Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 15, 1990 TAG: 9007150032
SECTION: VIRGINIA PAGE: E8 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEWPORT NEWS LENGTH: Medium
"There's definitely a financial incentive for using the plates illegally," state Department of Motor Vehicle Investigator Art Hansgen told the Daily Press of Newport News.
"You don't pay the state's 3 percent sales tax on the retail value of the vehicle. You avoid paying a titling fee. You don't pay registration, and you don't pay property tax."
According to DMV, there are 58,300 dealer tags issued to the state's 5,900 motor vehicle dealers.
In 1989, the average price of a new car in the state was $14,300, according to the Virginia Automobile Dealers Association. Using that price, the newspaper calculated a new car buyer would save $1,092 in taxes and fees annually by using a dealer tag.
Jeanne Chenault, spokeswoman for DMV, said the tags are issued to dealerships for demonstration cars used to give customers test drives. The dealership's owners, officers and full-time employees also are allowed to use the tags, as are part-time employees who are moving cars at the dealer's instruction.
She said customers also may use the tags for a few days before their tags are ready.
DMV officials said the tags can't be used by family members of the dealership's owners or employees.
Some officials say there is a vast difference between reality and the law. They suspect many used-car dealerships that double as wrecking yards, car repair shops and other businesses actually are set up for the owner and his friends to avoid paying the taxes.
The maximum penalty for misuse of a dealer tag is 12 months in jail and a $1,000 fine.
According to DMV records, only two people were prosecuted for misuse of tags last year, a fact that bothers many officials.
"It's probably the most abused law that's written in the motor vehicle section of the state code," said Sam Barfield, Norfolk commissioner of revenue. Barfield said tax collectors from across the state have been complaining to DMV about the proliferation of dealer tags.
"The law says we cannot tax that vehicle if it has a dealer plate. It is supposed to be in the inventory for sale. We have no problem with that.
"But what is happening is the wife or a friend is taking the vehicle and using it for their own personal use," he said.
The DMV has 46 investigators charged with enforcing the motor vehicle section of the state code. Besides checking dealer tags, they also are responsible for investigating auto theft rings and consumer complaints, monitoring collection of fuel taxes and other duties.
"We don't ride around looking for misuse of dealer tags," said Donald E. Williams, DMV commissioner. Williams said when complaints are made about the use of dealer tags, the department will talk with the dealer to gain compliance.
"DMV is interested in compliance; they're not interested in putting people out of business," he said.
Williams denied that there was a widespread pattern of abuse.
Lt. Gov. Don Beyer, a Volvo dealer in Northern Virginia, said when he first started in the business 16 years ago it was standard for spouses and children to have dealer tags.
"I don't think people looked at it as getting around the law; it was the law, the normal way of doing business," he said.
"I think we have some abuse within our industry," said Don Hall of the state auto dealers' association. He said he believes most of the abuse involves used-car dealers.
"Of course there is abuse," said Don Boling, director of the Virginia Independent Automobile Dealers Association, which represents used-car dealers. "Any time the government grants a privilege, there are always those who seek to abuse it."
The Daily Press found some of those driving vehicles with dealer tags included a building contractor and a restaurant owner.
The contractor also owns an auto dealership, but one with no telephone listing or business license. The restaurateur is not listed as an officer of the dealership that was issued the tags; an oversight, according to the dealership's owner.
by CNB