While our modern transportation system brings along with it the advent of many forms of mass-movement, the venerable car still holds sway in many places. Indeed, most businesses and individuals rely on a wide variety of vehicles in order to conduct their affairs. Keeping these cars and other vehicles in good physical shape is thus of vital importance for all car owners regardless of their geographical location. That said, just as important is the issue of legal protection for vehicles.
Car ownership comes with many legal responsibilities, and among these are maintaining a license, making sure the vehicle is in drivable condition, and paying a variety of taxes and fees. Taxes and fees, in particular, can be especially problematic because it is easy for the average person to miss a payment or two. Unfortunately, over time, if you fail to pay your taxes, you can be subject to a variety of ever-escalating fees and damages. Given enough time, some forms of taxes can result in fees totaling in the tens of thousands of dollars and other unpleasant penalties.
Even if you pay all of your bills and other taxes on time during your ownership period, you can still fall prey to owing large amounts of taxes. Because of this, it is of vital importance for car owners, whether they are commercial or individual, to have a firm grasp on car ownership laws and to learn how to avoid paying taxes on vehicles that they no longer own.
Common Registry Notification Mistakes
Oftentimes, if you’re new to car ownership and sales, you may think that once you junk or trade a car, your responsibilities are over. Unfortunately, in many cases, this is not true. If you own a vehicle and you wish to get rid of your car in one way or another, you must often file special paperwork proving the disposal of the vehicle to the proper authorities. Failing to do so can result in assumptions of continued ownership and the imposition of increasingly large tax bills and penalties.
The good news is, if you follow some simple rules of thumb, you can avoid making some common mistakes when it comes to vehicle tax payment and registry notification.
One very common car ownership mistake is not keeping up-to-date records. People who sell or junk their car often wait weeks or months before they make notifications, if ever. In such situations, the better option is to immediately notify the DMV of any sold or junked vehicles. You should do this in writing and make copies if necessary.
You may also need to have such documents notarized and may also have to return the license plates physically and in person. Taking care of these common steps can help you avoid tax issues down the road.
Many individuals and businesses help sponsor other drivers through co-ownership deals. Unfortunately, when these vehicles are sold or junked, the co-owner may be on the hook for additional taxes or fees. As such, if you co-sign a loan, it is essential to keep track of the course of the transactions and other details. By doing so, you can stay abreast of any sales and make proper notifications in a timely manner.
Reselling vehicles is also an issue that can be fraught with danger. Many private individuals and small businesses sell cars during the course of a fiscal year. During this time, car owners may trade many different vehicles, and as such, their financial fingerprints will be all over these deals.
If you frequently sell cars and you fail to make proper notation of the sales information, you may be stuck with ownership fees and taxes that you will have to pay before any resolution will be made. To avoid this conundrum, you should keep immaculate sales and invoice records in order to prevent undue tax burdens.
Possible Tax Penalty
If you own a vehicle, you can face very stiff penalties if you fail to pay your excise or sales taxes in a timely manner. You can also face similar penalties if you fail to notify the proper authorities of the sales of such vehicles. When this happens, the penalties can be increasingly strict. While such penalties can vary from state to state, a common theme with many excise tax regimes is escalating penalties.
For example, in some states, an initial excise tax bill of as little as $15 can grow almost exponentially if unpaid. Indeed, such small bills have turned into eventual tax burdens totaling many thousands of dollars. Plus, such afflicted individuals are often forced to pay some, if not all, of the taxes even if they do not legally owe them. Only then will some states allow you to file for remedial payments to make up for the mistakes.
In addition, many states also move to suspend the licenses of drivers who owe excise taxes whether or not the taxes are for vehicles that they currently own. Given the severity of these possible consequences, you should clearly document and have witnessed the sales and disposal of vehicles.
Common Motor Vehicle Registry Notification Methods
While the penalties for unpaid tax bills can obviously be very severe, the good news is that many motor vehicle registries make it easier than ever for drivers and other owners of vehicles to keep updated records of their vehicle status. If you purchase or sell vehicles, you should keep important and detailed information on hand that includes the bill of sale, vehicle identity numbers, and the identity of the buying or selling parties. You should also keep any financial documents related to the deals. Be sure to document or have witnesses for any plate returns, too.
You can also further follow up by calling the registry within seven days of vehicle sale to make sure that information has been updated into the system properly. Following these simple steps can help you avoid the severe pain that unpaid tax bills can inflict.
Remedies for Incorrect Tax Bills
Unfortunately, despite their best efforts, many individuals and businesses report that they often receive incorrect bills for vehicle-related tax burdens. These include bills for sales tax and excise taxes that may not, in fact, be owed. When this happens, such tax bills may often be sent to previous residential or commercial billing addresses. These bills can then be lost in the mail and returned to the registry with no knowledge of the receiver.
Over time, these types of incidents can result in individuals and businesses being unfairly charged for many thousands of dollars. To make matters worse, some states make it impossible for you to regain cash or driving privileges before paying the initial bill. This can result in job loss, threats to physical health, and many other issues. As such, it can be helpful if you’re afflicted by such situations to keep in mind some possible remedies.
In some situations, if you are hit with unfair sales or excise tax bills, you may lose your driver’s license or other privileges. Even though it is customary in many jurisdictions for you to be forced to pay such bills back before receiving your license privileges, in some situations, you may be able to receive work allowances for licenses. In these cases, you may have to pay small retainer fees in order to earn the right to use your licenses during certain business hours. This may allow you to get to and from work. You will also be able to take care of important family matters.
In other situations, the best route may be to acquire competent and skilled legal assistance. Skilled traffic lawyers can use their knowledge of the legal system to find ways to effectively promote their clients’ interests and to right the wrongs which were done. For example, traffic attorneys may be able to file for special injunctions that can help you keep cash in your pockets. At other times, they may fight to have you regain your driver’s license or other privileges.
If you can afford it, you may wish to skip these steps and pay the initial wrongful tax bills off. When you do so, you should keep careful notes and written proof of your payments. You should then present your evidence of prior vehicle sales to the proper authorities with a request for an abatement. If your paperwork is in order, you should shortly receive your money back and also have your privileges restored.
There is no doubt that having to pay unearned tax bills is unfair. That said, the best option is often to face up to the issues, fight back, and avoid paying taxes on vehicles that you no longer own.