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Special tax break boosts new car sales locally

A variety of vehicles are pictured Wednesday in the lot outside Mills Ford Lincoln Mercury Jeep south of Willmar. Managers at the dealership say they have seen a recent boost in sales thanks to a special federal tax break signed by the president. The legislation allows taxpayers who buy a new passenger vehicle to deduct state and local sales and excise taxes paid on the purchase on their tax returns next year. Tribune photo by Gary Miller

WILLMAR -- A special tax break is boosting sales of new cars, say managers at Willmar car dealerships.

Mills Ford Lincoln Mercury Jeep customers have said they're buying a new vehicle because of the new tax break, says Jeff Smith, general manager.

"It's probably about another 50 percent increase (in sales) just because of that,'' he said.

"I think the market is going up. We haven't seen it down that much because we're out in rural Willmar. But I think the metropolitan dealers are seeing it much worse than we are. It's definitely a plus for us,'' Smith said.

The Internal Revenue Service announced Tuesday that taxpayers who buy a new passenger vehicle in 2009 may be entitled to deduct the state and local sales and excise taxes paid on their tax returns next year.

"This deduction may make a decision to buy a new car a little easier for some taxpayers,'' said Carrie Resch, IRS spokeswoman.

"It lets buyers purchase now and get money back later on their tax return.''

The tax break is part of The American Recovery and Reinvestment Act of 2009, which President Obama signed into law on Feb. 17.

On a $35,000 vehicle, the 6.5 percent Minnesota sales tax would be $2,275.

"It turns out to be a heck of a savings,'' said Smith.

"As a matter of fact, we just sold two yesterday solely because of that and we've got another one in the works in this new Flex that Ford is making. They're solely coming in and buying just because of that,'' said Smith.

Pamela Frost, sales manager at Swenson Motor Company, attributes the tax break, along with rebates and other factors, for the sales increase at the dealership.

"We've had a very good new car month this past month, one of our better ones for quite a while,'' said Frost, who is pleased to see the tax break enacted.

"I'm happy with anything that will help us to move cars,'' she said. "I think it's been a positive move so far.''