Cents and Sensibility

Clunkers program is over, but the rumors keep rolling

Staff WriterSeptember 13, 2009 

The Cash for Clunkers program has ended, but the misinformation continues.

The latest rumor going around: If you traded in your fuel-inefficient vehicle for a more efficient one, you'll have to pay taxes on the amount of the rebate you received.

We're not talking chump change. North Carolina car dealers submitted $78.6 million in rebates worth up to $4,500 each under the program, according to the U.S. Department of Transportation.

But this false rumor was fairly easily debunked.

According to www.cars.gov, the official government Web site for the Cars Allowance Rebate System (the official name, if it ever comes up on Trivia Night), the answer is a big NO. It states: "The CARS Act expressly provides that the credit is not income for the consumer."

So there will be nothing on your 1040 asking you to state the amount of your clunker rebate.

As for state and local taxes, the Web site says that's a maybe and depends on the sales tax law of each state or locality. A quick call to the N.C. Department of Revenue provided that answer.

"The rebate is not considered income on an individual's state income taxes," said Thomas Beam, a spokesman for the agency.

Let's lay that rumor to rest now, please.

The news last week was that HAMP, the U.S. Treasury program that is supposed to help people keep their homes by encouraging lenders to modify existing loans, was working.

Participation could be better, Michael Barr, an assistant treasury secretary, admitted to a congressional panel. But he pointed out that more banks are signing up, and more loans are going into "trial modifications."

A trial modification means that the homeowner makes a reduced mortgage payment for an agreed upon number of months. At the end of the trial period, if all payments have been on time, the modification in theory should be approved.

I'm hearing different, and I'm also hearing from people who are getting nothing but red tape and bureaucratic paper shuffling when they try to talk to the loss mitigation specialists at their banks.

If you're banging your head against the wall, give me a call or e-mail me at the address below. If you're a lender who wants to share your perspective, let me hear from you as well. I'll be writing more about loan modification efforts next week.

In the meantime, homeowners who are in financial straits -- or who fear that they might be headed there -- should take advantage of a program being offered in Durham on Thursday. The City of Durham is holding a foreclosure prevention workshop from 5:30 to 7:30 p.m. in the Herald Sun Newspaper Building at 2828 Pickett Road.

The program is sponsored by the city's Department of Neighborhood Improvement Services, various community groups and the State Employees Credit Union. Counselors will be available to answer questions and information will be provided on the state's Home Protection Program and Loan Fund.

You must preregister. Do so by calling 560-1647, ext. 34266, or go to www.durhamnc.gov/departments/nis and complete the form. Check that site to find out what documents you need to bring.

mary.cornatzer@newsobserver.com mary.cornatzer@newsob server .com or 919-829-4755

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