INDIANAPOLIS – Some area drivers may have overpaid excise taxes when they registered their vehicle with the Indiana Bureau of Motor Vehicles.
The BMV announced Tuesday approximately 180,000 people were affected by a miscalculation that could cost upwards of $29 million in refunds.
“The BMV has determined that some Hoosier’s vehicles were misclassified for excise tax purposes. 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,” said Don Snemis, Commissioner of the Indiana BMV.
Under Indiana law, vehicles are placed in a tax classification based on value. This value is determined by using the price of the vehicle and applying an adjustment factor based upon Consumer Price Index data related to increases in new automobile prices.
The data is entered into a BMV system and officials say the software did not apply the adjustment factor, which caused some vehicles to be misclassified.
Snemis continued by saying “all previously misclassified vehicles will be reclassified using the proper data. Anyone who overpaid will be notified by mail and provided a pre-printed claim form, per Indiana law, to obtain a refund with interest. Hoosiers affected by this miscalculation can expect to receive a letter within about 30 days,” said Snemis.
The BMV distributes excise taxes to county and local governments on a regular basis. To mitigate the impact to local governments, the state will cover the upfront cost of refunds to taxpayers and will recoup the overpayment by adjusting distributions to local governments over the next two years. Additionally, the state will cover all interest payments.
Governor Mike Pence authorized BMV Commissioner Don Snemis to hire an independent consulting firm to audit the BMV’s processes, procedures and STARS system.
