North Carolinas county tax collectors are pretty good at getting us to pay real estate tax bills that can reach thousands of dollars a year, but they have a harder time collecting tax bills of $100 or $200 on cars and trucks.
This summer, they will hand that chore to the state Division of Motor Vehicles.
Car owners will write DMV one check each year to combine two bills they previously covered in separate payments: the DMV car registration renewal fee and the county car property tax.
Starting with DMV bills due in July, drivers will be required to pay their county car taxes before they can get their license tag renewal stickers. DMV used the same incentive a few years ago to get more drivers to have their cars inspected: No inspection? No renewal.
This will increase the amount of taxes that counties collect on automobile property taxes, said Rep. Verla Insko of Orange County, who sponsored the 2005 law that ordered the change. Because you cant get your tag without paying your property tax. They go together.
Counties report that 13 percent of their vehicle property taxes go unpaid each year, on average, compared to just 2 percent of all other property taxes. Thats $80 million in local taxes they never collect on cars.
And its not for lack of trying.
I spend a significant amount of money on postage, certified mail and staffing to collect from individuals that dont pay it on time, said Kim Simpson, Durham County tax administrator. Im freezing bank accounts, garnishing wages and seizing vehicles. I have two full-time sheriffs deputies that work for my office, and all they do is deal with motor vehicles.
Simpson says only 44 percent of Durhams car tax bills are paid on time within two months, before interest penalties are tacked on. Eventually she collects about 90 percent of them, a little better than the state average. But that leaves 22,000 car tax bills in her delinquent file from the past two years, and 14,000 of these are for less than $100.
Under the present system, North Carolinians receive car tax bills from the county a few months after they pay the DMV tag fee.
DMV now can block the registration renewal, eventually, to force payment of back taxes. But drivers find ways to dodge the tax bill. One tactic is to report that somebody stole your license plate; sometimes you can get a new one for a fee, tax officials say, without having to pay the tax that would have blocked renewal of the old one.
David B. Baker is local government director for the state Department of Revenue, which will handle the unified 100-county car tax system.
It saves money, and its also easier for the taxpayer to have one interaction with government per vehicle, Baker said. Sending one bill for each car instead of two saves $3 million in postage right off the top, he said. DMV will continue to give car owners the option to pay by mail, at a local DMV tag office or online.
But there are doubts out there. Rep. Sarah Stevens, a Surry County Republican, has introduced a House bill that would cancel what DMV calls the Tag and Tax Together program.
The implementation has been a nightmare, and to me it is much more costly than was ever intended, Stevens said. All of the costs are passed on to the county. Its a very convoluted system that has put more bureaucracy in government.
Stevens prefers a similar approach operated at the county level. She said some county tax collectors worry that theyll lose money in the fees they pay to have DMV collect the car taxes.
Baker said the counties will pay $1.69 for every car tax bill. Startup costs, including a computer network upgrade and 75 new DMV employees, have been funded from interest payments collected in late fees on county car tax bills.
So the people who dont pay the property tax on time on their motor vehicles are the ones paying for the new system, Baker said.
Monty Woods, tax collector for Caldwell County in the western end of the state, is anxious about the change. His small county raked in $200,000 in car taxes last year, and he hasnt figured out how much it will pay DMV under the new system.
Hopefully the collection rate will be much higher, but how much is it going to cost us? Woods said. If we make money, I think everybody will be happy.
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