Road Fund

Sources of Revenue:

Other Fund Road Fund

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    The purpose of this bill is to provide an exemption for certain motor vehicles from the payment of privilege tax and to provide for a refund of the privilege tax to the manufacturer on certain lemon law transactions.
    This bill would exempt the payment of privilege tax on replacement vehicles exchanged by the manufacturer that are comparable tot he vehicle originally titled by the customer. This bill will also allow for a refund of the privilege tax when the manufacturer has paid the customer a refund instead of providing a comparable vehicle.
    A provision in this bill will allow for the manufacturers to go back four years and request privilege tax refunds when the customer had opted for a buy out as opposed to a new vehicle.
    The Division of Motor Vehicles refunds customer fees on certain transactions. The Division, receives requests to refund privilege tax when the manufacturer has bought the car back from the customer under the lemon law. The Division does not refund the privilege tax to the customer since the terms of the buy back settlement includes the privilege tax.
    The Division only learns about lemon law buy outs when the customer makes a request for refund. The Division estimates that there are probably 50 transactions per year that would either be an exchange of a vehicle or the manufacturer buys back the vehicle.
    Assuming the average value of transaction is $18,000, the Division estimates that based on 50 transactions, $18,000 per transaction and 5% privilege tax, that the annual loss of privilege tax would be $45,000.
    Assuming that $45,000 represents one year's transactions, the cost to refund the four previous years would be $180,000.
    The cost to process these refunds including the four previous years would be approximately half (1/2) the time of an accountant to do the research. Estimated personnel cost would be $22,720.
    The total cost to the Road Fund per year to implement this legislation would be $67,720.

Fiscal Note Detail

Effect of Proposal Fiscal Year
Fiscal Year
(Upon Full
1. Estmated Total Cost 22,720 22,720 22,720
Personal Services 22,720 22,720 22,720
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues -45,000 -45,000 -45,000

Explanation of above estimates (including long-range effect):

    Estimated Cost
     Salary of 1/2 time for one accountant $16,000
     Benefits $ 6,720
     Total Cost $22,720
    Estimated number of transactions per year 50
    Estimated value of each transaction $18,000
    Total Value $900,000
    Privilege Tax Rate 5%
    Total Privilege Tax Per Year $45,000
    Estimated refunds for previous four years $180,000



    Person submitting Fiscal Note: Richard M. Johnston
    Email Address: