Crackdown on out-of-state cars yields more tax revenue

This car was parked at an Annandale apartment complex.

Fairfax County is encouraging residents to report online cars with out-of-state license plates that are habitually parked in their neighborhood

This effort is part of Operation Target, a program started a year ago by the Department of Tax Administration (DTA) to catch potential tax evaders and ensure county residents register their vehicles in Virginia and pay property taxes to Fairfax County.

Between July 1, 2015, and June 30, 2016, the county has identified more than 1,800 previously unregistered vehicles, yielding an additional $2 million in tax revenue, says Juan Rengel, director of DTA’s personal property division.

The vast majority of out-of-state cars have Maryland tags. In some cases, the owners are undocumented Virginia residents who are barred from getting Virginia driver’s licenses and thus can’t register their vehicles in Virginia.

The state would be able to collect a lot more in property tax revenue if those car owners were allowed to drive legally in Virginia, Rengel says.

Maryland is one of 12 states, plus the District of Columbia, that allows undocumented residents to get drivers licenses.

Virginia’s failure to enact a similar law “is another example of Richmond making bad policies that result in a negative impact in Fairfax County,” says Simon Sandoval-Moshenberg, director of the immigrant advocacy program at the Legal Aid Justice Center.  

Undocumented residents “are not trying avoid Virginia law or cheat the system,” Sandoval-Moshenberg says. “They are trying to follow the law but Virginia won’t let them. Most people would gladly pay their taxes in Virginia but Virginia won’t take their money.”

Legislation to allow undocumented residents to legally drive in Virginia was introduced in January by Del. Kaye Kory (38th District), who represents most of the Annandale/Mason area, and Sen. Scott Surovell (36th District).

There are safety issues, as well as the possibility of redirecting tax revenue from other states to Virginia.  Allowing immigrants to get a driver’s license would reduce the number of people driving without a license and without insurance, Kory says.

The bill was blocked by the Republican majority, but the General Assembly did call for the Virginia Department of Motor Vehicles to convene a working group to determine whether the commonwealth should allow undocumented residents to apply for driver’s licenses. The group is expected to issue a report in September and make a formal presentation in October.

If the committee recommends that the state issue driver’s licenses to undocumented residents, the General Assembly would still have to enact legislation to make that happen.

Kory predicts the legislature will eventually do so. “I think we’re going to get somewhere, maybe not in 2017. We need to ensure the drivers on our roads are trained and have insurance,” she says.

We found quite a few cars with Maryland tags in apartment complex parking lots in Annandale. Rengel would like to see apartment rental offices join the effort to report out-of-state vehicles. They are currently required to submit tenant lists to the DTA. Legislation to also require information on tenants’ vehicles failed in the General Assembly last year and Rengel expects it will be reintroduced in the next session.

Meanwhile, the Fairfax County Police Department has been more aggressively reporting cars with out-of-state plates at the request of Supervisor Jeff McKay (Lee) who had been getting a lot of complaints about those cars in his district, says FCPD parking enforcement officer Bob Otten.

Supervisors Penny Gross (Mason) and Linda Smyth (Providence) then asked the FCPD to report out-of-state cars in their districts. The DTA, however, doesn’t keep track of out-of-state cars by magisterial district.

The police doesn’t issue tickets to cars with out-of-state places, Otten says. “When we see it, we go online, the same as anyone else, and report it to the tax people. This is all a civil issue. The police don’t get involved in civil matters.”

Having an out-of-state plate doesn’t automatically mean the vehicle owner is a tax evader, Otten says. The car could belong to someone who lives in Maryland and works in Virginia or cares for grandchildren in Virginia. “You can’t make the assumption that it’s always an undocumented person,” he says.

Under Virginia law, a person who moves to Virginia has 30 days to get new plates and change their registration. Fairfax County requires new residents to report to the county within 60 days.

After an out-of-state vehicle is reported, DTA looks at several databases to determine whether the owner is a Fairfax County resident, such as voter registration rolls, employment records, and utility bills, Rengel says.

People who are found to be in violation of state law not only get a tax bill but are charged a $350 penalty, $250 for not having a Virginia plate, and a 10 percent late fee, plus interest if they don’t pay on time. The amount of the property tax is based on the value of the car.

“Very few” car owners reported actually turn out to be non-Virginia residents who owe property taxes, Rengel says. “About 25 to 30 percent – and I’m being generous here – may result in an assessment.” 

“This is a very transient area,” he says. “They could be here on military orders or full-time students who aren’t required to register vehicles in Virginia. They might not necessarily be evading taxes. There are many reasons you might see cars with out-of-state plates.”