNamara. "Like many businesses, auto dealers are struggling in this economy, and this tax credit is an important incentive that will help boost sales and help get New Hampshire's economy back on track."

A provision in the ARRA sought to encourage new auto sales by offering a federal tax credit to offset any state sales or excise taxes associated with purchasing a new car. New Hampshire has no sales tax, but does impose the equivalent of a sales tax on new cars through a registration fee. The registration fee on new cars is collected by municipalities and is based on the list price of the new vehicle. Under the ARRA, it was unclear whether the federal tax credit could be applied to offset New Hampshire's registration fee.

On February 27, Shaheen joined Senator Tom Carper (D-DE) in writing to U.S. Internal Revenue Service Commissioner Doug Shulman urging him to interpret the provision in such a way that New Hampshire consumers and auto dealers would benefit. Today, the Department of Treasury announced that it has agreed with Shaheen and Carper and will make the tax credit available to consumers in states that do not have a state sales tax.

The text of Shaheen's and Carper's letter and a press release from the Department of Treasury follow:


February 27, 2009

Commissioner Douglas Shulman

1111 Constitution Ave. NW

Washington, DC 20224

Dear Commissioner Shulman:

This week, the President signed The American Recovery and Reinvestment Act of 2009 into law.  That important piece of legislation includes a provision (sec. 1008) that would provide a federal tax credit to offset any state sales or excise taxes associated with the purchase of an automobile.

Our home states - along with Alaska, Montana, Hawaii and Oregon - do not have sales tax.  Delaware imposes a "document fee" of 3.75 percent when a new vehicle is sold in Delaware.  This fee is the equivalent of a state sales tax, although it is not called that term.  New Hampshire imposes a "registration fee" that is actually a tax based on the list price of the vehicle and is collected by municipalities at the time a new car is registered.

The purpose of this provision is to encourage Americans to purchase new automobiles and, therefore, we believe it was the intent of Congress to include Delaware's document fee and locally collected taxes in New Hampshire.  That this was the intent of congress is reflected in the attached colloquy that is part of the record of debate on the American Recovery and Reinvestment Act of 2009.

We ask that the IRS quickly provide direction on how it plans to interpret this provision, so that our dealers know if they may take advantage of it or not.


U.S. Senators Jeanne Shaheen and Tom Carper