INDIANAPOLIS - The Indiana Bureau of Motor Vehicles announced Tuesday that some 180,000 Hoosier motorists are in line for an excise tax refund after their vehicles were misclassified for purposes of the tax leading them to overpay.
The amount of the refund is approximately $29 million plus interest, according to the agency.
Some of the misclassifications date back to 2004 before the agency’s tracking and record computer system, known as STARS, was fully launched, according to BMV Commissioner Don Snemis.
Gov. Mike Pence has authorized the BMV to hire an independent consulting firm to audit the agency and its STARS system.
A vehicle’s classification depends on its value, and the STARS system is used to automatically calculate the excise tax owed by motorists when they are registering a vehicle.
According to the BMV, some vehicles were misclassified by the system when an adjustment factor used to help determine a vehicle’s value wasn’t applied.
The factor is based on new automobile prices.
“All previously misclassified vehicles will be reclassified using the proper data. Anyone who overpaid will be notified by mail and provided a pre-printed claim form, per Indiana law, to obtain a refund with interest. Hoosiers affected by this miscalculation can expect to receive a letter within about 30 days,” Snemis said in a statement Tuesday.
To reduce the impact to county and local governments, which receive excise tax collections, the state will upfront the cost of the refunds.
Then the BMV will recoup the overpayment over the next two year by adjusting those tax payments to local governments, according to the agency’s statement released Tuesday.
The state will cover the cost of the interest, according to the BMV.