Va. AG fixes title tax rate problem that the July 1 increase would have caused

Va. AG fixes title tax rate problem that the July 1 increase would have caused

The looming problem of which title tax to apply on vehicle sales in Virginia when the rate rises from 3% to 4% on July 1 is resolved, thanks to Attorney General Ken Cuccinelli, whose written opinion last week set the matter to rest. In his May 22, 2013 letter to DMV Commissioner Rick Holcomb and Motor Vehicle Dealer Board Director Bruce Gould and others, Cuccinelli set aside a 25 year old AG opinion, which provided that the title tax in effect at the time of title processing at the DMV, not the time of sale or ownership transfer, would apply. This caused considerable concern among Virginia dealers contemplating the prospect of selling vehicles prior to July 1, 2013, where the 3% rate was collected, but the 4% rate would be due, unless the paperwork was at the DMV before the rate change date.

From the AG™s May 22 letter:

It is my opinion that the proper tax rate to impose on a vehicle sales transaction in Virginia is the tax rate in effect at the time of the sale when the ownershipof the vehicle is transferredafter the tax is imposed on the sales transaction. The tax is then owed and is paid and collected when the vehicle is titled by the DMV.

As rationale for his action, Cuccinelli cited a changed automobile business from 25 years ago and a plain meaning of the word sales in the law.

The title tax increase from 3% to 4% on July 1, accordingly, should transition far better for all concerned than otherwise would have been the case.