2006 Tax Credit Question

Toyota.com - Hybrid Tax Credit
The bill of sale should be sufficient.

 

Bill of sale combined with the Title/Registration date should do the trick. In California you pay registration fees when you title the car which are then deducted from your Federal Tax Return. These dates should match.

 

I took the deduction for 2004 and did not NEED any proof. The IRS does not ask. I don't think the 06 Credit is too much different, just better.

 

Well, the IRS h34r: almost never asks for anything right away unless the deduction looks strange to their computers and jumps out. The problem is when they come back 4 years later and say something like... "we've been reviewing your return of XXXX and would you please provide proof of the following deductions/credits." Or worse yet they've disallowed a deduction/credit, send you letter and a bill with a recalculated return including penatlies and interest. Now you have to prove the validity of the claim you made with receipts that you've forgotten where you put them.

 

SOL = 3 years on assessments absent fraud/failure to file/substantial understatement (the later of when the return is due or when the return was filed). So, generally, you can stop worrying 3 years later.

 

Good idea to keep all your tax stuff in one folder for every year...

 

Tax returns: 3 yrs for information, but keep summaries and critical credits and deduction proofs for 7 yrs. If irregularities or any fraud is suspect, the 7 yr statute of limitation comes into play, and the 3 yr period is moot.

 

Exactly - agree with above posters. The single most important principle to remember when dealing with the IRS is that the burden of proof is ALWAYS on the taxpayer whenever you're within that 7 year limitation. :angry: