You asked for a description of PA 04-228, which changed the situs rules for motor vehicles, i. e. , the rules governing where a vehicle is subject to property taxes. You also wanted to know (1) if the act could allow more than one municipality to tax a vehicle used by a college student, (2) the amount of revenue municipalities gained or lost because of this provision, and (3) whether legislation was introduced in 2005 to amend the situs provisions.

SUMMARY

The act explicitly subjects all registered and unregistered vehicles operating or located in Connecticut to the property tax. Under the act, the tax also applies to a vehicle registered in another state if it most frequently leaves from or returns to a Connecticut municipality.

The act sets situs rules for determining where a vehicle is subject to the tax. As a general rule, a vehicle is subject to taxes in a municipality if it most frequently leaves from, returns to, or remains in that municipality. Usually this will be the municipality where the vehicle’s owner has his primary residence. Different rules apply to leased vehicles, vehicles owned by nonresidents, and recreational and construction vehicles.

The situs rules took effect upon passage and apply to any assessment year, thus allowing a municipality to tax a vehicle for an earlier assessment year in some cases. Other provisions, including a requirement that the motor vehicles commissioner annually provide tax assessors a list of vehicles subject to taxation in their respective municipalities, had different effective dates.

It appears that there are few, if any, circumstances in which more than one municipality could tax a vehicle used by a college student. We have found no data on the amount of tax revenue gained or lost by municipalities as a result of PA 04-228, and it appears that it would be difficult if not impossible to compile such data.

No legislation was introduced in 2005 to further change the situs rules for vehicles. HB 6962, in its raised bill form, would have imposed a state property tax on vehicles in lieu of the local property tax. The Finance, Revenue and Bonding Committee instead favorably reported a version of this bill that would have required the Office of Policy and Management (OPM) to (1) study the feasibility of eliminating the vehicle property taxes or equalizing them statewide, how any changes would affect taxpayers, and the potential costs and benefits; and (2) report its findings and recommendations to the committee by February 1, 2006. The House took no action on this bill.

PA 04-228 SITUS RULES

The act provides two sets of rules for determining a vehicle’s situs for property tax purposes. The first set is used to determine if a vehicle is subject to taxes in Connecticut. According to that rule, a vehicle’s owner is liable for taxes here, regardless of whether it is registered here, if it most frequently leaves from, returns to, or remains in a Connecticut municipality during its normal course of operation. Prior law provided a similar rule for determining if a vehicle registered in another state was subject to property taxes in Connecticut.

The second set of rules is used to determine where in Connecticut the vehicle is subject to tax. The act requires tax assessors to include a vehicle a person owns and operates in the municipality’s grand list if the vehicle, during its normal course of operation, most frequently leaves from, returns to, or remains in that municipality.

The act establishes a presumption that a vehicle is subject to taxation in the municipality where the owner resides unless the act explicitly states otherwise. For an individual, the municipality of residence is where he legally resides. His residence must consist of a true, fixed, and permanent home to which he intends to return after any absence. If the owner is a business or other organization, the act presumes that the taxing municipality is the one where the organization has established a site for conducting the purposes for which it was created. If the organization has sites in several municipalities, the situs for a vehicle is the municipality where the vehicle, during the normal course of its operation, most frequently leaves from, returns to, or in which it remains. In the case of a vehicle leased by an individual or organization, the situs is the municipality where the lessee resides.

The act has specific situs rules for vehicles owned by a company but used by its employees, recreational and construction vehicles, and vehicles normally used in Connecticut but owned by people who reside in other states.

With regard to vehicles owned by individuals who are state residents, the act’s situs rules are similar to those previously used in practice. Historically, such vehicles were taxed where they “slept,” i. e. , in the municipality where the vehicle was most commonly garaged or otherwise kept overnight. In most cases, this was also the municipality where the vehicle owner had his primary residence.

DOUBLE TAXATION

It appears that there are few, if any, circumstances in which a vehicle used by a college student would be subject to double taxation. As a general rule, a vehicle is subject to taxation in the municipality from which it most frequently leaves from, returns to, or remains during its normal course of operation. There will only be one municipality for which this is true. If a student owned or leased the vehicle, this municipality generally would be the one where he primarily resides. While there might be ambiguity as to where a student primarily resides, it is unlikely that he has two primary residences in the state. On the other hand, the law does not provide a mechanism for resolving situations where there is ambiguity as to which municipality is a person’s primary residence.

A Connecticut Association of Assessing Officers (CAAO) survey of municipalities with large universities found only two (Bridgeport and New Haven) routinely tax vehicles owned by college students whose parents live in other towns in the state. In the case that prompted your questions, Bridgeport taxed a vehicle owned by student attending a college in the city after determining that the student was the owner of record of a residential building in the city. It appears that the student’s parents had bought the property to provide housing for the student while she was in college.

If student used a vehicle owned or leased by someone else, e. g. , his parents, the act’s presumption is that the vehicle is subject to taxation in the owner or lessee’s municipality of residence.

REVENUE IMPACT

Neither OPM or CAAO have any data on the amount of tax revenue gained or lost by municipalities as a result of PA 04-228. Both OPM and CAAO indicated that it would be difficult if not impossible to determine these amounts. In order to determine these amounts, one would have to (1) compile all of the vehicle tax assessments across the state in 2004 and 2005, (2) identify those vehicles that were subject to taxes in one municipality in 2004 and another in 2005, and the resulting amount of revenue changes, and (3) determine the amount of these changes that were attributable to the act, rather than the owner moving from one municipality to another or the vehicle being sold across municipal lines.

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