Volkswagen and Audi diesel car owners affected by the proposed settlement on diesel car emissions may want to consider how Connecticut sales tax applies as they decide whether to take the buyback, keep their car, or trade-in their car to a dealership, warns Department of Revenue Services Commissioner Kevin Sullivan.
A proposed settlement between Volkswagen/Audi, the U.S. Department of Environmental Protection and other regulators is in response to software installed in certain Volkswagen and Audi diesel cars that gave false readings to pass emissions testing. The court is expected to approve the agreement by the end of the year.
Said Sullivan, “It is important for consumers to get all the facts and be aware of the tax implications before making a decision.”
Owners of 2009 through 2015 TDI 2.0-liter diesel Volkswagen or Audi cars will have two choices under the settlement once it is approved:
1 - Cash for the “buyback” of the car (or early termination of the lease), or
2 - Keep the car and have modifications done to the emissions software, plus receive cash.
If the owner chooses to take the buyback payment and use it to purchase another car, Connecticut sales and use taxes will be due on the purchase price of the car, including the buyback amount. There is no trade-in credit.
“This is not a typical ‘trade-in’ under Connecticut law where a motor vehicle dealership accepts a vehicle from a customer as a trade-in and applies a credit toward the price of another vehicle. Instead, there is one transaction in which the customer is being paid for his sale of the car back to VW, and then a second transaction where the customer uses that payment to purchase another vehicle from a dealership,” said Sullivan.
“When a car is traded-in, sales and use tax is applied on the difference between the taxable sales price of the vehicle being purchased from the dealership and the amount allowed by the dealership on the car being traded in,” Sullivan added. “This trade-in reduces the sales tax amount owed on the car being purchased.”
“If the owner chooses to keep the car and have the modifications made to the emissions software, there are no sales tax implications for the owner of the car,” Sullivan added.
The FTC has consumer information on the VW settlement: What does the record VW settlement mean for you?, and Early VW buyback offers could cost you.
Then
This is Putnam Sales and Service on Bridge Street following the Flood of 1955. Kennedy Drive did not exist at that time and Rite Aid sits here now. The dealership rebuilt in the same place the next year and moved to Rt. 44 shortly after that. It is now King Cadillac GMC and it is celebrating it's 80th anniversary.
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& Then
This is Putnam Sales and Service's building on Bridge Street after it was rebuilt following the Flood of 1955. Photos courtesy of King Cadillac GMC.
& Now
King Cadillac GMC held an 80th birthday party Oct. 22 at its current location on Rt. 44. Here visitors are looking at the "history" photos. Linda Lemmon photo.
Reflections
Autumn trees in Keech Brook in East Putnam.
Linda Lemmon photo.
'Jump-start'
jobs with
$50k grant
Northeastern Connecticut’s plans for reinvigorating the local innovation economy will move forward as the result of a grant announced today by The CTNext Program. The Northeast Innovation Hub has been awarded a $50,000 grant, the maximum amount offered, to jump-start the development of northeastern Connecticut’s “innovation places.”
Under this new economic development plan, Innovation Places will be concentrated areas where entrepreneurs and innovators have easy access to tech talent, support organizations and research institutions. These dense areas are intended to be highly walkable, transit-connected, and mixed-use in zoning to facilitate interactions among entrepreneurs and innovators across different organizations, and to be conducive to the creation of startup companies. This environment is intended to be attractive not only for entrepreneurs to work in, but also to live in and for recreation, to help the community retain the most in-demand workers.
This $50,000 grant will be used in the development of a strategic planning process to identify local conditions and build a master plan that identifies the resources and assets in each community (like a hospital, a university, a research firm, or a manufacturer) to create exciting new business opportunities. The program was designed to be publicly supported and privately led, with communities leveraging public funding to generate a larger amount of private investment and business growth.
Senator Mae Flexer led passage of the innovation economy law passed this year, which includes the creation of “Innovation Places.”
“This grant is a significant first step toward implementing a plan that will combine the expertise of northeastern Connecticut’s entrepreneur community, the close proximity of UConn, Eastern and QVCC and communities that are eager to innovate,” said Flexer. “Over the past several months I have convened local officials, educators, business owners and entrepreneurs to design a plan to capitalize on the economic potential in our region. We will be putting some of Connecticut’s brightest young minds in touch with experienced businesspeople, and giving them an environment where they can put their ideas into practice. New, growing small and medium sized businesses create jobs and economic activity at a far faster rate than larger companies. That is the kind of growth we need in Connecticut, and we’re going to make sure it happens right here in northeastern Connecticut.”
Putnam’s Economic and Community Development Director Delpha Very said she was “elated” to learn that northeastern Connecticut’s proposal was chosen by CTNext to receive the planning grant.
“I think we all have to thank Sen. Flexer for bringing this opportunity to the forefront and working behind the scenes while this legislation was being written to make sure that our state’s new economic development initiative could be accessible to any part of the state, including rural communities like ours,” said Very. “The fact that this planning grant was awarded to a rural community is especially important, and the beneficiaries of this truly regional concept are our business community, educational resources and neighborhoods. I think that changing the paradigm about how Connecticut does business and really focusing on entrepreneurship and innovators is not only a different concept, but it allows people who are not in the ‘business mainstream’ to shine and showcases opportunities that we are not used to.”
“I’m happy that everyone’s hard work, led by Sen. Flexer, came to fruition. Every economic development director in the area helped out on this and I can’t tell you how excited I am to be working on a new program in northeastern Connecticut that’s working with QVCC and UConn to help create jobs,” said state Representative Danny Rovero (D-Killingly). “As I’ve always said – ‘what we need is jobs, jobs, jobs’ and this will help to create those jobs. I am proud that so many people from our region came together to make this happen.”
“This is another positive step toward increasing economic development opportunities in northeastern Connecticut. There are a number of successes we can build upon to support new and existing businesses and create jobs,” said state Representative Christine Rosati-Randall (D-Killingly). “This planning grant will allow us to build upon what we already do well here in this region, and that is share resources. This collaborative effort, led by Sen. Flexer, will bring together our business community, schools, colleges and entrepreneurs to create the Northeast Innovation Hub which will infuse new vitality in our area’s economy. When we work together, we can get things done.”
“I think it’s a great recognition of the fact that our area has an unbelievable and underappreciated collection of industries that employ a lot of people in high-technology jobs and require a skilled workforce. These industries have tremendous potential for growth. Our towns need to start recognizing this fact and treat the area like a truly unified region by connecting businesses, the workforce, education, and the improvements of our historic urban centers like Putnam, Danielson and Willimantic that have historically attracted lots of activity and can do so again. This grant is the opportunity to have that conversation so that people inside and outside of the region really see us as a unified place,” said John Guszkowski, the director of Planning for CME Associates, who took the lead on writing the grant application.
“It’s also interesting to point out that, geographically, the Putnam-Killingly-Mansfield-Willimantic quadrangle is basically the same size as North Carolina’s ‘Research Triangle’ and we think of that as a single place and a place of innovation. We have an incredible advantage with UConn as our anchor institution of higher education, which will be the engine driving this. There’s no reason we can’t take advantage of the natural assets and educational institutions we have here and eventually rise to that same level of innovation and economic success,” Guszkowski added.
“Sen. Flexer took the lead to make sure all of the right people from eastern Connecticut were at the table as this grant application was being put together,” said state Representative Gregg Haddad (D-Mansfield). “Because of her leadership, our region of the state will have the resources to build an environment that will create jobs through innovation and encourage entrepreneurship. I was pleased to help our team in this important designation.”
“I am so incredibly happy and excited about the fact that we were awarded the grant, and I thank Sen. Flexer so much for her hard work and for bringing everyone together in the region to truly become a community that is working together to expand our local economy,” said state Representative Susan Johnson (D-Windham).
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