Ellis County Tax Assessor-Collector John Bridges is reminding the public that House Bill 2654 goes into effect Sept. 1.
The bill tightens the law relating to the gifting of a motor vehicle.
In particular, the bill has changed the criteria for determining when a transaction qualifies as a gift for motor vehicle tax purposes.
Effective Sept. 1, the only transactions that qualify to be taxed as gifts – at a rate of $10 in lieu of paying full sales tax – are those involving a motor vehicle that is received from a parent or stepparent, grandparent or grandchild, child or stepchild, sibling, guardian or a decedent’s estate.
A donation of a motor vehicle to a qualifying nonprofit will still be allowed for the $10 fee under the new law.
In addition to the normal transfer of title paperwork, those making/receiving a gift will now have to submit an affidavit of Motor Vehicle Gift Transfer form, which will require notarized signatures from both parties.
By closing the loophole in the law, the state estimates it will gain about $26 million in revenues for the 2010-2011 biennium.
Although most people are honest, the state has recognized a need for the change, Bridges said.
“The gift is there for a particular reason, like if you wanted to give your child a car or your grandmother wanted to give you a car,” he said. “It’s not for someone who puts a car up for sale in your driveway.
“Hopefully this cuts down the number of transfers by people not being honest,” said Bridges, who feels the added requirement of a notarized statement with both parties’ signature is an additional deterrent to those who might consider skirting the law.
As an example, in Ellis County, a normal car transfer involves the payment of sales tax at 6.25 percent, plus a transfer fee of $33, plus a $2.50 paperwork fee and then, if a window sticker is needed, a registration fee of from $50-$70, depending on the vehicle’s age.
Someone claiming a gift transfer would only pay a $10 fee instead of the 6.25 percent tax, which can mean a savings of up to several hundred dollars, even with the other fees added.
There may be some adjustments or rule changes enacted by the comptroller’s office as the new law goes into effect – one might be to allow the clerks in the tax office to handle the notary requirement on the new affidavit.
All of the money collected on a vehicle transfer in Ellis County goes to the state with the exception of a local road and bridge fee of $10 that goes to the four precincts and is earmarked for maintenance.
The tax office is allowed to keep $1.90 as a commission from each transfer to be used toward its operation. That money goes to cover personnel and office costs, such as envelopes used to mail notices and license plates.
Bridges said the $1.90 amount hasn’t increased in 10 years.
“The cost (of processing transfers) hasn’t been going down,” he said. “In Ellis County, you hope the volume will offset the expenses.”
Between its main location and three sub-branches, the tax office processes about 15,000 transactions a month, which works out to more than 1,000 per clerk.
“I think the taxpayers are getting their money’s worth as far as what we do for the number of people we have employed,” he said. “In fact, about four or five years ago, we did a survey of 20 counties similar to ours, that had about the same number of tax accounts and the same number of registered automobiles. As compared to all of those 20 counties, we had from five to 10 fewer employees than any of those other counties.”
A key factor in that has been that Ellis County Tax Office employees are cross-trained to handle several duties, including both property tax and vehicle transfers, he said.
Through August of this year, the tax office has handled 155,029 registered vehicles, collecting $9,707,277.
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