96-088
Response
May 3, 1996
Request
XXXXX
Policy
Analyst
Utah
State Tax Commission
BUILDING
MAIL
Dear
XXXXX
A situation has come under
discussion among county assessors and the Tax Commission dealing with “title
only” transactions. I am requesting
an advisory opinion on the issue outlined below. My specific question is: “Can county assessors require
payment of the fee-in-lieu of property tax when issuing a title only
transaction on a vehicle.” Pertinent
discussion issues follow.
Background
Several years ago, the motor vehicle
laws required both title and registration functions in combination. However, specific needs necessitated
treating these processes separately; hence, the law was changed to separate the
title transaction from the registration transaction. We now handle ownership issues under the titling provisions and
highway use issues under the registration provisions. The applicable code provision dealing with titles and the
prerequisites to titles is 41-1a-508.
Prior to operating a vehicle on
public highways, vehicles must be registered.
The registration functions also have prerequisites as identified in
section 41-1a-206. Among the
requirements for registration, paragraph (1)(a) of this section requires
payment of the fee-in-lieu prior to issuing registration for a vehicle.
Yet another issue brought into our discussion
by the county assessors involves section 59-2-1302, which creates a lien on a
vehicle if the fee-in-lieu is not paid.
Issue
The specific issue on which we are
requesting an advisory opinion involves damaged vehicles. The law requires that when a car is damaged
to the extent it is considered salvage, the title must be exchanged for a
salvage certificate; see section 41-1-1005.
Since this process is a title transaction, not involving a registration,
we looked to section 41-1a-508 for the requisites to title transactions. When the vehicle is again made operable, the
salvage certificate is exchanged for a branded title (or unbranded title if
appropriate) and the registration process would follow if the vehicle is
re-sold and registered in Utah. If the
vehicle is damaged after the annual registration is done, the
fee-in-lieu for that period has been paid, and presumably, the vehicle would be
part of dealer inventory or already sold, which would identify treatment of
fee-in-lieu for the following year.
However, if the vehicle is damaged prior
to the annual registration process, the opportunity for county assessors to
collect the fee-in-lieu as part of a registration process may not present
itself 1) for several months, 2) the next calendar year, or 3) not at all if
the vehicle is taken out of state. This
is the focus of the county assessors’ concerns; the timing and ultimate sale of
the vehicle may not present itself for counties’ to collect the fee-in-lieu
from the owner who owned the vehicle on January 1 (past). In some instances, the counties have carried
the unpaid fee-in-lieu to the new owner as a lien; sometimes assessing two
year’s worth of fee-in- lieu even if the new owner did not own the vehicle when
the first year’s fee-in-lieu became due.
However, we are unsure as to what constructive notice must be given (if
any) in order to assess the past due fee to a new owner. In many cases, there is no way that a person
purchasing a vehicle would know that back taxes are due.
In our discussion with the counties,
they are looking at the salvage certificate process as the means to collect the
fee-in-lieu that is due to them. While
we are all in agreement that the fee-in-lieu is due, we are in question insofar
as requiring the payment of the fee-in-lieu before processing the
salvage certificate transaction. This
is where the county assessors are tying this action to section 59-2-1302, in an
effort to collect the fee-in-lieu.
Current practice varies among counties.
Some will not allow a salvage title to be issued without first clearing
the fee-in-lieu (property taxes). Other
counties and the state offices issue the salvage title without respect to the
fee-in-lieu.
I invite you to visit with me
further on these issues, or contact XXXXX for further information. Several county assessors have also been
involved in discussions; XXXXX, XXXXX, is the most knowledgeable among
assessors on this issue.
Please let me know if I can provide
additional information to you.
Respectfully,
XXXXX
XXXXX
Customer
Service Division
Utah
State Tax Commission
Re: Title-only Transactions
Dear
XXXXX
We have received your request for an
opinion as to whether payment of the fee-in-lieu must be made in conjunction
with title-only transactions. We
understand that subsequent to your request, you met with XXXXX, Salt Lake
County Assessor, to explore these issues further. As your study progresses, we invite you to request an opinion on
any issues that present themselves. In
the meantime, we will consider this
request withdrawn pending future questions that require our attention.
For the Commission,
Alice Shearer,
Commissioner