Jun 10 2009
WASHINGTON – Delaware’s congressional delegation applauded an announcement today by the Internal Revenue Service (IRS) that Delaware’s vehicle document fee qualifies for a federal tax credit under the American Reinvestment and Recovery Act (ARRA).
In order to stimulate automotive sales, the ARRA established a federal tax credit to offset state sales taxes on vehicle purchases. Because Delaware levies a document fee but no state sales tax, Delawareans would have been unfairly deprived of the federal tax credit without today’s ruling.
Sens. Tom Carper and Ted Kaufman (both D-Del.) and Rep. Mike Castle (R-Del.) sent several letters to IRS Commissioner Douglas Sherman requesting that the IRS recognize the eligibility of Delaware’s vehicle document fee for the federal tax credit.
And, because the ARRA limited the credit to vehicles purchased in 2009, the Delaware delegation argued that it was imperative that the decision be made quickly.
“This is an important and positive decision that will encourage Delawareans to purchase new cars and help boost our state’s economy,” said Sen. Carper. “It was always Congress’ intent for the document fee to be eligible for the federal tax credit. Today’s ruling will benefit car dealers and consumers in Delaware.
“The IRS’ ruling on Delaware’s document fee means Delawareans will now receive their fair share of the economic recovery package’s tax deductions,” said Sen. Kaufman. “This will encourage more people to purchase vehicles in Delaware this year – in turn providing much-needed support to our state’s struggling auto dealerships.”
"This common sense ruling levels the playing field for Delawareans who have purchased a new vehicle this year and I am glad that the IRS responded quickly to our request,” said Rep. Castle.
Alaska, Montana, Hawaii, Oregon and New Hampshire also lack state sales taxes and also received exemptions in this decision today.