Alabama Department of Revenue Office of the Commissioner Media Affairs Section Post Office ox 7001 Montgomery, Alabama 36132-7001 For Immediate Release

For More Information Contact:
Carla A. Snellgrove
or Carolyn Blackstock
Telephone: (334) 242-1390
FAX: (334) 242-0550
www.ador.state.al.us

Changes Coming in Vehicle Property Tax Collection Procedures

Montgomery, Aug. 13, 1999--Beginning Jan. 1, 2000, Alabama will change the way it collects property taxes on vehicles, announced State Revenue Commissioner James P. Hayes Jr.

Vehicle owners will pay current-year property taxes when registering their vehicles, beginning in 2000. This change comes as the result of a new law, Act 99-363, aptly called the Synchronized Taxation and Registration System or STARS.

"In the past, our property tax laws have required the assessment of taxes one year, and payment the following year, causing vehicle property taxes to be paid in arrears. Motor vehicle registration, on the other hand, has been handled on a

current-year basis," said Hayes.

What do the changes mean to Alabama motorists renewing their vehicle registrations and paying property taxes in 2000?

"Actually very little change will be noticed by vehicle owners renewing their registrations--other than beginning in January, they will have a registration receipt showing current-year 2000 property taxes paid, rather than 1999 property taxes. The new law does not change the rate of tax, payment of motor vehicle registration fees, or any procedures related to the motor vehicle registration renewal process," explained Hayes.

The new law specifically requires that taxes be collected in advance on motor vehicles beginning January 2000 and that no property taxes on vehicles will be due in arrears for the 1999 tax year.

"The biggest change will be in store for county assessing and collecting officials and their staffs who are on the front-end of the vehicle tax assessment and collection

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Aug. 13, 1999

process. The STARS legislation revamps the entire motor vehicle property tax collection process," says Hayes.

The new law provides that property taxes on motor vehicles are due: (1) during the renewal month of the owner; (2) on the date the motor vehicle enters Alabama; (3) on the date the motor vehicle is removed from the inventory of a dealer; (4) or on the date which the motor vehicle is otherwise determined to be taxable, whichever comes first. Taxes become delinquent on the first day of the month following the owner's registration renewal month.

"For example, a vehicle owner whose designated motor vehicle registration renewal month is January will pay registration fees and property taxes on his or her vehicle for the period Jan. 1, 2000, through Dec. 31, 2000. Taxes and registration fees on the vehicle become delinquent Feb. 1, 2000," explained Hayes. "Owners whose registration renewal month is February will pay property taxes and registration fees covering the period Feb. 1, 2000, through Jan. 31, 2001. Taxes and fees on the vehicle become delinquent March 1, 2000," added Hayes.

Alabama's motor vehicle registration renewal system is a staggered renewal system, based on the first letter of the vehicle owner's last name. The registration period runs from January through October each year for private passenger vehicles.

One important aspect of the new law involves how taxes will be assessed and collected on new vehicles. The law defines a "new vehicle" as a vehicle being registered for the first time with a manufacturer's certificate of origin, and one being assessed as Class IV property (private passenger automobiles and pickup trucks owned and operated by an individual for personal or private use and not for hire, rent or compensation).

Beginning in January, the property tax on a "new vehicle" at the time of registration will not be paid until the first renewal or other subsequent registration of the vehicle, whichever comes first. Consequently, the first renewal or subsequent registration of a "new vehicle" will include (1) the property tax that would have been due at the time of the first registration and (2) the current registration year's property tax.

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"Bringing the vehicle property tax collection process forward will certainly make the entire process more efficient for tax assessors and collectors, and less confusing to individuals registering their vehicles and paying their vehicle property taxes, as the two payment periods will now coincide," added Hayes.