5 On Your Side

NC's new 'Tag and Tax' program impacts lease agreements

Posted September 23, 2013

— The state of North Carolina recently started the new "Tag & Tax Together" program that allows drivers to pay their registration renewal fees and vehicle property tax at the same time.

But the program is impacting some lease agreements and creating confusion.

About 25 percent of vehicles registered in North Carolina are leased. 5 On Your Side contacted multiple manufacturer finance companies and found that, before the new law, most companies would receive the tax bill and simply include the amount owed in the customer's next bill.

Ford Motor Credit, however, handled it differently, leading a Wake Forest man to believe that he's paying the tax twice. 

"It is a very big nuisance, especially since I've been paying for 12 months in advance already," said Stephen Derosa, who leased a 2013 Ford Fusion for his son in June. 

He said he accepted an option offered by the salesman to roll an extra $24 into his monthly payment to cover the state vehicle property tax in advance.

But then he got a letter from Ford, pointing out changes with the Tag & Tax program. The letter states Ford Motor Credit no longer gets the tax bills; customers do. The company tells customers to pay the bill, and then submit a receipt for reimbursement.

Tag and Tax New 'Tax & Tag' program could impact your lease

"To me, I'm getting taxed twice here – once by Ford and now once by the state of NC," Derosa said.  

After dozens of calls to Ford Motor Credit and Hastings Ford in Greenville – the dealership where Derosa leased the car – 5 On Your Side was initially told Derosa was confused about that extra $24.

But 5 On Your Side questioned Ford Credit about a reminder email it sent to North Carolina dealers about the tax change, saying "local fees will no longer to added" to lease contracts. Spokeswoman Margaret Mellott then said Ford leases written in North Carolina before Sept. 1 did include costs related to "handling property tax billing" and that, because of the new law, Ford lease costs for consumers will go down a little.

In the end, Hastings Ford said it will pay Derosa's tax bill when it arrives.

Still, Derosa said the back and forth has been "ludicrous."

5 On Your Side recommends checking your own lease agreement to see how it handles vehicle property tax. And don't forget: Now that registration renewal and property taxes are one bill, they are due at the same time. 

If you don't pay, interest will add up and, ultimately, you could get a ticket for expired tags.

61 Comments

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  • rachel Sep 25, 6:12 p.m.

    I appreciate the advice ConservativeVoter-but my point is why doesn't it work as fast and smooth-both ways-why only when its to their financial advantage? Why should I have to send documentation so they can refund me, when I should not have to pay more then I owe in the first place? Prorating once the plate is turned in is a piece of cake for a computer-especially one that can hit individuals with a fine within a 24hr window.

  • ConservativeVoter Sep 25, 5:07 p.m.

    "I have always loved the part where you get taxed on vehicles you sold and turned the plate in on-I had it explained to me at the court house once(remembering of course, your insurance company can notify the dmv the day you cancel your insurance so they can hit you with a big penalty)- the explanation is the dmv computer don't inform the tax bureau when you no longer own your car-so they tax anyway-funny how its efficient when it works against you, and unable to work when it might work for the consumer. Imagine that - rachel"

    If you send Wake County a couple of the document from the DMV showing that you no longer own the vehicle, they will refund you the difference from the property taxes that you paid.

  • ConservativeVoter Sep 25, 5:06 p.m.

    Another example of the law of unintended consequences by our government.

  • lwe1967 Sep 24, 6:08 p.m.

    There are going to be big problems on this. More than they bargained for!

  • rachel Sep 24, 5:10 p.m.

    I have always loved the part where you get taxed on vehicles you sold and turned the plate in on-I had it explained to me at the court house once(remembering of course, your insurance company can notify the dmv the day you cancel your insurance so they can hit you with a big penalty)- the explanation is the dmv computer don't inform the tax bureau when you no longer own your car-so they tax anyway-funny how its efficient when it works against you, and unable to work when it might work for the consumer. Imagine that

  • rachel Sep 24, 5:01 p.m.

    this is a mess- my son got a car this spring-reg/titled/tagged- due for inspection May 2014-I have received the property tax bill for the car-and tried to pay it-they say I can't until I have the car inspected-so now they charge interest each month on the taxes-I did check the registration- inspection is due in May 2014-so I guess I have to inspect it before it is due by several months in order to comply with this new tax/tag rule? I paid HUT and Property taxes when I registered the vehicle in May- this is September-what gives with this scam?

  • kikinc Sep 24, 4:04 p.m.

    I don't understand why you would have to pay property taxes on leased vehicles. You are renting the vehicle; it's not yours. Why are you responsible for paying taxes on it?

    The finance company owns the car, so they actually receive the bill. That company then tacks that bill onto your monthly payment. At least that's how it worked when I leased my car through Honda. The car company isn't going to pay taxes on a vehicle that you're driving.

  • pgamerica Sep 24, 3:50 p.m.

    When will americans stand up and rid of the democratic and republican conglomerate they arw the reason we are in the mess we are in..those that crossed the ocean from england searching for freedom from oppression only to have it spat on by the elete of today..i guess our new pledge of allegiance should read I Pledge Allegiance to the scams and lies. of the United States of America and to the elite we elect one nation under satan unaccountable with liberty and justice for all that can afford it

  • southerntalent Sep 24, 3:35 p.m.

    http://www.ncdot.gov/dmv/vehicle/tagtax/

  • southerntalent Sep 24, 3:34 p.m.

    This will also affect people purchasing new and used vehicles as they have to pay the prop tax within 60 days to get a regular plate

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