I recently got a letter from my local county's Personal Property Tax Department stating that while my federal return had one of my car's listed for business use, the vehicle was registered for personal use with the county, thus receiving a state subsidy. They are asking to list which one of my vehicles was used for business. My question is, should I simply list the vehicle I used and pay back the subsidy, or go back and try to amend my tax return and not claim that deduction? Which one would be more likely to lead to further action from either the IRS or the local state tax department?

I guess for your federal return, aslongas the car is classified as biz use, you do not need to amend your 1040 however, for your state return, you need to contact dept of revenue of your home state for sure.