Another Taxing Question
He lives and works in Rhode Island, and has just been elected to a local town council - but has his $40,000 truck registered in Vermont. This week Jim Hummel finds out why - and what state law says about who should be registered in Rhode Island. The answer may surprise you - and a lot of Rhode Islanders who have their vehicles registered in other states, trying to avoid the local car tax.
Twice a month the Exeter Planning Board gathers around a table at Town Hall discussing issues affecting the future of the community. Taking it all in is board member Daniel Patterson, who has lived in Exeter for 13 years. He and his wife own ShanBri Farms five miles across town on Route 2 and just last week Patterson was elected to the Exeter Town Council.
On this night Patterson has arrived in a 2009 GMC Sierra - with Vermont license plates - a vehicle that he uses regularly to get around town. So we asked him after the meeting why he has an out-of-state registration.
Hummel: ``We wanted to know why you have Vermont plates on your truck?''
Patterson: ``Because I do business in Vermont.''
Patterson says the business is visiting various farms in Vermont to buy supplies - like hay - for his own farm.
Patterson: ``Because when you go onto a farm up in Vermont with Rhode Island plates, they kind of don't want to talk to you. If you go up there with Rhode Island, Massachusetts, Connecticut plates, they call you a `Flatlander,' kind of like a level of trust.''
Although Patterson said we were the first to ask him about the Vermont plates, he was clearly ready for our questions.
Hummel: ``You know the rules here about registration?''
Patterson: ``The sales tax on that vehicle has been paid to Rhode island. It was registered here, then moved up there about six months after I bought it.''
Hummel: ``So has that been for a couple of years?''
Patterson: ``This truck here, I bought it in February.''
Hummel: ``So you paid taxes here in Rhode Island?''
But when we asked Patterson a few days later to give us proof that he paid the tax, he did not respond - nor did he answer two e-mails and a phone call we placed to him over the past month.
Even if he did buy - and pay sales tax on the vehicle - in Rhode Island, the registry tells the Hummel Report Patterson is violating state law by having Vermont plates on the truck - when he lives and works in Rhode Island.
Vispo: ``If you're a resident of the state - you live here. And you either live here and work here, or you live here and your children go to school here, you've got 30 days after you've been in the state to get your car registered in RI.''
Mike Vispo of the Rhode Island Division of Motor Vehicles says the law leaves no ambiguity.
Hummel: ``Some people will say, `Hey, I own property in another state, I own property somewhere else, doesn't that allow me because I'm paying my property taxes and everything else, why shouldn't I be able to register it there?'"
Vispo: ``The law doesn't make a provision for that. The law is pretty straightforward - it says 30 days in this state, you must register your vehicle in this state.''
Hummel: ``So what does it take to register a car here in Vermont? Well not much. In fact the Commissioner of Motor Vehicles, as he's called up here, tells the Hummel Report you don't even have to own property in Vermont - a mailing address will do. And perhaps more attractive to a Rhode Islander - Vermont has no car tax.''
And Patterson was a little more vague when we asked him about property taxes for his truck in Exeter.
Hummel: ``And then it's been registered here with the town for property tax purposes?''
Patterson: ``It will be for the first six months it was here, yes.''
Hummel: ``Will...meaning it won't be later?''
Patterson: ``However they do the tax rate here.''
According to records at Town Hall, Patterson has two vehicles registered in Rhode Island in his name:
A 1994 vehicle assessed at $944 - which he was taxed $30.76 on last year.
And a 2003 vehicle assessed at $1,260, that cost him $41.06 in property tax last year.
Patterson told us he bought the Sierra truck in February and paid more than $2,900 in sales tax, which would put the sales price at more than $40,000.
The tax assessor in Exeter tells the Hummel Report Patterson's truck does not show up on her rolls.
If it were taxed at $40,000 he'd have to pay $1,300 in property tax.
If it were taxed at $30,000 he still be responsible for nearly a thousand dollars.
Vermont has no property tax on vehicles.
Exeter, like every other community in Rhode Island, bases its car tax on a list of registrations it receives from the state registry.
Hummel: ``Would there be any way a community would know other than the registry whether a car is registered here?''
Vispo: ``I don't believe so.''
Hummel: ``How would the community know?''
Vispo: ``They wouldn't - unless motor vehicle said this car was registered for X amount of time, the community would not know. Unless the person went to the tax assessor and said I've got an out-of state registered vehicle and I want to pay you some tax. But normally the process is we tell the cities and towns what was registered, to whom and for how long.''
Hummel: ``But that scenario seems pretty remote that somebody's going to walk into their local....''
Vispo: ``Seems extremely remote.''
And with the General Assembly's elimination of the car tax exemption - nearly every motorist is paying more in property taxes this year.
Hummel: ``Bottom line is, it's revenue.''
Vispo: ``It's revenue. Everybody that's registered out of state that shouldn't be it's costing the state money on the local level and that funnels into the bigger picture.''
That loss in revenue from the car tax is one of the many issues that Daniel Patterson will have to deal with when he's sworn in as Exeter's newest town councilman - on Tuesday.
In Exeter, Jim Hummel, for The Hummel Report.