Motor Vehicle Excise Taxes
What is motor vehicle excise tax?
Under MGL Chapter 60A, all Massachusetts residents who own and register a motor vehicle must annually pay a motor vehicle excise. Also, under MGL Chapter 59, Section 2, it is important to note that every motor vehicle, whether registered or not, is subject to taxation, either as excise or personal property, for the privilege of road use, whether actual or future. The excise is levied by the city or town where the vehicle is principally garaged and the revenues become part of the local community treasury.
Billing: Excise bills are prepared by the Registry of Motor Vehicles according to the information on the motor vehicle registration. They are sent to city or town assessors who commit them to the local tax collectors for distribution and collection of payment. Cities and towns may also prepare their own bills based on excise data sent by the Registry in conformity with Registry requirements.
Bill Computation: An excise at the rate of $25 per one thousand dollars of valuation (effective 1/1/81) is levied on each motor vehicle. Information on the value of a motor vehicle is accessed electronically through a data bank complete with valuation figures. Different sources provide the valuation figures depending upon whether the motor vehicle is an automobile, a truck, a motorcycle, or a trailer. For example, automobile valuations are derived from figures published in the National Automobile Dealers Association Official Used Car Guide (NADA), to which the Registry has electronic access. Most public libraries have copies of NADA and other motor vehicle official guides.
Figures are the manufacturers' list prices for vehicles in their year of manufacture. Present market value, price paid, or condition are not considered for excise tax purposes. The excise tax law (M.G.L. c.60A, s.1) establishes its own formula for valuation for state tax purposes whereby only the manufacturer's list price and the age of the motor vehicle are considered. The formula is as follows:
- In the year preceding the model year (brand new car released before model year) 50%
- In the model year 90%
- In the second year 60%
- In the third year 40%
- In the fourth year 25%
- In the fifth and succeeding years 10%
Every motor vehicle owner must pay an excise tax based on valuation of at least ten percent of the manufacturer's list price; thus, owners of vehicles older than five years should have a fixed excise tax bill for succeeding years of ownership. Even though an owner may have applied for an abatement that may reduce an excise tax bill, no excise shall be less than $5.
Proration: Excises are prorated on a monthly basis. If a motor vehicle is registered after the beginning of any calendar year, no excise will be imposed for those months, if any, which have fully elapsed before the vehicle is registered. If a vehicle is registered for any part of a month, however, the excise will be due for all of that month. The annual excise due on a car registered after January 1 will be reduced, therefore, by one twelfth of the full year's excise for every month prior to the one in which the vehicle was registered.
Important Reminder: Remember that when a motor vehicle is registered, a motor vehicle excise bill is generated and the owner is responsible for its payment. If the owner moves within Massachusetts or out-of-state, if he or she sells or trades the motor vehicle, or if it is stolen, s/he needs to make every effort to obtain the bill, to pay it, and then to apply for an abatement if they are eligible.
And lastly, to avoid not receiving an excise tax bill on time, the owner should keep the Registry of Motor Vehicles aware of the current mailing address. There are several on-line transactions which can be performed at the Massachusetts Registry of Motor Vehicles website.
I no longer reside in Hatfield. Do I still have to pay this bill?
The owner must pay the motor vehicle excise to the city or town in which he/she resided on January 1. If the owner did not notify the Registry that he/she moved before the first of the year, it may be necessary to file for an abatement with the former city or town which had sent the excise bill once the owner furnishes proof that he/she had moved before the first of the year.
If the owner of a vehicle moves out of Massachusetts and registers their vehicle in another state and cancels his/her Massachusetts registration, he/she can file an application for an abatement for that portion of the year after the month in which the motor vehicle was registered in the new state. A copy of the out-of-state registration is needed to file for an abatement. The license plate needs to be returned to the Massachusetts Registry of Motor Vehicles, in which case the Mass. RMV will process a Plate Return Receipt to the owner. A copy of the Plate Return Receipt is needed to confirm to the Assessors that, by the generation of the receipt, an excise bill will not be processed for this motor vehicle to this owner with this registration in the following calendar year.
I no longer own this vehicle. Do I still have to pay this bill?
If the Motor Vehicle has been Sold: If an excise bill is received for a vehicle or trailer which has been sold, the seller must return the plate(s) to the Registry of Motor Vehicles, get a Plate Return Receipt, and file an application for abatement together with the Plate Return Receipt and the bill of sale with the Board of Assessors. The bill will be adjusted to reflect the portion of the year when the vehicle was owned by the recipient of the bill.
It is important to remember that the bill for a vehicle that is no longer owned should not be ignored.
If the Motor Vehicle has been Traded: If an excise bill is received for a vehicle which was traded and which was not owned in the calendar year stated on the bill, it is recommended to pay the bill and then file an application for abatement with the Board of Assessors. The application must accompany a copy of the registration for the new vehicle indicating the date of transfer.
If an excise bill is received for a vehicle which was traded but which was owned for a portion of the calendar year stated on the bill, it is necessary to pay the bill and then provide a copy of the registration for the new vehicle which indicates the date of transfer, together with an application for abatement to the Board of Assessors. The Board can then adjust the bill to reflect the ownership for only part of the year, and grant the proper abatement. The bill on the trade-in vehicle is prorated back to the last day of the month prior to the one in which the vehicle's registration was canceled and the excise bill on the new vehicle will be prorated as of the beginning of the month in which the vehicle was registered.
It is important to remember that the bill for a vehicle that is no longer owned should not be ignored.
Abatements: If an owner of a motor vehicle thinks that he/she is entitled to an adjustment of his/her excise bill, it is strongly recommended that s/he pay the bill in full, then contact the local Board of Assessors for an application for abatement. Although payment of a bill is not a precondition for an abatement, an owner risks incurring late fees and penalties if an abatement is not granted. Abatements can be handled through the mail; however, the bill should be paid as assessed and a refund will follow if the abatement is granted.
Under M.G.L. c.60A:2 as amended by Chapter 262, sections 10-11, of the Acts of 2004, abatement applications must be received by the assessors within three years after the excise bill was due, or one year after it was paid, whichever was later.
Abatements can be filed if the owner believes the assessment is incorrect, or if the vehicle was stolen, or if the vehicle was sold during the year in which it is being taxed and the registration was properly canceled, or if the owner moved, or registered the vehicle in another state and canceled the registration in Massachusetts. No abatement is entitled if the registration is canceled but ownership is retained or if moving to another MA city/town within the same year. If the registration is canceled, it is most important to return the plate(s) to the Registry of Motor Vehicles and to obtain a Plate Return Receipt. When an abatement is granted, excise bills are prorated by the month, thus the owner is responsible for the excise accrued through the month in which the car was last registered to him/her. No abatement can reduce a tax to less than $5, and no abatement of less than $5 will be granted.