Tax Code Runs Deep


American capitalism has produced generations of great brand names, and Chevrolet is one of the most iconic. While General Motors and its Chevrolet brand were caught in the economic downturn of 2007–2010, they have rebounded quickly and are now actually in one of the strongest periods in their history.  

Right now, Chevrolet is running a bold marketing campaign for our era of skeptical consumers. Their “Love It or Return It” campaign lets you buy any new Chevy through September 4 and, as the name implies, lets you return it if you don’t love it. Per usual, there’s fine print of course. You have just 60 days to decide, and you can’t drive it more than 4,000 miles. You also may be “subject to federal, state, or local tax on any benefit paid.”  

So what does “tax on any benefit paid” mean? What “benefit” is there in returning a car you decide you don’t like? As with so many questions like this, the answer is that it depends on the situation. That’s why it is very important to always read the fine print and to contact a tax professional when making large or even not–so–large financial decisions. They can assess your specific situation, including whether the car purchase was for business or personal use, or whether you qualify for any special deductions and credits, and then determine whether there is any tax liability.  

Washington knows how important the auto industry is to our economy, so the tax code is full of incentives to drive sales, and these incentives can possibly affect your taxes. That is why it’s not surprising that the IRS pays attention to these kinds of transactions. Make sure you understand how car purchases – especially if they are for business – affect your taxes and bottom line. It’s important to consult a tax professional any time you consider taking advantage of special promotions or special tax deductions, as the IRS often looks at these types of promotions and incentives as audit targets.