DOBSON —On the eve of county residents receiving their first tax bill under a new billing protocol, local tax officials have one message for the public: Don’t blame us, we don’t like it either.
According to Tax Director Michael Hartgrove, residents in the county should begin seeing their bills in the next month or so, but the new way the money is collected will mean delays in the county receiving the income, and could cost the county quite a bit of money. That’s because the money that now goes to the county, under the present collection methods, will go to the state, which will hold onto the revenue for a period before disbursing it back to the county.
The state is taking over the collection of property taxes in an effort to increase the collection rates in counties which are having trouble collecting taxes, but local officials say the move will preclude them from setting up installment payments for county residents who may be struggling to come up with the whole amount.
Michael Hartgrove, Surry County tax department director, said on Thursday that the changes will require taxpayers to pay their entire vehicle tax and any fees owed before they can register their car.
The end result could be people unable to legally drive their vehicles until they come up with a pile of money, he said.
“They’re not going to let people pay in installments and keep their vehicles on the road, so what are they going to do?” Hartgrove asked. “Drive without legal tags or not drive at all?”
That’s a change from the present method of collecting taxes.
“Now, you register your car and the DMV sends us a file that tells us when you registered it,” Hartgrove said. “After four months, if you haven’t paid your taxes your registration is blocked and the only way to get registered after that point is to prove you’ve paid your taxes.”
This gives people that additional time to make weekly or monthly payments on their vehicle tax.
But under the new collection system that option will disappear.
“We will have to send your information to the DMV and you’ll receive your sticker fee and your tax bill at the same time. They want to tie the vehicle inspection, taxes and registration fee into the same notice,” Hartgrove said. “It’s going to be a huge bill. Say you have a $25,000 car. You’re looking at several hundred dollars, plus the inspection and you’re going to have to come up with more than $300 within a month.
“We have a tremendous amount of people (paying in installments). Under this new system you pay the whole thing right then or you don’t get your sticker. There are no options,” he added, noting that in economically depressed Surry County, “that could be a huge problem.”
Headaches for Tax Collectors
Hartgrove said the move could also end up costing the county money, because fees currently paid by customers who pay by credit card will now be charged to the county under the new plan.
“If people pay by credit card, and between 41 and 49 percent of the residents do, we’re going to be having to eat those costs of the credit card fee under the new system,” he said. “It varies from $2 to $6 per transaction plus other fees, and we send out about 78,000 bills per year. This is going to be additional costs incurred by the county.”
Under the new plan, called Tag and Tax Together, Surry County will be charged a fee of $2.05 for each license-renewal/tax bill processed by the state Division of Motor Vehicles. When credit cards are used, the handling fee will jump to $6.13 per transaction, she said.
Under the existing plan the county is collecting about 98 percent of taxes owed, a number Hartgrove said the new system — designed to increase the percentage collected by localities — won’t help.
“If we were collecting 80 percent of the motor vehicles in the county, it might be a good idea,” he said. “But this is going to hurt us and the residents in the county. The system is not broken in Surry County and it’s not broken in several other counties, but they’re fixing it for fixing its sake.”
According to the tax director, the system is being rolled out prematurely.
“We don’t have a grasp on the new software yet and we have to start using it in two weeks,” he lamented. “We’re not going to be told when the new bills will even be sent out. Residents are going to start calling us and we’re not going to know what to tell them.”
Hartgrove said he sympathizes with residents hurting during the economic downturn.
“I’m not going to blame the citizens for not understanding what’s happening because we don’t understand it ourselves, but we have to do this because it’s the law,” he said. “I don’t like this at all. I don’t see it being an advantage for Surry County — I see it being a nightmare for quite a while…”
State Legislator Weighs In
Rep. Sarah Stevens, Surry County’s delegate to the state House of Representatives, has said while the plan may sound good on the surface in ensuring that taxes are paid, it presents extra costs to county governments due to fees that are included.
Beginning with registration-renewal notices mailed in May for bills due in July, vehicle owners will receive combined statements not only for the cost of new license stickers but also the county taxes owed for the same cars or trucks.
“They wanted to make it easier,” Stevens said of the taxation process, given that 13 percent of motor vehicle property taxes go unpaid annually. The Tag and Tax Together program ensures that an owner can’t renew a tag without paying the taxes.
A registration-block mechanism has been in place for years in the state, but sometimes fails to provide such a tax-collection guarantee since it must be activated by counties.
Stevens is proposing a plan that will shift the collection from the state back to the counties.
Her plan, which is now awaiting consideration by the House Transportation Committee, would have counties process the tag renewal and property taxation rather than the DMV.
Reach Keith Strange at firstname.lastname@example.org or 719-1929.