February 10, 2004
SUPPLEMENTAL MOTOR VEHICLE PROPERTY TAX
By: John Rappa, Principal Analyst
You asked why the law requires towns to prorate supplemental motor vehicle property taxes for 10 months instead of 12 and if any towns prorate these taxes on a daily basis.
10-MONTH PRORATA PERIOD
The legislature shortened the period from 12 to 10 months in 1980 largely for administrative reasons (PA 80-430). During the floor debate on HB 5160 (which became the act), Representative Wojtas explained that preparing tax bills for vehicles registered in August and September would “carry us through the end of September and by the time Motor Vehicles ran the supplement list and got it back to the Assessors in 169 towns and vehicles had to priced and exemptions placed, corrections made, that a Jaunary 1 billing was totally out of the question” (House Proceedings, April 2, 1980, p. 1303).
The cost of preparing the tax bills for vehicles registered during these months would also cost more than the revenue they would generate. Representative Ferricielli stated, “many times the bill of 1/12 (i.e., the prorata factor for a vehicle purchased in September) is sometimes smaller than the cost of processing the bill… .The amount that [taxpayers] would have paid under the [prorating] schedule as it exists is so small that it causes more problems than it is worth to administer” (p. 1319).
Exempting vehicles registered in August and September from the tax did not create a new loophole “as there were before when people would wait and purchase their car on October second or third to get away with a whole year without paying taxes,” Ferricielli explained. Before the legislature instituted the supplemental tax in 1976, a person who registered a vehicle after the assessor prepared the grand list (October 1), did not have to pay taxes on the vehicle until the assessor prepared the next year's list.
PA 76-338 (codified at CGS § 12-71b) addressed this problem by requiring people who registered vehicles after October 1 to pay taxes equal to the amount they would have paid on July 1 if the vehicles were on the town's grand list. The legislature subsequently changed the due date for paying the tax and prorated the amount based on when the vehicle was registered.
PRORATING TAXES ON A DAILY BASIS
While the law allows towns to prorate the supplemental motor vehicle tax on a daily basis, few appear to do so. The Department of Motor Vehicles (DMV) tells towns only the month when a resident registers a vehicle, not the date, which is needed to prorate the tax on a daily basis. Wethersfield gets around this problem by prorating for taxpayers who can document the date they registered the car.