CHESTERFIELD COUNTY, Va. -- Diligent record-keeper Alesha Moore did a double-take when she opened her personal property tax bill a few days ago. Moore’s 2022 tax bill was significantly higher than her 2021 bill.
“Counties send you 15 bills for three different things. They think they’re just going to overload you with information, and you’re just going to pay it,” Moore said.
After looking back on her tax bills in the two previous years, she found out why: her 2018 Nissan Murano with 80,000 miles was assessed at a much higher value. After dropping $650 in value in 2021 to $16,000, the vehicle was assessed at $22,350 in 2022, an increase of $6,350.
“I’m just dumbfounded, I don’t know what other word to use than that,” Moore said.
While Moore’s tax bill comes from Chesterfield County, CBS 6 heard similar stories from vehicle owners in Henrico and other localities. Turns out officials anticipated higher personal property tax bills this year because of how vehicle assessments work.
According to officials in multiple Central Virginia counties, tax assessors are required by law to assign a fair market value for vehicle assessments using a recognized pricing guide. Most localities use the JD Power Used Car Guide for the Eastern Region.
Because of high demand and limited supply for used cars, prices skyrocketed in 2021, which in turn drove up assessed value.
“We are living through unusual economic conditions. Inflation is up and prices for goods and services are increasing, which had a direct impact on your real estate and vehicle taxes,” said Jenefer Hughes, the Chesterfield Commissioner of Revenue. “At least with real estate, you expect the investment in your home, and therefore your real estate taxes to increase. You buy a vehicle, expecting it to depreciate as it gets used, and, therefore, to decrease in value. Unfortunately, the law requires a different valuation method, which in 2022, resulted in an increase in vehicle tax assessments.”
Localities differ in how they plan to offset the increased vehicle assessment for taxpayers. Chesterfield officials cut their vehicle license tax in half and increased the percentage of Car Tax Relief for residents. As first reported by the Henrico Citizen and confirmed by CBS 6, Henrico official plan a vehicle tax relief announcement Friday.
Moore understands the dynamics at play and can thankfully pay the increase in her property tax bill. Still, like many, she feels powerless against the sheets of paper that show up in her mailbox.
“It really doesn’t matter what the taxpayer says because they just make up the rules and we just have to follow them,” Moore said. “Our wages aren’t going up. The price of everything is going up, and people are having such a struggle just paying their regular bills.”
“If there’s anything that you can take away from this it’s that everybody is struggling, whether it’s financially or emotionally or with their kids, husbands, home, work. It doesn’t matter. Everybody’s in it together,” she continued.
Officials said taxpayers have the right to challenge their assessment, a process that usually goes through your county or city finance department.
CBS 6 contacted officials in the largest four localities of the Richmond Metro for information on how increased vehicle assessments are impacting taxpayers and what resources are available for those who might be shocked by the increase. Their responses are below.
The full statement from Chesterfield Commissioner of Revenue Jenefer Hughes:
“Most Chesterfield County citizens are seeing an increase in personal property tax bills in 2022.
The reason is the dramatic increase in used car prices. As the global economy recovers from the COVID pandemic, supply chain issues continue to affect new car manufacturing, which in turn has escalated demand for used cars, particularly those purchased in the last 5 years. This means it is not uncommon to see vehicles valued at more than the purchase price.
It’s important to understand the economic dynamics in the used car market to contextualize the personal property increase. The Commissioner of the Revenue is responsible for assessing personal property taxes (VA Code Sec 58.1-3100-3123.1). My office has used the same assessment methodology for at least 35 years. I have explained this below.
VA Constitution Article X, Sec 2 requires assessment of personal property at Fair Market Value. VA Code Sec 58.1-3503(3) then directs the use of a “recognized pricing guide” for valuation at retail, trade-in or loan value. The JD Power Used Car Guide for the Eastern Region is considered the “recognized pricing guide” by the Commissioner of the Revenue Association, and all localities use it for vehicle assessment purposes. The JD Power valuations are based on objective market analytics, which includes the current price of vehicles. We live in a free-market economy, and vehicle prices are affected by free-market dynamics. When there are supply issues and demand is high, prices go up until supply matches or exceeds demand. When the economy is operating “normally”, vehicle prices will decrease and so will your vehicle tax bill. At this time, we don’t have enough information to predict when that will happen.
At the end of January, my office performs a mass valuation of over 400,000 vehicles in our system, and then sends a Return of Tangible Personal Property to every vehicle owner notifying them of their vehicle’s assessment. The PP Return included a newsletter that highlighted the fact that vehicle assessments were likely to increase this year, as they did last year. Starting in Fall 2022, the Commissioner of the Revenue’s office will launch an online Taxpayer Portal, which will make it much easier for citizens to access their vehicle assessment data.
In 2022, the total vehicle assessment resulted in $22 million more tax revenue than in 2021. The Board of Supervisors received this information the day after the mass valuation was completed, to give them time to consider their options. They recognized this was a result of a disruption in the economy and focused on strategies to mitigate the tax increase this year. They chose to send back the entire amount of the tax increase to citizens, in two ways:
- Leverage the Car Tax Relief legislation signed by Governor Gilmore, to provide relief on vehicles driven for personal use. This year, the Board of Supervisors voted to increase the percentage tax-relieved to 55%, which is unusual. Typically, this percentage trends down, because the county receives a fixed $41 million, which is applied to a growing number of vehicles, reflecting the county’s population increase (around 43% would be normal). The legislation, however, only allows this relief up to $20,000 of a vehicle’s value, so a maximum of $389. This maximum threshold has not been revised since the legislation was signed. The actual cost to the county for this tax relief was $23 million.
- Cut the Vehicle License Tax by 50%, to $20. This measure cost the county over $7 million.
In total, the county returned $30 million to taxpayers to mitigate the increase in personal property tax assessments. They did the right thing.
Taxpayers have the right to appeal an assessment at any time, per VA Code Sec 58.1-3980. There are instructions at chesterfield.gov/comrev [chesterfield.gov] to appeal. Every appeal is reviewed and considered, and the taxpayer will receive a response. However, the onus is on the taxpayer to prove the assessment is incorrect.”
Chesterfield also posted on their blogMonday.
A spokesperson for Henrico sent the following statement:
“We have heard very clearly our residents' concerns about the impact that higher car values have had on their personal property tax bills. The county manager and Finance director are working on a plan to provide tax relief to our residents. Details will be released in a news conference Friday. Thank you for your interest. We look forward to sharing more information with you Friday.”
Henrico County also published information on their website for taxpayers to review regarding the increased vehicle assessments and their impact on personal property tax bills. You can view it here.
Henrico said the Q&A was posted on April 22.
Hanover officials said their billing cycle is unique to others in Central Virginia. Residents are not billed for personal property taxes until after Thanksgiving.
“This is due to our one-time billing process. Between now and then market values and car values could change. Hanover is monitoring this. If the demand and values continue into the fall, we’ll reevaluate what options there may be to assist our citizens,” a spokesperson said in a statement to CBS 6.
Budgeting officials in Hanover anticipate an extra $4.5 million in revenue than anticipated because of vehicle assessments.
Officials in Richmond are working to gather the appropriate details, and they will be posted here shortly.