North Carolina’s new vehicle “Tag and Tax Together” program will be delayed once again, pushing the program’s implentented to September rather than July.
“As of right now, this process will go into effect for September renewals, or any new registration after Sept. 1,” said Ashe County Tax Administrator Keith Little to the Ashe County Commissioners during a Monday meeting..
Tax and Tag Together will enable drivers to conveniently pay vehicle property taxes along with registration renewals at the same time.
“When you go in to renew an existing plate, you pay the renewal fee and taxes at the same time, or you don’t renew the tag, period,” said Little.
Under this new system, vehicle owners will receive a statement that lists both vehicle registration fees and taxes due (assuming the address on the vehicle’s registration is current). Vehicle owners will receive this statement about 60 days prior to their vehicle’s registration expiration.
Vehicle owner’s annual inspection, registration renewal and vehicle property tax will be due the same month each year. Only one payment, made either in person, online or by mail, is required to pay both the annual tag and tax for a vehicle.
This change was prompted by House Bill 1779, passed by the N.C. General Assembly in the 2005-06 session.
HB 1779 was originally set to be implemented in 2009, but according to Little, the implementation was delayed until 2011, then delayed until 2013, and delayed two extra months from July to September.
Little explained how the old system of tag and tax collection functioned, and explained the main reason for the new changes.
“If you renew a tag in January, we bill you in April for the property taxes, it’s due May 1, and basically past due June 1, when we start adding interest,” said Little.
“If you don’t pay it by September, we’ll block your tag. We send an monthly report to DMV that have all the vehicles for a certain period of time that haven’t paid. They flag all those records in their database to be blocked for renewal. You’ve got to pay that bill before you can renew that tag next time,” said Little.
That is how the old system functioned, but according to Little, the system needed to be modified because too many people were waiting to pay property tax, ignoring the upcharge from additional interest.
“First of all, the small amount of interest we add to those bills has never seemed to be much of an incentive for people to pay those bills on time,” said Little.
Under the old system, 5 percent interest was charged for the first month a bill is past due, and the bill was charged .75 percent for each additional month.
“When you’re talking about a $20 tax bill, that’s $1 for the first month, and very little after that,” said Little. “It wasn’t much of an incentive.”
Little said many people payed 8-12 months late, which creates deliquent bills, a low collection rate and makes the tax difficult to collect.
Little said Tax and Tag Together provides several advantages as opposed to the old system.
“It should improve the customer experience,” said Little. “Now it’s a one stop shop, their done when they get the renewal, pay their tag fee and pay their taxes, and they’re through for a year.”
Little also said the Tax and Tag Together program should improve the vehicle property tax collection rate, raising the collection rate for registered motor vehicles to 98-99 percent.
The new system also eliminates registered motor vehicles’ delinquent taxes, and eliminates duplication of mailing two different bills.
Also, the program will essentially make it illeagel to drive without paying vehicle property tax.
During his time speaking to the commissioners, Little explained some of the details about the transition between the old system and new system.
Vehicle property taxes will now be collected at the licence plate agency rather than the tax office. Little said Ashe County is fortunate because the county heads the license plate office and the tax office, making this an easier transition.
Also, Little said there will be a four-month overlap when bills will be sent out based on the old system until Sept. 1, when the new system is implemented. During this overlap, there will be a doubling of vehicle tax, but eventually, tax collection will even out.
According to HB 1779, no owner will have to pay taxes twice in the same tax year for the same vehicle during this transition period.
By law, the tax year for a vehicle begins the first month after an owner’s previous registration expires. While it is possible to pay twice in a calendar year, no vehicle owner will pay twice in the same tax year or for the same 12-month period.