Chapter 175 of the General Laws is hereby amended by inserting after section 113O the following section:-

Section 113O½. For purposes of this section, an insurance payment received for a motor vehicle that has been stolen and not recovered shall be treated as a trade-in credit when applied toward the purchase of a replacement motor vehicle; provided, that: (i) the stolen vehicle has been reported to law enforcement and remains unrecovered by the time of the replacement vehicle purchase; and (ii) the insurance payment is applied toward the purchase of the replacement vehicle. The insured shall provide to the seller of the replacement motor vehicle documentation from the insurance company indicating the amount of the insurance payment and confirmation that the payment was for a stolen and unrecovered vehicle, which shall be sufficient documentation for the purposes of this section and for the purposes of any excise tax. The sales price of the replacement vehicle subject to tax shall be the difference between the total sales price of the replacement vehicle and the amount of the insurance payment that shall include any excise tax, provided that such difference shall not be less than 0.