Man finds Washington state tax error on car tabs could be costing you hundreds

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SHORELINE, Wash. – A local man discovered a Department of Licensing tax error that could be costing thousands of people hundreds of dollars.

Keith Brick estimates the problem is likely 20 years old, and could affect anyone who bought or brought a car to Washington state.

The Shoreline software developer caught the error when he double-checked the amount Washington state said he owed this year for his car tabs.

“Last year my RTA excise tax was only $67; this year it was $214,” said Brick.

He knew the number would be going up with the new tax for ST3, a voter-approved measure to fund transit projects. The state would be collecting 1.1 percent, over the .3 percent that had been collected.

But when he got the bill, he said it was clear to him there was an issue.

“There’s obviously a big problem here,” he said.

His $214 bill would calculate out his car’s MSRP (manufacturer's suggested retail price) to be $34,135 -- not the $20,000 he paid in 2011.

“As an out-of-state vehicle, part of the process is telling them the year, make, model and trim of your car. From there, their system suggests an MSRP,” explained Brick. “It shows up in the mail as the value code on your vehicle registration.”

“The value code for my vehicle is 34135. That just looks like a number, that’s actually the MSRP they are using to calculate my RTA tax.”

Brick said he didn’t notice the overage until the ST3 tax this year was collected.

“I overpaid by maybe $20-$25 last year and this year they’re asking me to overpay by $75-$76,” he said.

Department of Licensing spokesman Brad Benfield said, “We started doing a little research in our system that indicates it’s not just one or two, it might be a 1,000 or 2,000, or slightly higher than that.”

Benfield said they have been fielding phone calls from taxpayers concerned they may be overpaying with the addition of ST3. In most cases, he said they’re just confused on how a car’s worth is estimated.

“It’s not what they can sell their car for at any time,” he said. “It’s not based on a car's current market value, it’s based on a formula that’s contained in state law that uses the original MSRP and it depreciates that over time.”

However, in Brick’s case, he was right. The DOL says they have found errors in their system and it can go as far back as 1996.

“There have been cases apparently where a mistake was made, somebody selected from the wrong model, from the wrong menu, or maybe a dealer typed a wrong number,” said Benfield.

Brick said the numbers entered by hand into the system override the original MSRPs provided by manufacturers.

“With the dealerships entering their own information as part of the title applications and DOL office registering vehicles from out of state, there’s a lot of room for error,” said Brick.

To test his theory, Brick said he researched cars currently listed for sale online in the DOL site.

“It turns out, up to 30 percent of the cars that are currently for sale have the wrong MSRP in the DOL database,” he said.

Brick is hoping the DOL can fix the error quickly, but knows the process will be tedious.

“Now’s the time to get this issue fixed, the error may have been there for 20 years, but with the increase with ST3, the magnitude of this mistake is multiplied almost fourfold.”

Benfield said the DOL is already working on the issue, since being alerted by taxpayers like Brick.

“We want to get this taken care of as quickly as possible and make sure we have the resources for customers to call,” he said.

The Department of Licensing created a team of up to six people to work on the issue and field phone calls.