Senate Transportation hears that purchase-and-use tax rules, appraisal process burden low-income car buyers

The Senate Transportation Committee on Feb. 12 heard extensive questions about how Vermont calculates purchase-and-use tax when a vehicle is bought in a private sale and about barriers that keep low-income Vermonters from registering older or damaged cars.

Deputy Commissioner Matarusso of the Department of Motor Vehicles told the committee there is “an online calculation wizard” that allows users to enter trade information and get a tax calculation, and described two basic private-sale tracks: vehicles 19 years old or newer use the JD Power main trade value; vehicles 20 years old and older use JD Power low retail. “If you have a vehicle that's 19 years or newer or 20 years and older. If it's 19 years and newer, we're using the main trade value from JD Power. If it's 20 years and older, we're using the low retail,” Matarusso said.

The committee heard that dealers can prepare an appraisal form that DMV will accept at registration, and that an after-the-fact refund is possible when appraisals are submitted later. Matarusso said a dealer appraisal can be done at the time of registration and that “we will honor that” appraisal. He advised that buyers attest the vehicle is roadworthy when they register: if the car cannot pass inspection at the time of registration, the tax generally is not due until registration.

Why it matters: Committee members said the practical effect can fall hardest on people who buy inexpensive cars, buy vehicles as-is through online marketplaces, or purchase wrecked vehicles to repair. Members described constituents who buy a $500 wrecked car and later pay tax assessed on a much higher JD Power value once they register the car. One committee member said the cost and time needed to get an appraisal and resolve check-engine–related inspection failures can be prohibitive for workers who cannot miss shifts.

DMV staff and committee members discussed enforcement trends and the pathway for resolving valuation disputes. Andrew Collier, an administrative staff member at DMV, said enforcement and public behavior have shifted since the COVID-19 pandemic: “Since COVID there... there's been a significant shift in how enforcement is happening on the road,” he said, arguing that reduced roadside enforcement affects incentives for people to get inspections and registrations.

Committee members asked how many dealers will provide appraisals and how accessible those appraisals are in rural counties with few licensed dealers. DMV said all licensed dealers are certified to complete an appraisal, but committee members said local access and appraisal fees remain concerns for low-income Vermonters who buy cars on Facebook Marketplace or Craigslist instead of through dealers.

Several members noted the inspection process itself creates barriers: vehicles with a check-engine light cannot pass inspection until that problem is fixed, and parts or diagnostic access for check-engine systems often go through manufacturers and dealers, which can raise costs. DMV staff said that fixing check-engine issues is a repair matter for mechanics or dealers, not a DMV function.

The committee also discussed programs that aim to reduce transportation burdens. A committee member pointed to MileageSmart and Replace Your Ride as existing programs that help Vermonters with older, high‑maintenance vehicles move to more efficient, lower‑maintenance cars, including electric vehicles. A member said they had moved a recommendation in committee to secure an initial $1.5 million for program expansion; committee staff said they would follow up with data and options.

The committee asked DMV for data that would inform policy: counts of dealer appraisals, how many purchases are through licensed dealers versus private sales, and enforcement data such as tickets and warnings for unregistered or uninspected vehicles. DMV staff said ticket and warning data are a reasonable place to start for estimates but cautioned the results will be imperfect.

The discussion closed without committee action; members asked staff to gather the requested data and reported interest in a narrower, data-informed policy review rather than immediate legislative change.

A next step recorded in the hearing was a request that DMV and committee staff compile numbers on appraisals, dealer locations, inspection failures tied to diagnostics such as check‑engine lights, and enforcement counts so the committee can consider focused policy options.