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600 E. Boulevard Ave.
  Bismarck, ND 58505-0599
  701.328.7088 phone
  701.328.3700 fax
  877.328.7088 toll-free
FOR IMMEDIATE RELEASE Contact: Beth Boustead, 701.328.3039
Friday, May 1, 2009

Fong: Vehicle Rebate Offers No Longer Taxed

BISMARCK, N.D. – Tax Commissioner Cory Fong announced that effective today the state will no longer tax rebate offers on new car purchases.

“This is good for consumers and our automobile dealers,” said Fong. “It offers an incentive to stimulate purchases of new vehicles and provides some tax relief on those purchases.”

Currently, the sales of licensed motor vehicles, such as cars, trucks, vans, and motorcycles, are subject to a five percent motor vehicle excise tax instead of state and local sales taxes. The tax is typically collected by the dealer at the time of the sale and sent to the Department of Transportation. The revenue from the motor vehicle excise tax goes to the state General Fund.

“The new law eliminates the state’s excise tax on rebates offered by car manufacturers,” said Fong. “This means that the customer is paying tax on the final price that they pay for a new car.”

Senate Bill 2184 allows an automobile dealer to use a manufacturer’s rebate to reduce the price of the vehicle that is used to calculate the state motor vehicle excise tax. The change goes into effect today, May 1st.

Previously, when a customer purchased a new vehicle and the manufacturer offered a rebate (or other incentive) that reduces the price paid to the dealer, the rebate was subject to five percent motor vehicle excise tax. The 2009 Legislature passed a law that exempts the rebate from tax on purchases made on or after May 1, 2009. Governor Hoeven signed the provision, making it effective today, according to Fong.

For example: a customer negotiates a vehicle purchase price of $22,500 from a dealer and the manufacturer offers a rebate of $2,500. This results in the customer paying a net price of $20,000. Under the new law effective May 1st, the tax is $1,000 ($20,000 times five percent). Prior to May 1st the tax would have been $1,125 ($22,500 times five percent).

“Rebates offered by the automobile manufacturers function a bit differently than rebates on other products, like televisions or refrigerators,” said Fong. “The vehicle rebate is not mailed in to the manufacturer who then sends a check to the customer. Instead, the rebate actually reduces the price paid by the customer.”

For more information about the change to the motor vehicle excise tax, contact the Tax Department at 877.328.7088 option 5, or visit the Tax Department’s web site at www.nd.gov/tax.

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