5 On Your Side

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

Posted September 23, 2013 6:20 p.m. EDT
Updated September 23, 2013 6:45 p.m. EDT

— 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.

"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.