The Kansas Department of Revenue has ordered car dealers to change their practices when it comes to donating vehicles for use by Kansas University coaches and other athletic department employees.
The state’s Vehicle Dealer Licensing Bureau has notified five dealerships across the state to no longer use dealer plates on vehicles they have donated to a Kansas University athletic department program that provides cars to select coaches and employees.
The state contacted the dealerships after hearing concerns from a member of the public and from the Douglas County treasurer that the use of dealer tags was shorting Douglas County of property tax dollars.
“It probably is not the crime of the century by any means,” said Douglas County Treasurer Paula Gilchrist. “But we are concerned about it. These are fairly new vehicles that normally would have above average property tax bills attached to them.”
The county receives no registration fees or property taxes on cars that are tagged with a dealer’s tag, Gilchrist said.
How many cars?
A spokeswoman from the Kansas Department of Revenue said the use of dealer tags as part of the KU program was a clear violation of dealer tag law. The law allows the owner of a dealership and sales personnel to use the plates on cars that they drive on a regular basis. But the law does not allow the plates to be used on cars regularly driven by people outside of the dealership.
“Our director of vehicles was pretty emphatic that there is not a gray area here,” said Jeannine Koranda, a spokeswoman with the department.
Koranda declined to release the names of the dealerships the department contacted about the matter. She said the department was not planning to assess any fines against the dealerships because the state is confident that the dealers will now start complying with the law.
Koranda did not have an estimate of how many vehicles may have been improperly tagged or for how long. The Journal-World made a Kansas Open Records request to Kansas Athletics this week seeking more details about the number of cars that have run dealer tags on them in 2010. But the request was unable to be filled because the department had not located records showing the requested information about the tags.
Judith Pottorff, corporate counsel for Kansas Athletics Inc., did confirm that the department currently has 75 vehicles in the courtesy car program, called The Wheel Club. She said none of the cars currently has a Kansas dealer plate on it, although some Missouri dealerships continue to use the dealer license plates. Pottorff said she could not speculate on how many of the cars prior to the state’s order ran with Kansas dealer tags.
Gary Bennett, general manager of Laird Noller Automotive in Lawrence, said his dealership provides the athletic department with three vehicles for the program. He said two of the vehicles always have been tagged with standard license plates that required payment of property taxes and fees. But he said one vehicle that was changed out every 3,000 to 5,000 miles did run a dealer tag. He said he thought the limited use of the vehicle allowed for the dealer tag, but he said he understands the state’s position.
“We don’t have a problem with it,” Bennett said. “We’ll do whatever the state wants us to do.”
According to information on the athletic department’s website, it is the responsibility of the dealer to register the car that is donated for athletic department usage. The car remains in the dealer’s ownership.
A representative with Lawrence-based Crown Automotive also confirmed that it provided vehicles for The KU Wheel Club program. But he said dealer tags were not used, although it was unclear whether he was referring to current cars in the program or whether they had never been used in the past. The representative declined to comment further.
Without knowing how many vehicles have been tagged with dealer plates — or for how many years — Gilchrist said it was difficult to estimate how many tax dollars the county has lost. But, as an example, a 2010 Lincoln Navigator — a type of vehicle known to have been driven by KU coaches — would generate about $985 in registration fees and property taxes for a single year.
“For us, this really just comes down to the county’s position of treating all taxpayers the same,” Gilchrist said.
New or used?
The dealer tag issue also has other implications. Koranda, with the state, confirmed that vehicles that have been tagged with a dealer’s plate can still be sold as new vehicles rather than used vehicles. Once a standard tag has been placed on a car, it can never be sold as new.
Attempts to reach Kansas Athletics spokesman Jim Marchiony for comment about the issue weren’t successful. Previously, he has said The Wheel Club program was an appropriate way for the athletic department to help attract and retain quality employees. It appears the program has grown in size since the Journal-World last reported on it in 2004. Today the program has 75 cars. Back then it had about 65.
Athletic department employees are allowed to drive the vehicles for personal use in the “immediate Kansas area,” according to the department’s website. The use of the vehicle is counted as an employee benefit and the employee pays tax on the benefit, Pottorff said.
Dealerships that participate in the program are given points in the athletic department’s priority point system related to tickets. Dealers also qualify to purchase two men’s basketball tickets per car, and may receive complimentary tickets to football, women’s basketball and other athletic events, according to the department’s website.