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The "NO CAR TAX" Law
What is the Personal Property Tax Relief Act?
The Personal Property Tax Relief Act of 1998 provides tax relief for passenger cars, motorcycles, and pickup or panel trucks having a registered gross weight of less than 7,501 pounds. To qualify, a vehicle must:
- be owned by an individual or leased by an individual under a contract requiring the individual to pay the personal property tax.
- be used less than 50% for business purposes.
Motor homes, trailers, and farm use vehicles do not qualify for tax relief.
Does my vehicle qualify for the Car Tax Relief?
If you can answer YES to any of the following questions, your motor vehicle is considered by State Law to have a business usage and does not qualify for Car Tax Relief.
- Is more than 50% of the mileage for the year used as a business expense for Federal Income Tax purposes OR reimbursed by an employer?
- Is more than 50% of the depreciation associated with the vehicle deducted as a business expense for Federal Income Tax purposes?
- Is the cost of the vehicle expensed pursuant to Section 179 of the Internal Revenue Service Code?
- Is the vehicle leased by you, and the leasing company pays the tax without reimbursement from you?
Why is the Personal Property Tax Relief Act important to me?
The Personal Property Tax Relief Act of 1998 provides tax relief for any passenger car, motorcycle, or pick up or panel truck having a registered gross weight of less than 7,501 pounds. The vehicle must be owned or leased by an individual and NOT used for business purposes.
Vehicles qualified for tax relief are noted on your tax bill and show a reduction of the portion of the tax the Commonwealth will pay. For qualified vehicles, your tax bill is reduced by 53% (2016 percent of tax relief) on the first $20,000 of value. If your qualifying vehicle's assessed value is $1,000 or less, your tax has been eliminated and the Commonwealth's share is 100%. Tax relief is calculated using the City's effective tax rates that were in effect on August 1, 1997.
Since the City adopted "Filing by Exception" effective 1/1/06, residents of Chesapeake will be required to register their motor vehicles with the Commissioner of the Revenue only once. Only persons with new information to report or with changes will be required to file. Therefore, it is important that you review your personal property tax bills to be sure that your vehicles are properly qualified. If your vehicle is improperly qualified or you are uncertain whether your vehicle would be eligible for car tax relief because it is used part of the time for business purposes, contact the Commissioner of the Revenue's office. When you pay your taxes on qualified vehicles, you are certifying to the City that your vehicle has been qualified correctly.
FAQs: What You Need to Know About the Personal Property Tax Relief Act
Who determines if a vehicle qualifies for the "Car Tax Credit"?
The Commissioner of the Revenue will determine if your vehicle qualifies.
How can I tell if my vehicle qualifies?
A qualifying vehicle is defined as any passenger car, pickup, panel truck, or motorcycle used less than 50% for non-business purposes. The Commissioner of the Revenue makes the determination according to state guidelines.
- Beginning January 1, 2003, vehicle owners will be required to certify with the Division of Motor Vehicles (DMV) that the use of a vehicle is for either personal or business use. The certification will be part of each application for initial and renewal vehicle registration at DMV. In turn, DMV will inform the City of this information.
- If at any time your vehicle no longer qualifies for the car tax credit, you must inform the City and DMV.
I lease my car. Will I get tax relief?
If the vehicle is for personal use and the leasing company does not pay the taxes without reimbursement from you.
If I have a truck or a motorcycle, will I get tax relief?
Yes, if it is privately owned and for personal use. Trucks must also have a gross weight under 7,501 pounds to qualify.
How long will I have to pay personal property tax on my car?
The Personal Property Tax Relief Act of 1998 was originally supposed to take five years to phase in. However, with current budget restraints, the car tax credit will take longer to phase in. It is General Assembly's responsibility to determine what the percent of credit will be each year.
Will I still have to pay penalty and interest if I pay late?
Yes. If you pay late, penalty will be assessed on the gross tax amount due. Interest will accrue at the annual rate of 10% until paid in full.
What does the State require of Chesapeake?
As part of the Compliance Program, Commissioners of the Revenue, Treasurers and other local officials having assessing or collection responsibilities shall implement provisions for certification by the vehicle owners as to vehicle use for business purposes. The certification is required for any vehicle with a value in excess of $1,000.
- In jurisdictions where an affirmative personal property tax return is required of the taxpayer, certification shall be obtained at the time of filing a return of personal property. In cases where this method fails to obtain the requisite taxpayer certification, taxpayer certification may be obtained at the time of any ONE of the following:
- Application for or issuance of a decal or local license plate. This can be at the time of the initial or renewal of the local vehicle license pursuant to Section 46.2-752, Code of Virginia.
- Payment of personal property tax bill where payment can be construed as a certification of vehicle usage.
- Any other communication with the vehicle owner requiring an affirmative response or responsive action on the part of the owner.
- In jurisdictions where a File By Exception method is used for personal property tax returns, certification shall be obtained at the time of the following:
The File by Exception process in which citizens shall be required to notify the locality of any changes in vehicle usage on an exception basis, and either
- Payment of personal property tax bill where payment can be construed as a certification of vehicle usage, or
- Application for or issuance of a decal or local license plate. This can be at the time of initial or renewal of the local vehicle license pursuant to Section 46.2-752, Code of Virginia.
What does the State require of the Division of Motor Vehicles?
Beginning January 1, 2003, vehicle owners are required to certify the use of the vehicle to be either personal or business. The certification will be part of each application for initial and renewal vehicle registration at DMV. Certification information collected by DMV shall be made available to Commissioners of the Revenue and other local assessing officials for use in discharging their responsibilities for qualifying vehicles for relief under the Personal Property Tax Relief Act of 1998.