Nebraska collects $850,000 in unpaid car taxes, fees

Leslie Reed

Jul. 16, 2008 (McClatchy-Tribune Regional News delivered by Newstex) -- LINCOLN -- Nebraska has collected more than $850,000 in unpaid car taxes and fees in a crackdown on those who improperly registered their vehicles in Iowa and South Dakota.

State Patrol Col. Bryan Tuma said today that the investigation found a "pervasive and widespread" practice of Nebraskans circumventing state motor vehicle tax laws by registering their cars in the neighboring states.

The investigation by the State Patrol, the Department of Motor Vehicles and the Department of Revenue began in February, after Nebraska authorities compared the Social Security numbers on Nebraska driver's licenses with those used to register vehicles in Iowa and South Dakota.

In June, authorities mailed more than 10,000 letters to Nebraska residents who appeared to have registered cars out of state.

So far, two people have been arrested in Lancaster County for tax evasion and more than 2,500 people have voluntarily paid back taxes and re-registered about 2,800 vehicles in Nebraska.

Tuma said 2,096 of those people had registered their vehicles in Iowa and 422 in South Dakota.

Registering a vehicle in states with different types of registration fees can yield tax savings. Nebraska vehicle registration taxes are based on the age and value of each vehicle and can total hundreds of dollars, so registering a car elsewhere can yield a savings of hundreds of dollars annually.

State DMV Director Beverly Neth objected when asked if the investigation indicated that Nebraska motor vehicle taxes are too high, prompting people to "save money" by registering their cars in states with lower taxes and fees.

"I don't see that as 'saving money.' I see it as committing a crime," Neth said.

Many of the vehicles being registered out of state are high-ticket luxury cars or motor homes, she said. She said one person paid more than $26,000 in back taxes and fees on two motor homes.

She also said those who improperly registered vehicles in other states are not entitled to refunds from those states after they re-register the vehicles in Nebraska.

Although the investigation has found a significant number of violations, officials said about one-fifth of the people who got letters from the State Patrol received them in error.

Most of them were able to show legitimate reasons for registering a vehicle in another state. Those who work or attend college in another state may register the cars they use in that state.

In at least 17 cases, Iowa authorities mistakenly listed Nebraskans' Social Security numbers on vehicle registrations, apparently through a typographical error.

In a few other cases, Neth said, someone may have stolen a Nebraskan's identity to register a car, and she urged anyone who thinks their Social Security number was incorrectly used to contact the Iowa Department of Transportation's Office of Vehicle Services to investigate further.

Tuma said authorities continue to pursue 3,825 more individuals who have not yet voluntarily re-registered their vehicles or demonstrated that they are properly registered out of state.

Each of Nebraska's 93 counties has seen at least one motorist re-register a vehicle in response to the State Patrol letter, he said.

Most of the responses, about 40 percent, came from Douglas County, while 15 percent were from Sarpy County and 9 percent from Lancaster County.

The effort has resulted in the collection of $260,000 in motor vehicle taxes; $399,000 in state sales taxes; $63,000 in city sales taxes; $51,000 in wheel taxes; $72,000 in fees; $384 in county sales taxes; and $7,600 in sales tax interest and penalties.

State law requires any motor vehicle or trailer that is operated, parked or towed on Nebraska highways for more than 30 days to be registered in Nebraska.

State Tax Commissioner Doug Ewald said the investigation has helped make sure everyone pays a fair share.

"This investigation sends a message that the State of Nebraska is serious about creating a more equitable tax structure for all Nebraskans, through the aggressive enforcement of the state's motor vehicle registration laws," he said.

--Contact the writer: 402-473-9581, leslie.reed@owh.com

Newstex ID: KRTB-0149-26714481