Washington Cracks Down On Vehicle Tax Evaders Feds, Oregon Helping In Investigation Of Car License, Sales Tax Fraud
Federal investigators are sniffing the tire tracks of Washington drivers who buy vehicles in Oregon and license them there at cheaper rates.
An investigation initiated by the two states is focused on car dealers who allegedly solicit Washington residents to buy and license vehicles in Oregon to avoid higher taxes in Washington state, Washington Revenue Department spokesman Mike Gowrylow said.
Federal investigators are involved because of the possibility of mail fraud.
“I’m optimistic that there’s going to be some movement on that front fairly soon,” Gowrylow told the Eastside Journal.
The Revenue Department estimates Washington loses $21 million a year in excise and sales taxes because of vehicles illegally being licensed in other states. The most common avenue for avoiding taxes is Oregon.
The Washington department believes up to 10 percent of private vehicles in Clark County, just across the Columbia River from Portland, might bear Oregon plates illegally.
“There’s practically a cottage industry down there for people offering up their home addresses for use by Washingtonians,” Gowrylow said.
Washington State Patrol detective Mike Little, part of a Kirkland-based team that investigates illegal car licensing, said he’s found that mail-forwarding businesses in several Oregon cities have lists of vehicles registered to their addresses.
WSP computers contain license-plate numbers of vehicles whose drivers have received warnings, so if they are stopped again for license tax evasion, the driver may be cited.
Publicity surrounding the crackdowns has brought a flurry of telephone tips on possible violators, Little said.
There also has been an influx of vehicles with out-of-state licenses to WSP offices in Bellevue and Tukwila for vehicle identification number checks - the first step in getting Washington license plates.
Taxes for vehicle licensing in Washington are significantly higher than in Oregon because of the lack of a state income tax in Washington.
But Oregon gets most of its revenue from an income tax, so a car can be licensed there for two years for only $30. A motor home costs about $250 for two years.
In Washington, however, most state revenue comes from the sales tax.
Washington residents who buy new vehicles are supposed to pay the Washington sales tax even if the vehicle is purchased in another state.
The cost of registering a car in Washington depends on the vehicle’s age and follows a formula that starts out based on 100 percent of the manufacturer’s suggested retail price.
The Washington Legislature made some adjustments in its just-ended session that could lower the taxes paid by car owners, but those changes must be approved by voters in a November referendum.
One is a $30 rollback in motor vehicle excise taxes. Another would reduce the percentage of the original value at which a vehicle is taxed in the second and third years.
The $30 rollback would be significant for many drivers, Gowrylow said, because the average annual excise tax bill on all cars in the state is $143.
But it won’t stop those who try to license their cars illegally in a lower-cost state, Gowrylow said.
“It’s never going to deter the person who wants to buy a Porsche Carrera and license it in Oregon.”
xxxx Penalties A conviction for vehicle license tax evasion carries a $330 fine. Washington state also can take civil and criminal action to assess penalties and recover lost revenue.