county responsibilities under “tag & tax together”
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County Responsibilities Under “Tag & Tax Together”. Chris McLaughlin Assistant Professor, UNC SOG [email protected] 919.843.9167 September 2013. Two Thorny County Issues. Bankruptcy & Registration Blocks Gap Billing. Bankruptcy & Registration Blocks. - PowerPoint PPT PresentationTRANSCRIPT
County Responsibilities Under “Tag & Tax Together”
Chris McLaughlinAssistant Professor, UNC [email protected]
September 2013
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Two Thorny County Issues
• Bankruptcy & Registration Blocks
• Gap Billing
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Bankruptcy & Registration Blocks
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Registration Blocks and the Automatic Stay
• Automatic stay arises immediately at filing
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The Automatic Stay
• Bans “process, proceeding or action” against debtor for claim that arose before filing
• Creating a registration block (or refusing to remove a block) is definitely an “action” covered by automatic stay
• Which means . . . 6
The Automatic Stay
May not block registrations for unpaid RMV taxes that arose before the taxpayer filed for bankruptcy.
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Post-Petition RMV Taxes
• Automatic stay also bans any act to “obtain possession” or “exercise control” over debtor’s property for any claims (pre- or post-petition)
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Post-Petition RMV Taxes
Key question: is a registration block an act to exercise control over the debtor’s property?
•No!! MV registrations (and drivers’ licenses) considered privileges and not property
•Which means . . .
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The Automatic Stay
May block registrations for RMV taxes that arose after the taxpayer filed for bankruptcy.
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The Automatic Stay
• When does RMV tax arise for bankruptcy purposes?
– Existing registration expires
– New registration applied for
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The Automatic Stay
• The good news:
• Under Tag & Tax Together, unpaid RMV taxes will usually be post-petition.
• DMV may require payment of RMV taxes.
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When are unpaid RMV taxes pre-petition?
Two situations in which unpaid RMV taxes will be pre-petition and therefore not subject to registration block:
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When are unpaid RMV taxes pre-petition?
Bankruptcy filing after registration expires but before renewal
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When are unpaid RMV taxes pre-petition?
Bankruptcy filing after obtaining limited registration on new vehicle but before obtaining regular (full-year) registration
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The Bottom Line on Blocks
• Permitted for post-petition taxes:– Registration expires or taxpayer applies for
new registration after bankruptcy filing
• Not permitted for unpaid pre-petition taxes:
– 2 limited situations
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Example 1
• Billy files for bankruptcy on September 1, 2013.
• Billy Blue Devil’s registration expires Oct. 31, 2013.
• Billy renews his registration on Nov. 20, 2013.
• DMV requires payment of 2013-14 property taxes on vehicle.
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• Did the DMV violate the automatic stay by requiring Billy to pay the 2013 taxes on his vehicle?
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Example 2
• Tina Tar Heel’s registration expires Oct. 31, 2013.
• Tina files for bankruptcy on Nov. 2, 2013.
• Tina renews her registration on Nov. 10, 2013.
• DMV requires payment of 2013-14 property taxes on vehicle.
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• Did the DMV violate the automatic stay by requiring Tina to pay the 2013 taxes on her vehicle?
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Example 3
• Susie Seahawk buys a new car on Oct. 31, 2013. She obtains a limited registration.
• Susie files for bankruptcy on Nov. 5, 2013.
• Susie applies for a full registration on Dec. 10, 2013.
• DMV requires payment of 2013-14 property taxes on vehicle.
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• Did the DMV violate the automatic stay by requiring Susie to pay the 2013 taxes on her vehicle?
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Example 4
• Wanda Wolfpack files for bankruptcy on October 20, 2013.
• Wanda’s registration expires on Oct 31, 2013.
• Wanda renews her registration on Nov. 5, 2013.
• DMV requires payment of 2013-14 property taxes on vehicle.
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• Did the DMV violate the automatic stay by requiring Wanda to pay the 2013 taxes on her vehicle?
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The Process
• How will DMV know not to place block on taxpayer?
• Taxpayer must provide proof of bankruptcy filing to county
• County must inform DMV to flag accounts and to remove those flags after bankruptcy
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Bankruptcy and Registration Blocks
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Gap Billing
• DMV collecting taxes on registered motor vehicles
• County obligation to bill and collect property taxes on unregistered motor vehicles
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Gap Billing
• Who is responsible for property tax collection when a vehicle moves back and forth between registered and unregistered status?
• Late Renewals
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Key Issue: Did Tax Year Change?
• Tax year tied to registration year
• When registration and tax years change, there will be a gap during which vehicle was unregistered
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Key Issue: Did Tax Year Change?
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Key Issue: Did Tax Year Change?
• DMV will change registration year:
1. Vehicle not drivable
2. More than 12 months since expiration
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Key Issue: Did Tax Year Change?
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Gap Bills: GS 105-330.3(a1)
• Prorated for # months unregistered– Unregistered 4 months, pay 1/3 of full year tax
• Due & Delinquent 1st day of 2nd month after bill prepared– Bill prepared in November, due January 1
• Interest at 5% first month, then .75%/month
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Gap Bills: GS 105-330.3(a1)
• Collection remedies same as those for “regular” personal property bills: – Attachment/Garnishment– Levy– Foreclosure if taxpayer owns RP– No registration blocks
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How Will You Know You Need to Create a Gap Bill?
• VTS report shows RMVs with new registration (and tax) years
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Draft of Ptax Bulletin #165
• Example 1: Billy Blue Devil– No change in tax year, car
always registered
– No need for gap bill
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Draft of Ptax Bulletin #165
• Example 2: Wanda Wolfpack– Tax year changed due to car
not drivable
– Gap bill for 8 months
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Draft of Ptax Bulletin #165
• Example 3: Tina Tarheel– Tax year changed; > 12
months since expiration
– Gap bill for 24 months
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Discovery Bills?
• Current GS 105-303 calls for discovery bill if car unregistered for an entire fiscal year (July to June)
• Too complicated! – 2 bills (discovery & gap)– Different values, tax rates due dates, interest
• Will change statute to require only gap bill
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Gap Billing
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