November 1, 2004
MOTOR VEHICLE ASSESSMENT FOR PROPERTY TAX PURPOSES
By: Kevin E. McCarthy, Principal Analyst
You asked the following questions with regard to the valuation of motor vehicles for property tax purposes, which we answer in order.
Who requires that assessors use the National Automobile Dealers Association (NADA) guides and why?
By October 1 annually, the Office of Policy and Management (OPM) must recommend a schedule of motor vehicles, which assessors must use in assessing motor vehicles for property tax purposes. The schedule must include the value of all vehicles currently in use, to the extent that this information is available. The value for each listed vehicle must be 100% of its average retail price as of October 1, as determined by the OPM secretary in consultation with the Connecticut Association of Assessing Officers (CAAO). In practice, OPM has recommended use of the values contained in the NADA guides. These guides cover most passenger vehicles and light and medium trucks, among other vehicles.
What discretion does an assessor have if the NADA guide does not give a fair value for a vehicle?
In practice assessors routinely set a vehicle's assessed value at the value contained in the guides. However, it appears that an assessor has the discretion to adjust the guidebook value in order to more accurately reflect the vehicle's market value.
In the absence of NADA data, what procedures is a town expected to use and who prescribes that valuation methodology? What alternative resources or methods are available to the town to establish fair value?
If a vehicle is not listed in the schedule, the law does not specify a valuation method and the assessor is responsible for determining the vehicle's value. The CAAO website, http://www.caao.com, has links to several other sources of information regarding vehicle values. They include the Edmund's guides to new car and truck prices, guides for classic vehicles, and recreational vehicle classifieds. The law does not limit assessors to these data sources and an assessor could base the valuation on such things as the vehicle's sales price, adjusted for depreciation.
The municipality's legislative body may, by resolution, approve of any change in the assessor's method. (CGS § 12-71d). If a vehicle is 25 years old or older and is registered as an antique, it cannot be valued at more than $500 (CGS § 12-71).
Is there a legal requirement for board of assessment appeals to explain and document the rationale of decisions they make on a vehicle's fair value?
The taxpayer has the burden of proof in showing that an assessment is inaccurate, and there is no requirement that the board of assessment appeals explain and document its reason for denying an appeal. However, if the taxpayer appealed the board's decision to the courts, the board would have to explain its rationale.
Are there approaches used in other states to fix motor vehicle values when a retail guide is unavailable?
Most states either do not impose property taxes on motor vehicles or base the tax on something other than the guidebook value. Nineteen states do not subject motor vehicles to property taxes or similar value-based taxes states (Delaware, Florida, Hawaii, Idaho, Illinois, Iowa, Louisiana, Maryland, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Vermont, and Wisconsin). In some of these states municipalities can impose a registration fee on vehicles that is either flat or based on the vehicle's weight.
Of the states that do impose value-based taxes, the most common valuation method is the actual or recommended sales price for the vehicle when it was new, adjusted for depreciation. Seven states, in addition to Connecticut, base on valuations on the NADA guides. It appears that assessors in these states have broad discretion in valuing a vehicle that is not covered by the guides.
In 16 states, a tax is levied in lieu of the property tax, often by the state or counties, with the revenue allocated to local governments. In 12 of these states (Arizona, Colorado, Maine, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, Utah, Washington, and Wyoming), the tax is based on the MSRP. In California and Indiana, the tax is based on the vehicle's purchase price. In Oklahoma, the tax is based on the factory invoice price. Utah uses the purchase price for new vehicles and the NADA value for used vehicles.
Twelve states, including Connecticut, subject vehicles to the property tax. Of these six, in addition to Connecticut, base valuations on NADA guides (Alabama, Kentucky, Mississippi, Missouri, South Carolina, and Utah). In Arkansas, Georgia, North Carolina, Virginia, and West Virginia) assessors have broad discretion in setting vehicle values for property tax purposes. In Rhode Island, the state Vehicle Value Commission sets the values.
In Texas, the local option property tax on motor vehicles is based on NADA values, but is imposed by only about 4% of taxing jurisdictions. In Rhode Island, the property tax is optional. In Alaska, local governments can impose a property tax or a registration tax that is based on the vehicle's age.
The above information is taken from a National Conference of State Legislatures (NCSL) survey, which is available online at http://www.ncsl.org/programs/fiscal/autotaxs.htm.
Are there statutory remedies to aid the constituent who feels that he has been mistreated in the assessment process? What other remedies can be proposed?
Under current law, if a taxpayer believes that an assessment is inaccurate, he can appeal to the board of assessment appeals or the courts. The board meets during the month of September solely for appeals relating to motor vehicle assessments appearing on the preceding grand list. The taxpayer must appear before the board in order for it to consider the appeal. If the taxpayer is unable to appear in person, he may give written authorization for someone to appear on his behalf (CGS § 12-111). The taxpayer can appeal the board's decision to the courts (CGS § 12-117a).
A taxpayer can apply directly to the court if he believes that the tax on his property was computed on an assessment that, under all of the circumstances, was manifestly excessive and could have not been arrived at without disregarding the law regarding assessments. This relief is in addition to any other remedies provided for under the law. The appeal must be made within one year of when it was assessed. The court can grant the relief that it finds appropriate. The appeal does not suspend any action against the taxpayer. (CGS § 12-119).
The legislature could require that the valuation of motor vehicles that are not listed in the NADA guides be based on their MSRP or actual sales price, adjusted for depreciation. Please note that the NCSL survey found that the depreciated sales price was generally higher than the values listed in the NADA guides. Alternatively, the legislature could require or explicitly allow assessors to consider the sales price or other data in valuing vehicles that are not covered by the guides. Finally, the legislature could require boards of assessment appeals to respond to any specific arguments a taxpayer raises in challenging the valuation of his vehicle.