Repossessions, are you claiming your tax credit?
Dealers who are financing their customers in Buy Here Pay Here are eligible to claim a sales tax credit for any loan that did not make it the full term.
EXAMPLE –
A dealership sells a vehicle with a two year loan contract. The following month the sales tax on that sale is remitted to the Department of Revenue. The customer stops paying and the vehicle is repossessed after 4 months.
Within 12 months of the repossession, the dealer can claim a pro-rated amount of the sales tax remitted. Calculating that amount can be difficult, however most Dealer Management Systems will calculate this for you.
They key is to consistently assign those sales in your DMS as a repossession. This will ensure the data is there to be listed when the dealer accesses the monthly sales tax report.
This report will have a break down of all repossessions, customer names, vehicle information and amount of credit for each that can be claimed.
When filing sales tax on the DR-15, the total amount of all credits can be listed on line 6, “Less Lawful Deductions”
This amount will be subtracted on this form from the amount of sales tax the dealer is remitting that month.
Remember, the dealer has 12 months from the time of repossession to claim this credit.
Jennifer Finlay
Director of Marketing and Sales
407-583-9199
jennifer@youroata.com
