Pam Boyd/pboyd@vaildaily.com
When Gypsum residents Lee Dorothy and Lorie Everman received their motor vehicle registration bill from Eagle County this spring, something seemed off about the tax calculation.
“When I looked at it, I thought ‘Gee, that sounds like a lot of money,’” Everman said.
Turns out, the couple was right and the charges were about $80 more than they should have been. But their issue wasn’t a simple mathematical error. Instead, it reflects the limitations of Colorado’s old motor vehicle registration system and the nuances of its new one.
Dorothy and Everman are not the only Colorado residents affected. According to the Colorado Department of Revenue Division of Motor Vehicles, there were 228,126 vehicles affected by the issue the Gypsum couple noticed on their 2019 vehicle registration bill.
First year, twice
For Dorothy and Everman, the issue is tied to the R-Pod camper they purchased in the spring of 2018. They have documentation showing the manufacture date of their trailer was March 12, 2018. But their trailer is a 2019 model because, in the same way next year’s car models come out in the fall, new RVs models debut in the spring.
As anyone who has ever paid specific ownership tax when registering a new vehicle can attest, the first year registration bill is higher than subsequent years. Colorado charges specific ownership tax on a sliding scale based on model year and in the case of Class D vehicles such as the Gypsum couple’s trailer, the calculation reflects 85 percent of the manufacturer’s suggested retail price and the scale is:
- First year — 2.1%
- Second year — 1.5%
- Third year — 1.2%
- Fourth year — .9%
- Fifth through ninth year — .45%
- 10th year and beyond — .45% or $3, whichever is greater
When the Gypsum couple dug into their trailer bill, they found they had been charged the 2.1% rate twice — in 2018 when they purchased the trailer and again in 2019, the model year of the camper.
“I think a lot of people just write a check and they don’t even look at that stuff,” said Dorothy. “But there is no first year, twice.”
A call to the Colorado Division of Motor Vehicles, however, revealed that it’s exactly what happened. What’s more, under the old software used in Colorado, that practice was protected by statute. But state officials say there’s a new DMV system now in place to address the problem.
Old system’s limitations
According to DMV Communications Manager Sarah Werner, the issue ties back to the DMV software used statewide. Colorado’s previous system dated back to 1983 and it was replaced statewide between Aug. 1-5, 2018, with a software product called Colorado DRIVES.
Werner noted the 1980s era system was limited. Specifically, it was limited to one factor in the determination of specific ownership tax calculations. That base factor was vehicle model year.
As a noted in a Frequently Asked Questions document from the Colorado DMV, the previous system “was programmed so that the specific ownership tax was calculated based on the vehicle model year regardless of when the vehicle was initially purchased or registered. In these cases, the vehicle was being charged the first year rate of 2.15 twice — once each for the initial year registered and the actual model year, rather than moved down a year of service.”
“That was the calculation that was in the system and it was correct at the time,” said Werner.
But the new Colorado DRIVES software allows for more than one factor to be considered in vehicle specific ownership tax calculations. Werner said the statute now reflects the argument that Dorothy and Everman assert — there is only one first-year specific ownership charge at the 2.1% rate.
“The Colorado DRIVES system was configured to properly charge the first year of specific ownership tax one time using the initial registration date instead of the model year for new vehicle registrations when the vehicle’s model year is newer than the current year,” states the Colorado DMV FAQ document. “This change was effective on the system’s ‘go live’ date of August 6, 2018.”
But there is still an outstanding issue for people such as Dorothy and Everman and the 228,126 vehicles in that were registered last year prior to the switch to the new system. As noted by the DMV, those vehicles may have been double charged the first year tax rate this year.
“No one will pay the first year rate after July 2019,” Werner said. “If you register your vehicle today, you will not have this problem.”
In its acknowledgement of the issue, the state DMV says it is working to correct the problem and a recommendation about how to proceed is expected in early June.
For the Gypsum couple, a local solution was found after a month of back and forth with state officials. Ultimately their specific ownership tax rate was adjusted to the correct amount.
Admittedly hard-headed
“If we weren’t so hard-headed, we probably would have walked away from this,” Everman said. “The thing that bothered us the most was no one would tell us anything.”
The Gypsum couple said when they contacted Eagle County Clerk and Recorder Regina O’Brien with their issues, she offered to investigate the issue and get back to them with an answer. Ultimately that answer was yes, they were overbilled.
“This is not an Eagle County specific issue,” O’Brien said. ” We contacted the state to get more information about exactly what was happening and the customer contacted the state as well. Ultimately we adjusted their fees to be what they should be and renewed their record.”
The Gypsum couple said the financial impact in their situation was relatively small — $81.59. But they noted customers who own more expensive vehicles could be hit hard. For example, owners of an RV valued at $200,000 would be charged $4,200 at the 2.1% rate when they should pay at the 1.5% rate for a bill of $3,000.
While Dorothy and Everman were able to solve their issue locally, they were more frustrated with their contacts at the state DMV. As the couple sought answers to their problem, they culled through the minutes of the Colorado DRIVES County Governance Committee. The meeting minutes, which are posted online, reflect January and February discussion of the specific ownership tax rate issue.
Dorothy and Everman said the state officials they contacted weren’t forthcoming with information about the problem.
“It was mind-boggling to me that they wouldn’t just step up and say there was an issue and they were doing something about it,” Dorothy said. “We were never angry, but we just couldn’t get an answer.”
Werner noted the issue is a complicated matter and the state DMV has now posted the FAQ document on its website to help other customers who have been assessed the first-year specific ownership tax rate twice.
“We are trying to address the issue and make sure people get to the information they need,” she said.
“I believe that the state is trying to make things right,” O’Brien said. “I know they are trying to come up with the solution to this issue.”
Dorothy and Everman hope that other DMV customers have an easier time than they did getting their bills corrected.
“We are done with it now, though,” said Dorothy. “We have presented all the information we could.”