TRANSFER OF VEHICLES TO IN-LAWS

House Bill 5261

Sponsor:  Rep. Kevin Cotter

Committee:  Tax Policy

Complete to 3-21-14

A SUMMARY OF HOUSE BILL 5261 AS INTRODUCED 1-29-14

The bill would amend the Use Tax Act to add in-laws to the list of family members who are not subject to the use tax when transferring a vehicle, effective January 1, 2014.

According to the Department of State, currently if you purchase a vehicle from another person, 6% tax is due on the full purchase price or fair market value, whichever is greater.  No tax is due when an individual purchases a vehicle from an immediate family member. An immediate family member is defined as:

o                   Spouse

o                   Parent (natural or adoptive)

o                   Brother or sister (including half-brothers and sisters)

o                   Child (natural or adopted)

o                   Stepparent, stepbrother, stepsister, or stepchild

o                   Grandparent or grandchild

o                   Legal ward or legally appointed guardian with certified letter of guardianship

 

House Bill 5216 would create a new section in the act (Section 4BB), effective January 1, 2014, that applies specifically to vehicles.  It retains the current exemptions (found in existing Section 3), but would add:  father-in-law, mother-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law, and grandparent-in-law.  The bill does not define the term "vehicle."

FISCAL IMPACT:

As written, the bill would be expected to have a negligible impact on use tax revenue. Because it’s already possible to avoid the use tax by transferring a vehicle to an in-law through a mutually related individual, the bill would permit the same result and eliminate an additional transfer that is already exempt under current law.

                                                                                           Legislative Analyst:   Chris Couch

                                                                                                  Fiscal Analyst:   Jim Stansell

                                                                                                                           Adam Desrosiers

■ This analysis was prepared by nonpartisan House staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.