Utah lawmakers crack down on illegally registered vehicles

SALT LAKE CITY — State lawmakers are cracking down on Utahns illegally registering vehicles to avoid paying the state sales tax. 

In Utah, the sales tax is what funds a majority of the work done on roads. And lawmakers are saying, if the car spends most of its time on Utah roads, it should help pay for them.

But people are buying and registering their cars and other recreational vehicles in different states to avoid that sales tax.

KSL at Night Host Rusty Cannon gave an example on Dave and Dujanovic.

“It’s a $100,000 boat, or a $2,000 dollar RV, or a really nice Aston Martin or something. And you just buy it in another state and avoid that sales tax. And you’re telling your insurance company that it’s used here in Utah. Well, that’s a problem. You’ve evaded the tax.”

How much will these Utahns need to pay? 

There’s an estimated 16,000 vehicles doing this across the state. This results in the state losing about $64 million in revenue. 

But Cannon said the state is not going after the money lost over the years. Lawmakers are focused on the sales tax that would have been due at the time of the purchase. 

“The current plan is to just say, ‘Sales tax is just due that would’ve been due at purchase and then get current on registration.’ There’s no plan to go after–at this point–previous year’s registration.” 

As lawmakers move forward with the plan to end illegally registering vehicles, they also have a plan to encourage people to get on board.

“The plan is to give about a 6-month grace period, where they’ll mail a letter to all those that have these types of vehicles and say, ‘Hey, it’s time to get your affairs in order.’ If they don’t do that, they will be subject to penalties, which will not only be the sales tax that you owe but a double amount, meaning twice the sales tax,” said Cannon. 

The crackdown was proposed in the revenue and taxation interim committee meeting this week.

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