When you purchase a car in California, you owe sales tax based on where the car is registered. The California DMV uses a table based on ZIP Codes to determine what that should be. For 90% or more of California, it works fine; the sales tax rate in a ZIP Code is uniform.
However, California has numerous sales tax rates based on cities, counties, and special districts. Two individuals living in the same ZIP Code might have two different sales tax rates. The DMV has apparently programmed its computer to charge the higher of the two sales tax rates when registering a car purchase. An impacted consumer has to then apply for a refund (if he becomes aware of the issue).
Yet California’s Board of Equalization, the agency responsible for sales tax collection in California, developed an online tool to accurately show the sales tax rate for a location. Unfortunately, the DMV refuses to use it and told George Runner, a member of the BOE, that it would be several years before the problem is fixed.
Mr. Runner expresses surprise at the situation. I am anything but surprised. I suspect the DMV likes the current procedure because they show higher revenue generation (which will presumably increase their budget) and because of pride of ownership. ‘We can’t use a tool developed by the BOE,’ the DMV may be thinking. ‘It’s not ours, so how can we trust it? And it doesn’t directly interface with our computer system. We don’t want our clerks overriding a sales tax rate (even when it’s wrong). Let the consumer just apply for a refund.’
This is yet another reason why trust has fallen in government and regulators.