Application of Sales and Use Taxes to the federal Car Allowance Rebate System (CARS)

The discount provided under the federal Car Allowance Rebate System (CARS) is treated as a trade-in allowance for Connecticut sales and use tax purposes under Conn. Gen. Stat. §12-430(4).  This means that Connecticut sales and use taxes do not apply to the CARS discount, because the sales and use taxes apply to the net sales price AFTER the CARS discount is deducted from the full sales price.

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