The Problem
Thousands of Kentuckians are beating the system through the improper use in Kentucky of motor vehicles bearing out-of-state license plates or improper use of temporary or other tags. Such use costs Kentucky millions of dollars annually in motor vehicle usage tax and ad valorem property tax.
The Law
Kentucky law requires the registration of motor vehicles within 15 days from the date they are brought into Kentucky for use. A 6 percent motor vehicle usage tax is levied on motor vehicles for the privilege of operating on Kentucky highways, based on the value at the time they are first placed in service in Kentucky. Property tax is assessed annually on vehicles sit used in Kentucky on Jan. 1, based on their fair cash value.
Who Loses?
You do! Kentucky residents beating the system by registering vehicles in other states in order to avoid motor vehicle usage tax and ad valorem property tax make you, the honest taxpayer, the loser. Also, new residents beating the system by failing to register their vehicles within 15 days after they move into Kentucky makes you the loser. The ultimate losers are your local school districts and services dependent on revenues from the evaded taxes.
Where the Money Goes
The motor vehicle usage tax is used to build and maintain Kentucky's highways. Approximately 60 percent of the ad valorem property tax is returned to the local community, funding your public schools, your fire departments, your police departments, your ambulance services, your libraries, etc., with the remainder contributing to the General Fund.
The Solution
If you observe Kentucky residents evading the system by operating motor vehicles on Kentucky highways for more than 15 days with out-of-state license plates or more than 30 days with temporary or other tags, please help the Department of Revenue identify these Freeroaders by calling toll free 1-800-882-8990 or completing the online form by clicking here. When you call, give as much of the information as possible on the Tip Information Sheet. You need not identify yourself when calling or submitting an online tip. The Department of Revenue will take appropriate action to collect taxes due.