State law puts cart before the horse

There's a hole in Nebraska's vehicle titling law -- a hole so big you could drive a Hummer through it.

The Nebraska State Patrol suspects an Omaha Hummer dealership did just that.

The dealer is being investigated for alleged title fraud and providing false title applications to government offices in three counties.

Though the case is unresolved, one thing is clear: The potential for lucrative scams is bigger because of Nebraska's law on titling vehicles.

Nebraska may be alone in letting people get a title before paying sales taxes and fees.

Buyers in the state have 30 days after purchase to register the vehicle and pay those costs.

Keith Kiser, an official with the American Association of Motor Vehicle Administrators, said he wasn't aware of any other state that follows the practice. Iowa requires taxes and fees to be paid before a title is issued.

Former State Sen. Mark Quandahl and Sen. Pam Redfield, both of Omaha, tried unsuccessfully for several years to change Nebraska's law.

Their main concern was what some call "title jumping," which is when vehicle owners transfer titles multiple times to avoid paying taxes. Officials say the practice leads to lost state and local revenue.

But Redfield said recently that changing the law also would thwart the kind of scenario being investigated by the patrol.

The senators' proposals have been opposed by a state vehicle dealership association. The group says that paying registration costs right away would be a hardship for Nebraskans because of the state's high taxes and fees. Those include sales tax, a motor vehicle tax, a motor vehicle fee and registration and titling fees.

"Our goal is to help the customer," said Loy Todd, president of the Nebraska New Car and Truck Dealers Association. "People prefer to have extra time" to pay.

The association also doesn't want anything to delay or interfere with the titling and lending process. The title comes with a lien to protect the lender's interests.

A tip to the Douglas County Treasurer's Office prompted state officials to review title records from the Omaha Hummer dealership, said Betty Johnson, records administrator for the Nebraska Department of Motor Vehicles.

The review revealed that sales tax and registration fees had not been paid in 2005 and 2006.

Huber Hummer, 11102 West Dodge Road, is accused by investigators of using false names on applications to obtain vehicle titles.

The patrol also is investigating to see whether other dealerships or car buyers may have used false information to title vehicles.

According to court documents, Huber sold more than 200 Hummers to a brokerage company in Missouri. Of those, about 190 were known to be exported outside the United States. The patrol is trying to verify that the others also were exported.

Using the names of fake or inactive businesses on Nebraska titles hid the fact that the vehicles were being sold to a broker for export. Huber would not qualify for manufacturer incentives on exports or on sales to brokerages for the purpose of exporting.

Most of the Hummers were titled in Douglas County, while about a dozen were titled in either Lancaster or Sarpy Counties.

No one has been arrested or charged. The investigation is ongoing. Huber has not returned calls seeking comment on the investigation.

State Patrol Sgt. Alan Theobald said requiring taxes to be paid when a vehicle is titled would be a step toward preventing such activity.

"It probably would deter some things like this from happening," he said, adding that paying taxes and fees to get a title would "eat up the incentives."

General Motors has estimated the loss from overpaying incentives at about $1,500 per vehicle.

Yet the sales tax and fees to register a Hummer would be much more than that.

Hummers sell for between $30,000 and $140,000. The sales tax and registration fees on a $30,000 vehicle are estimated at $2,100. For a $140,000 vehicle, the tax and fees are $9,000.

Over the past 40 years, the time for registering vehicles in Nebraska has varied between 10 and 30 days after purchase.

For a brief period -- from 1969 to 1972 -- owners were required to register vehicles at the time of titling, but that applied only to person-to-person sales.

Redfield said the delay historically was allowed to give owners extra time to save the money to pay the taxes and fees.

"The 30-day delay was a courtesy to the public to give them time to come up with money," she said.

Redfield's efforts to change the law since 2003 have failed.

Todd said his dealers association opposed the bills because they would have created much more work for buyers and dealers.

"No bill that we've seen has been able to do any good without doing much more harm," Todd said.

The Douglas County Treasurer's Office has supported the proposed law changes.

Corrine Burnett, manager of motor vehicles for Douglas County, said as long as title applications are filled out and the information matches manufacturer paperwork for the vehicle, a title is issued.

If someone does not pay taxes and fees after obtaining a title, she said, all the county can do is forward the paperwork to the Nebraska Department of Revenue.

Burnett said that happens 75 to 100 times a month.