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Virginia goes after Out-of-State License Plates

Discussion in 'Mid-Atlantic Region - USA (PA, DE, MD, DC, VA)' started by toggie, Aug 3, 2016.

  1. XS29L9B

    XS29L9B Karting

    Feb 23, 2008
    70
    ...in my garage
    Looks like the City of Falls Church is trying to jump on the bandwagon:
    https://patch.com/virginia/fallschurch/fine-out-state-plates-coming-falls-church

    Eff. Mar. 1, 2018
    ____________________

    From Fairfax County, 2016:

    Vehicle Data


    More than 900,000 personal property (car) tax bills will be mailed to county residents this summer. However, you may know of a vehicle in your neighborhood with out of state plates that should be researched by our tax office. Within the last fiscal year, more than 1,800 previously unregistered vehicles were added to car tax records (see chart below), which will yield more than $2 million in tax revenue to support the county budget.

    Top 10 States Added to Car Tax File

    STATE COUNT
    Maryland 742
    Florida 161
    District of Columbia 123
    Texas 86
    Pennsylvania 66
    Montana 66
    New Jersey 60
    North Carolina 59
    Ohio 54
    New York 50
     
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  3. energy88

    energy88 F1 World Champ
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    For a couple of these states, it is likely to be more than just avoiding the car tax. Florida and Texas don't have a state income tax, so the scaffolds probably desire to keep their old residency for as long as possible and avoid that tax also.
     
  4. BMW.SauberF1Team

    BMW.SauberF1Team F1 World Champ

    Dec 4, 2004
    13,338
    It is technically possible to use that card to avoid state income tax, but it's still illegal to not pay taxes in a state you work even if you are a resident of another state (unless there is a reciprocal agreement). I worked for GWUH in DC for a year for medical training and I kept my FL residency status. When I started the job, I had to fill out the same tax paperwork as everyone else, but I checked non-resident status. I still had taxes withheld and I still paid taxes to Maryland (where I lived that year), but I always filed as a non-resident. There was no option with my employer to pretend everything was FL to owe no one taxes. Maybe other employers are different and allow that, which would fit with what you are suggesting as a reason.
     
  5. energy88

    energy88 F1 World Champ
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    I'm speaking more of self-employment, temp employment, and less than 181 days remaining in a calendar year situations that may be getting milked.
     
  6. CornersWell

    CornersWell F1 Rookie

    Nov 24, 2004
    4,652
    Tax policy is the tail wagging the dog.

    If a legal out of state resident (defined as 183 days, IIRC) has a second home in VA, but keeps a vehicle (licensed in that other state) garaged in VA, what's the problem? The vehicle is appropriately licensed (and taxed) in their state of residency. I repeat that this is just a money grab by VA.

    Further, if you reside in VA for more than 30 days, EVEN THOUGH you're an out of state resident, VA wants you to have a VA DL. More overreach.

    It's absurd.

    CW
     
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  8. INRange

    INRange F1 Veteran
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    Jan 27, 2014
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    The facts are a bit different:

    VA Driver's License/ID Card
    Once you become a resident of Virginia, you have 60 days to transfer your out-of-state driver's license to the state. You will need to apply in person at your local VA DMV office. If you have a commercial driver's license (CDL), you will only have 30 days to transfer for a VA CDL. See our following pages for more information:

    NOTE: If you're a temporary resident, you don't have to get a Virginia license unless you stay here for longer than 6 months or become gainfully employed.


    Most of the US States have the same requirements.

    What is different about Virginia is their pursuit of out of state registered vehicles which is driven by the infamous car tax. The tax has always created bad behavior and will continue to do so until it is rescinded (which is unlikely to ever happen). It is safe to say that this is the least "regressive" tax Virginia has because rich people buy expensive cars. Poor people can't afford them but will gladly enjoy the tax revenue it creates.
     
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  9. CornersWell

    CornersWell F1 Rookie

    Nov 24, 2004
    4,652
    While that may be the law, if you're ever pulled over by Fairfax PD, they'll intimidate you. They'll tell you you MUST have a VA DL. And, they have ways of finding out.

    Don't ask me how I know this. Gestapo tactics.

    CW
     
  10. arizonaitalian

    arizonaitalian F1 World Champ
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    Oct 29, 2010
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    Physical presence in the state.

    All property tax laws are designed to tax property that is physically in the state.

    This isn’t complicated. And it is pretty much the same generic laws in every state (although importantly the conditions that trigger tax nexus vary from state to state).
     
  11. arizonaitalian

    arizonaitalian F1 World Champ
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    Your example has many facts and much documentation of a valid business and thus would not be a registration nor tax problem.

    Of course this example has nothing to do with the typical exotic owner who lives in state X and puts his car into a MT LLC that has no valid/real business purpose (other than attempting to avoid taxes in state X)
     
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  13. CornersWell

    CornersWell F1 Rookie

    Nov 24, 2004
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    Except vehicles are personal property that can, and do, cross state lines.

    CW
     
  14. arizonaitalian

    arizonaitalian F1 World Champ
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    Oct 29, 2010
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    And?

    Lots of property is portable. Even intellectual property has tax ramifications and can be moved even easier than a car :)

    Of course the states have thought of the portability of cars and thus the relevant laws include statutes about how much time the property spends in the state. I’ve kept cars and homes in several states since 2001, the statutes around time in state are a burden and sometimes conflict between states, but I make a good faith effort to treat my tax matters fairly and consistent with the law and it’s intent. It isn’t really hard. (Some people like to avoid taxes and thus ignore the statutes. Good for them, but they are often not in compliance with the laws of the relavent states.)
     
  15. toggie

    toggie F1 World Champ
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    Nov 30, 2003
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    Virginia really needs to change to a more normal car tax method, that is, only charge a one-time sales tax at time of car purchase, and keep annual registration fees under $1000 per year.
    This would eliminate 90% of the “police state” behavior.
    Maybe replace the annual car tax revenues with a slightly higher state income tax or general sales tax.
    Paying $10k to $30k per year, every year, for a car is unreasonable IMO.
     
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  16. CornersWell

    CornersWell F1 Rookie

    Nov 24, 2004
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    Well, as far as MT is concerned, it's legally registered and taxes are being paid there. So, I don't see a basis for VA to declare that its interests trump those of MT's.

    I have noted that EVEN IF all formalities are adhered to, and the individual steps are each legal, the IRS may still declare a valid structure to be an avoidance "scheme". This, essentially, amounts to a heads-I-win, tails-you-lose argument. As an attorney (and one who's studied tax law), I find that intellectually unsatisfying as a justification.

    CW
     
  17. Texas Forever

    Texas Forever Four Time F1 World Champ
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    Catch 22. If you get caught, are you going to spend 4 times the tax to fight it, or are you just going to pay it? I can’t tell you how many times I’ve seen the IRS or a state do something arbitrary because (1) they don’t care, and (2) they know it’s not worth fighting.


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  18. CornersWell

    CornersWell F1 Rookie

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    There is a problem with letting a conflicted entity (like the IRS or VA state revenue department) adjudicate their own determinations.

    CW
     
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  19. bobzdar

    bobzdar F1 Veteran

    Sep 22, 2008
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    The reason they don't is they'd have to increase house property taxes correspondingly, which would burden wealthy land owners even more than the car tax. The whole point of it was to shift property tax burden to renters from land owners. Can't have your cake and eat it too.
     
  20. toggie

    toggie F1 World Champ
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    Nov 30, 2003
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    Which is why shifting the tax from cars to Sales Tax on all goods purchased would be more fair.

    Virginia's Sales Tax on all goods is currently 5.3% (4.3% goes to the State and 1% goes to the local County).
    The 2017 revenue for Sales & Use Tax in Virginia was $3.97 billion.
    The 2016 Tangible Personal Property Tax total for the State's Counties and Cities was $3.10 billion.

    To do away with the Car Tax, we'd need a Sales Tax Rate similar to California's 7.25%.
    It would need to bring in a total of about $7 billion per year.

    Of course, the other alternative is to just lower government spending, but that's "crazy talk", so ignore that idea. :)
     
  21. INRange

    INRange F1 Veteran
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    Bob,

    I'm not sure I understand what you are saying. I own rental property and I pay property taxes on that whether it is rented or not. The renters don't pay the property tax.....I do. Those taxes are already higher than I pay in DC for the same property value. How is it possible DC is a cheaper place to live than the suburbs when it comes to taxes?

    What I don't agree with is the never ending demand for more money by the Commonwealth. The car tax gives the owner the opportunity to pay for their car again with year over year taxes....Northern Virginia politicians will never give it up and only want to increase it. They play the same game with real estate values.

    Certainly the politicians believe they "have cut everything to the bone" but the reality is quite different. Only one Governor tried to take this on in the last 30 years and he was only partially successful.

    I agree a higher Sales tax is a better solution.....but the politicians want to keep the car tax and raise the Sales tax which is eating your cake and eating everyone else's.
     
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  22. Gh21631

    Gh21631 F1 Veteran
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    Virginia sucks when it comes to auto's - no credit for sales tax already paid, recurring property tax based on NADA which is excessive. Real estate property tax is not cheap in NOVA either,we get screwed at every turn. The part that gets me is that my neighbor has access to everything I do but my recurring property taxes are significantly higher because I have better taste in cars. I cant wait to leave this state, should be home shopping in FL soon.

    Oh and the BS speeding laws with reckless driving, tolls everywhere that continue to increase, blah blah. We do have decent schools though. :)
     
  23. Gh21631

    Gh21631 F1 Veteran
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    How does MD do it? 6% sales tax, comparable property tax to NoVA, credit for sales tax paid on auto's. There is a slight difference in income tax, MD is higher. Hogan has turned MD around not so much with Kane.
     
  24. Gh21631

    Gh21631 F1 Veteran
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    This doesn't make any sense.
     
  25. E60 M5

    E60 M5 Moderator
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    I don't want to pay more taxes period. Gov. Gilmore had promised to eliminate the personal property tax on vehicles and they never followed through, leaving us were it is today.
     
  26. Texas Forever

    Texas Forever Four Time F1 World Champ
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    I guess the idea of any government agency spending less is a nonstarter, huh?


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  27. bobzdar

    bobzdar F1 Veteran

    Sep 22, 2008
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    Large land owners (like estates and other non-rental properties) wanted lower property taxes. In order to cover that, they created the car tax where everyone with a car, and not just real estate owners, directly carries part of the yearly tax burden. If you get rid of the car tax, the taxes on real estate will increase. Not as big a deal for rental property owners, they will pass it on to their renters, but large land owners (like say tobacco companies, all of those northern VA estates) will have a much larger tax burden to cover for the short fall and they would rather keep it as it is.

    I get not liking the car tax, but if they get rid of it they'll make it up somewhere else, and the most logical one is to put it back on real estate.

    I get it, my personal property tax bill is higher than my real estate bill, so it'd probably benefit me, but I knew it coming to VA and knew it when I bought my vehicles. Cheating it by registering them out of state or to an Montana LLC or whatever is, and should result in enforcement. If the tax structure of Montana offered a better living situation, I would move there, but the industry and job situation there for my line of work is **** compared to here so I'd have to already be set and not have to work for it to make sense.
     
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  28. Gh21631

    Gh21631 F1 Veteran
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    Nah, farmers have tax incentives.
     

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