State changes car tax due date
By Steve Herring
Published in News on January 2, 2013 1:46 PM
Wayne County tax officials are anticipating an upswing in revenue collections once a state law passed in 2005 finally goes into effect on July 1 that requires vehicle taxes to be paid at the same time vehicle registrations are renewed.
In any given year, the county collects an estimated $4.4 million in vehicle taxes while another approximately $900,000 is delinquent.
Theoretically the change should result in a 100 percent collection rate, freeing tax office staff from spending their time trying to track down the delinquent bills. It should also cut down on postage.
Currently the state Division of Motor Vehicles sends out the notice for registration followed by a bill from the county.
Wayne County Tax Administrator David Ward said he is not sure how much more the county can expect to collect until after the system is operational.
"We now spend a considerable part of our time trying to collect delinquent vehicle taxes as well as our delinquent annual (property tax) bills," Ward said. "If it is paid up front, you spend your time on annual bills and other things that you need to do. People are accustomed now, the way things work, when you go and renew an existing tag or get a new tag issued for a licensed vehicle, the DMV sends to all 100 counties in North Carolina a list of anybody who did that in a month.
"We get that list, process it, create and mail the vehicle bills about 90 days after you have renewed your tags or have gotten a new one issued. The new system we are going to effective July, when you get your registration like you get now to go renew your tag, or a new registration, that registration form will be a two-part form."
It is actually referred to by the DMV as "an invitation to renew," said Alan Lumpkin, assistant tax administrator.
"Your invitation to renew is also going to include the bill for property taxes on that vehicle you are renewing that tag on," Ward said. "What you will have to do then, where now you get your invitation to renew, you go get your tag and in approximately 90 days you get a bill from us -- now when you go to get your tags, you have to pay your property tax also."
The tax would be paid at the DMV license plate agency office or online if the tags are renewed online, Lumpkin said.
"It all gets paid to DMV and obviously all of that money comes back to the county," Ward said.
Normally on annual bills the county has been able to maintain a collection rate of 97 percent or better, Ward said. Whereas vehicle taxes, before becoming delinquent, the rate is about 68 percent to 70 percent.
"As far as paying timely on vehicles, about 68 percent of people pay timely," Lumpkin said. "On annual bills, it is roughly around 89 to 90. Then, by the end of the fiscal year on June 30, we have the 97 percent or better on the annual and the vehicle is up to about 81, 82 or 83. It varies every year.
"With the new system, if you just fail to go renew your tag, forget it or whatever, there is a late interest on that also. You will pay interest not only on your taxes, but on your fee for renewal also. So trying to avoid it won't work also. If you have July renewal, you have until Aug. 15 to pay taxes and get your tags."
The interest is 5 percent for the first month and three-fourths of percent each following month.
The changeover is not requiring any additional hardware or software on the county's part. However, the DMV put in a new computer system in place that will interact with the existing one, Lumpkin said.
The state is doing its testing and training now, and county employees are expected to do their training in February.
"Our folks will actually be going into that system each month plugging in all of the information to bill all of those vehicles," Ward said. "That information, once it is in there and processed, along with what DMV does for the registration, would then be printed out."
The taxes have to be paid before the registration is issued, Ward reiterated.
"That is one of the reasons the law changed," Lumpkin said. "The biggest reason is to help save money, the taxpayers' money. I forget how much money they are saving just in postage because of combing those two (state and county) letters. It is a big savings right there. Then you are paying one bill. You are writing one check or going online to pay one bill."