Connecticut AG Announces State Supreme Court Victory Barring Tax Refunds To Auto Manufacturer For Lemon Cars

December 11, 2007 -- Connecticut Attorney General Richard Blumenthal today announced a State Supreme Court ruling rejecting DaimlerChrysler Corporation's attempt to obtain tax refunds from the state for "lemon" cars returned to the manufacturer.

DaimlerChrysler sued the state for denying its claim for a refund of state sales tax it paid to consumers pursuant to the state's lemon law.

Under the lemon law, a consumer may return a materially defective new motor vehicle that cannot be repaired to the manufacturer, which must then refund to the consumer the vehicle's contract price, plus all collateral charges, including sales tax previously paid by the consumer.

The State Supreme Court today upheld an earlier trial court ruling that a manufacturer cannot obtain a sales tax refund because it was not the taxpayer, and the state's lemon law - under which the company seeks reimbursement - does not expressly or implicitly provide for such reimbursement to the auto manufacturer.

"Reimbursing sales tax to a manufacturer for a defective car would be giving undeserved lemonade for a lemon," Blumenthal said. "Returning money that a consumer paid to the state would undermine the entire purpose of our state's lemon law. DaimlerChrysler's baseless tax claim, and wasteful court battle, sends a sad message to consumers about its priorities. The state lemon law is intended to deter and diminish the sale of defective vehicles, not enable manufacturers to recover money for them."

Source: Connecticut Attorney General