Car luxury tax in Massachusetts

Some people get all the luck.

Thanks to a foul-up by the Massachusetts Registry of Motor Vehicles, owners of some 131, 000 ultra-luxury cars, such as Lamborghinis and Maseratis, escaped or paid only a fraction of the auto excise tax they owed the state.

How did this happen? From the late 1990s to 2007, the RMV calculated the vehicle tax bills with a database from the National Auto Dealers Association. The problem is—and boy, this is a hoot—NADA excludes high-end luxury cars.

Therefore, someone who bought a $1.5 million vehicle in Boston during that period likely paid less in excise taxes than someone who purchased a Honda Civic. In the worst-case scenarios, RMV workers guesstimated ultra-luxury car values at $17, 000. In the case of a $325, 000 Maserati, the tax would amount to $383 rather than the correct $7, 313.

The real losers are the cities and towns of Massachusetts, which overall lost $32 million per year—money they won’t recoup because the state has found it to be too costly, laborious and possibly illegal to charge luxury car owners for the back taxes.