BMV: Drivers overcharged on excise taxes

(WISH Photo, file)

INDIANAPOLIS (WISH) — Thousands of Indiana drivers were overcharged by more than $29 million due to mistaken excise tax charges stretching back to 2004, the Indiana Bureau of Motor Vehicles announced Tuesday. The admission marks at least the third overcharging allegation against the agency in the last year.

“The BMV has determined that some Hoosier’s vehicles were misclassified for excise tax purposes,” said BMV Commissioner Don Snemis in a news release announcing the mistake. “As a result, those customers overpaid excise taxes when registering their vehicles. These misclassifications stretch back to 2004 when the BMV’s System Tracking and Record Support (STARS) computer system was implemented on a limited basis.”

The BMV has issued more than 60 million vehicle registrations since 2006 and collected $3.4 billion in excise taxes. 180,000 of those registrations are affected by the miscalculation, the agency said.

Excise taxes are collected by the BMV and distributed to local units of government, including cities and counties. Indiana law specifies that drivers pay the tax based on the value of their vehicle, which includes an adjustment factor based on new automobile prices. In some cases, the BMV did not apply the adjustment factor, which caused some vehicles to be misclassified, the agency said.

The mistake was discovered “in the process of analyzing a related issue,” a BMV spokesman said.

Because of that, the BMV will issue approximately $29 million in refunds to those 180,000 drivers, plus interest. Drivers who overpaid will be notified by mail and provided with a claim form, which they must fill out to obtain the refund, the agency said.

Drivers affected by the excise tax miscalculation can expect to receive a letter within 30 days, the BMV said. Refund issuance will depend upon how many claims are received, and when they are received, a BMV spokesman said.

To reduce the impact of those payments on local governments, the state will cover the upfront cost of the refund, then will adjust distributions to local governments over the next two years. The state will also cover all interest payments.

In August 2013, millions of Hoosier drivers were issued small refunds as part of a $30 million settlement where the BMV admitted it had overcharged drivers under the age of 75 who obtained or renewed a driver’s license between 2007 and 2013. The overcharges averaged around $3.50, according to court documents.

The following month, the BMV announced that a commissioned review by an outside law firm had also identified other fees being charged at rates higher than allowed by state law. A second lawsuit alleges the additional fees include everything from vehicle registrations to motorcycle endorsements, personalized license plate fees and chauffeurs licenses.

Last week, the BMV asked a Marion County judge to enter a protective order “prohibiting the sharing or disseminating of any videos of any depositions taken in this matter with any member of the public, including in particular, any members of the media.”

That request follows reports from I-Team 8 and other media outlets on the videotaped deposition of former BMV Deputy Director Matthew Foley, who testified in a May deposition that the BMV was aware as early as 2010 that some of its fees exceeded the amounts allowed under state law. Foley alleges that the BMV continued overcharging Hoosier drivers for at least two years in order to avoid budget troubles.

“I am shocked and disappointed that an agency that exerts so much authority over our daily lives continues to spend money on outside lawyers to fight these overcharges,” said Irwin Levin, who filed the latest class-action lawsuit regarding overcharging allegations against the BMV. “As a lawyer that’s invested in holding the BMV accountable to the people it serves, it’s even more shocking that this [admission] comes out the same week they ask for a gag order restricting access to the legal process designed to find the truth.”

A hearing on the agency’s request for a protective order is scheduled for December.

In the meantime, Levin said he anticipates the excise tax admission will have “an tremendous impact” on the existing lawsuit.

“There’s a culture at the BMV that apparently doesn’t understand they work for the people of the State of Indiana,” Levin said. “If the BMV truly wants to do the right thing, they need to sit down and hammer out an agreement. Everyone who overpaid for any fees should get their money back, plus interest.”

Gov. Mike Pence authorized the BMV Tuesday to again hire an independent consulting firm to audit the agency’s financial structure, including the STARS computer system responsible for the excise tax overcharges. The BMV hopes to begin interviewing potential firms soon, a spokesman said.

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