MOTOR VEHICLE

MOTOR VEHICLE: TAX: BASIS FOR COMPUTING: Motor Vehicle registration tax must be based upon base price as listed on window sticker. Minn. Stat. § 168.013. 632e-l August 18. 1994 John R. Wildes Assistant Director Department of Public Safety Driver and Vehicle Services Division 120 Depanment of Transportation 395 John Ireland Boulevard St. Paul. MN 55155 In your memorandum to Attorney General Hubert LI. Humphrey, III. you present substantially the following: FACTS The Department of Public Safety, Driver and Vehicle Services Division (DVS) administers the moto1 vehicle registration tax provision in Minn. Stat. § 168.013, subd. la ( 1992). The tax is predicated on the vehicle's base value. DVS determines motor vehicle base values by referring to price lists provided by manufacturers for their ve!licle models. These price lists inciude a category labeled "MSRP," or Manufacturer's Suggested Retail Price. assigned to each vehicle model. Each vehicle model is also described by a portion of the Vehicle Identification Number (VIN), hereinafter referred to as "VIN identifier." which is also included on the price lists. The VIN is a federally standardized m0tor vehicle identification system. DVS uses the VIN identifiers to administer the registration tax provisions by identifying vehicles according to their VIN identifiers and assigning the corresponding MSRP as the base value. For most vehicles, different MSRPs are accompanied by different VIN identifiers, so using VIN identifiers to identify base values and administer the registration tax program is a simple matter. However, some manufacturers cluster different vehicle configurations under the same VIN identifier and assig , ɱach vehicle a different MSRP. The vehicles uɲually differ in configurations of engine type, transmission type, body type variations, standard equipment packages and/or available options. When multiple MSRPs are provided for vehicles with the same VIN identifier, administration of the registration tax program becomes very difficult. Moreover. under each of these VIN identifiers, DVS has considered all of the different configurations with their different MSRPs to be tax exempt equipment separately added to the same base vehicle, which base vehicle was intended to be the object of the taxable base value. Therefore, DVS uses each VIN identifier's lowest MSRP for the base value. John R. Wildes Page 2 Aucrust 18, 1994 You then ask substantially the following: QUESTION Does Minn. Stat. § 168.013. subd. la(b) permit DVS to assign the lowest Manufacturer's Sug--gested Retail Pr;ce (MSRP) for each Vehicle Identification Number <VIN) identifier category as the motor vt:hicle's "base value" for purposes of the annual registration tax? OPINION We answer your question in the negative. Minn. Stat. § 168.013. subd. la(a) sets the annual motor vehicle registration tax at "S10 plus an :idditional tax equal to 1.25 percent of the base value." Section 168.013. subd. la(b) defines "base value": 'base value' means the manufacturer's suggested retail price of the vehicle including destination charge as reflected on the price listing affixed to the vehicle in conformity with United States Code, title 15, sections 1231 to 1233 (Public Law Number 85-506) or otherwise suggested by the manufacturer or determined by the registrar if no suggested rel'lil price exists. and shall not include the cost of t'ach accessory or item of optional equipment separately added to the vehicle and the suggested retail price. Thus, in order to determine whether DVS' practice complies with this statute. two interr<!lated questions must be answered: (I)o What is the "manufacturer's suggested retail price" (MSRP); ando (2)o What are "accessor[ies] or item[s] of optional equipment separately addedo to the vehicle and the suggested retail price."o Section 168.013, subd. la(b) is unambiguous in stating that the MSRP is found on the price listing affixed to the vehicle in conformity with 15 U.S.C. §§ 1231-1233. which is commonly referred to as the window sticker. The window sticker must be affixed to the new vehicle by the manufacturer prior to the delivery of the vehicle to any dealer. 15 U.S.C. John R. Wildes Page 3 :\.ucrust 18, 1994 §n1232. The price listing requirements ior the window sticker are found in 15 IJ.S.C.n §n1232(f). which states that the following information must be disclosed:n ( 11 the rr;cail price of such automobile suggested by the manufacturer; (2)n the retail delivered price suggested bv the manufacturer for eachn accessory or itt.>m of optional equipment, physically attached to such automobile at the !'me of its delivery to such dealer, which is not included within the price of such automobile as stated pursuant to paragraph (1); (3)n the amount charged. if any, to such dealer for the transportation ofn such automobile to the location at ,vhich it is delivered to such dealer: (4) the total of the amounts specified pursuant to paragraphs (1), (2). and (3). 15 U.S.C. § 1232(f). [Emphases added.] Thus, several different prices are found on the window sticker. as reflected on the attached window sticker for a J 994 Jeep Cherokee Country: a base price, prices for separately listed options, a transportation or destination charge, and a total price. See Exhibit A. In our opinion. the price listed pursuant to 15 U.S.C. § 1232 (f)(l) (the "base price" on Exhibit A) is the MSRP referred to in Minn. Stat. § 168.013. subd. la(b). It is readily apparent that nt.>ither section 1232(f)(2) nor section 1232(f)(3) are MSRPs. That leaves a choice between section 1232(f)(l) and section 1232(f)(4). In our judgment. section 1232(f)(l) is the MSRP for several reasons. First, the parallel language and structure of the statutes suggests that section 1232(f)(l) is the state's definitiun of MSRP. Section 168.013, subd. la(b) refers to "manufacturer's suggested retail price." The identical words are simply reordered in section 1232(f)(l) as "retail price ... suggested bv the manufacturer." This language is not found in section 1232(f)(4). Also, neither the state definition of MSRP nor section 1232(f)(l) include the accessories and options. Indeed, the identical language is used to describe these separately listed cost items in section 1232(f)(2) and their exemption from the MSRP in John R. Wildes Page 4 Auaust 18, 1994 subdivision la(b). i.e., "each accessory or item of optional equipment." These Items inclusion in the section 1232(0(4) price but exclusion from both the state MSRP a:,d section l 232(t)(l) suggests that the latter two refer to the same MSRP. Second. the federal legislative history supports the above interpretation. It refers to section 1232(t)(l) as the "suggested price of the car.·• and to section 1232(t)(4) as the "total manufacturer's suggested retail price" 1emphasis added). 1958 U.S. Code Cong. and Adm. News. p. 2903. Third. if the MSRP were section 1232<f1(4). it would not have been necessary to separately specify :he transr ·r.r01w1 "r destination charges in subd. la(b). because they are already included in section 12.:;·_,t)\4). Fourth. a parsing of the statutory language leads to the conclusion that the separately added items exempt from state to': :.,ʄ ,i,e sectiv:-'. 1232(0(2) items. As noted before. the state exemption language and section 1232(0(2) are very similar, with each bracketed portion having its counterpart in the other statute: "[each accessory or item of optional equipment] [separately added] [to that vehicle] [and the suggested retail price]" (subd. la(b)) almost certainly refers to " [ each accessory or item of optional equipment]. [physically attached to such automobile at the time of its delivery to such dealer. which is not included within the price] [of such automobile] [as stated pursuant to paragraph (!))" (section 1232(t)(2)). Note that the counterpart to the "suggested retail price" in subd. la(b) is the price in "paragraph (I)" i.e., section .232(t)(l), referenced in section 1232(t)(2). Importantly, the counterpart to thea "separately added" language is the portion referring to items attached to the vehicle at delivery but not included in the base price. Also. even though the equipment categorized by the manufacturers as optional came from the factory attached to the vehicle, they are nevertheless separately listed by the manufactu.ers on the window sticker. As a result. they are separately John R. Wildes Page 5 Auaust 18, 1994 added to the section 1232(t)(l) base price. just as are the items listed pursuant to section 1232(t)(2) when computing the total pursuant to section 1232(t)(4). The options are also not included in the manufacrurers · own price list MSRPs. Although the different price list MSRPs reflect the different vehicle configurations of engine type. transmission type, body type variations and/or available options. analysis of the price lists indicates that their MSRPs do not include equipment categorized by the manufacrurer as options but which are in fact added to the vehide at the factory. Thus. they appear to be "separately added" to the vehicle. Since the options are separately added to both the vehicle and to the section 1232(t)(l) price. the section 1232(t)(l) price is the "suggested retail price" referenced at the end of section 168.013. subd. Ja(b). It should also therefore be the "manufacturer's suggested retail price" referenced at the beginning of section 168.013. subd. la(b), which is the base value when combined with the destination charee. The fifth reason why thȭ MSRP in section 168.013, subd. la(b) is the section 1232(t)(l) price is that the different model configurations of staDdard equipment are inc!uded in the section 1232(fi(l) price listed on the window sticker. The standard fearures are also included in the MSRPs on the manufacturer·s prire list which become the window sticker MSRPs. They are not "separately added" to a base vehicle and to the suggested retail price as required under secti'Jn 168.013. subd. la(b) for exemption from tax. Because the exempt equipment must be "separately added" to the vehicle and the suggested retail price, and the suggested retail price refers to the section 1232(f)(l) price reflected on the window sticker, all equipment included in the section 1232(f)(l) price is included in the base value and subject to the tax. The standard equipment in their various configurations are included in the section 1232(f)(l) price and are thereby part of the base value and subject to the tax. John R. Wildes Page 6 Auaust 13, 1994 Finally, the manufacturer's price list MSRP. which DVS has used as the MSRP under subd. la(b), appears to be the same actual dollar amount as the section 1232/t)(l) price on the window sticker. For the Jeep. the section 1232/t)(l) or base price of $19.366 is nearly ideutical to the MSRP of $19.266 on the manufacturer's price list for the model code corresponding with the VIN identifier (J78). See Exhibits A and B. The $100 difference is probably due to a mid-year price hike (the price list is dated August. 1993 and the window sticker was provided in March. 1994). All of these foregoing factors lead to the conclusion that the MSRP in section 168.013. subd. la(b) refers to the price listed on the window sticker pursuant to section 1232(t)(l), or the "base price." The "base value" under Minn. Stat. § 168.013. subd. la(b) is. therefore. the 15 U.S.C.§ 1232(t)(l) price plus the destination charge. It does not include accessories or options listed pursuant to section 1232(t)(2) or added at the dealer. Also for these reasons. DVS' practice of using the lowest MSRP for each VIN identitier on the manufacturer's price list conflicts with section 168.013. subd. la(b). The MSRP must be listed on the window sticker. It appears from the available information and from the foregoing analysis that each of the several MSRPs under the same VIN identifier are l.sted as their own section 1232(f)(l) base prices on the window stickers for the respective vehicles. Therefore, each of these sev.:ral MSRPs represent different base values for registration tax purposes. DVS has suggested that the Legislature intended only to tax the n._ :e basic. pre-multiple-standard configuration vehicle. and. tc capture some of the value of various combinations of extra equipment, added $10 and 1/4% to the original proposal ol 1 % of base value. This may be the case; the legislative history is bare. However, the statutory scheme set in place does not leave room to accommodate DVS • proposed definitions of extra or added equipment, tied as it is to the federal law. Nor does the state statute permit adjustments to John R. Wildes Page 7 Auaust 13, 1994 accommodate the administrative problems now apparent in using VIN identifiers to identify the base value and tax. To the extent that the VIN identifiers do not capture the information necessary to administer the registration tax, the administration system must be modified to comply with the statute. Very truly yours, HUBERT H. HUMPHREY III Attorney General RONALD S. LATZ Assistant Attorney General HMIOAAD EQUIPMEIIT l!ICLUOӵI) AT IIO EXTRA CHAROE !.U!ILEB8 REPLACED BY OPT!OUAL EOUIPMEtlTJ 'C':MJ.AANO• TRAC ?ART• T:ME SHIFT ON rtlE FLY •WO SYSTEM • Ӷ'<:Tfl:A OV:ET tNSULA TlON • i:-;io:H ANO REAR OAS SHOCK AaSCRBE!".S • UA.LOGEN HEADLAMPS • (ӷAMP AGNE OR Af:':::iENT LCWE/'I. BODY CL.l.:J;;)ING ':;•;AL REMOTE CCNTfiOL BREAKAWAY MIRRORS •c.QQF RACK • '!X7 ALUl.l'N\JM LA rT!Cl:. ','IHE::\.S '1>225/70 A 1 Ӹ OWL EAGLE GA 7<F1ES •DEClltMIOWlNQBACK CLC':"'..t ::-=cӹ,r SL:C:-<!:7 S'::ATS • '::.'.)TM FO:LD:Ӻ:G REt.q_ SEAT ','{1""1.! ?EMOVAillE C:..:SHICN • ӻ LJ/Ӽl.l Si'Tӽ!:0 \.','!Ti-/ FCL;.:i Ӿf.'.;SC,'-1 S?;AK!:=.S !. CLCCK '-·•1TEIJ GLASS POWER GROUP • 4 • COOR • D'JWER 'MNOCJWS & t.oc:-<s • 1<'.EYI.ESS £NTRY 4 -Wl-<EEL ANTI•LOCKlNQ 9RAKES 4. S?Et'.O J.UTCMA TIC TRANSMISSION "S:.L£CT 7ӿAC" 4WD REAR WINDOW DEFROSTER OUAL ELEC'i'P.IC REMOTE MlRRORS FOG LAMPS NO CHARGE AIR CCNDITlctmG TOTAL VEHICLE & OPTIOIIS DESTIUATION CHAROE TOTAL BEFORE DISCOUNT IJEEP DISCOUNT 599.00 6ij7 .00 ;;:;4.00 15h00 :oo.oo 110.00 . s Q.36.00 22.772.00 1 Ԁ'Hi.DO s 23.287.00 r)' • s,• oo I . . -, •. l •·ԁJTEFl.'.-l!TTt'.N'T \VlNDSHIELO Wlf>C,:q5 • Ԃ=AR ','{1"'-IQOW WIP?;q/WASHE:1 • f"!IQNT Flc::n MA TS WITH CAtlPET !NSERTS ·ԃ:,;;1-1r Grl.CUP c)jroT AL PRICE:. !t' \ s 22.692.00 1¢ NO'P!, it;•! . '1 (•' •ԄE,\ !Hert WRAPPED CCLCR KEYED STEERING WHEEL CITY MPG 15 Ae\ual mll1ao11 win vary with op1ton,. clrlv1ri9 cond1lleM.  fltn bJ•. ::;::J to EPA lndlca111 tMt int matortt)I of Vԅll1elllt Wltn tn111111,11m&IH WIii achieve bllWHll 12 Md 18 rr.ogln lhe city, and between 16 Md 'l2 rT'CQ on I.ht nlQhway. 19U CHEROKe.is: •WD 0 CV\.. 4.0 L (24:1: CID). MUL TlPO!NT Ԇ\JEL INJECTION, .,j. SPEED AU TOMA nc TRANS, W/ LOCKUP 10RCUE CONVERTER, FEEOBACK FUEL SYSTEM. Estlmalatl Annual Fu1I Coit: 1 ms Exhibit A HIGHWAY MPG 19 For Cԇm,mhon 8ho001na, a:l va:i1clu c!&Ԉ:fi6d u SPECIAL. PURPOSE have Dean 111vod m11eaoe ra11na1 ԉrmolng lrom 12 l'o 28 mci;i city t.f\d 14 to 9 moo r,,1gnw11y. . . . l ,iii ' ::'tn lmKUHil™' OWNAnOfOf('I PJIOTfC'ffON ,-.»I ,OW,lruJH OI . . tMtNll•n::r•Ԋlf w. __ , ......... 1/il fij i'.I t,•1\\ 4 ,j., i.----••'f, -:;.2-1 'S ',, ? CHRYSLER CORPOP.ATION 1994 MODEL YEAR JEEP EFFECTIVE JULY 29, 1993 MANUFAC. MODEL SUGGESTED DESTINATION QQQg RETAIL PRICE CHARGE WRANGLER: YJJL77 w/2_A,2_8 Yi $11,390/ $495 SE 'I?. 14,545 495 CHEROKEE: 2DR2WD- SE XJTL72 12,827/ 495 w/2 0, 2 E - SPORT 14,984 / 495 w/2:G, 2:H - COUNTRY 16,771 / 495 4DR2WD - SE XJTL74 I" 8 13,837/ 495 w/2 0, 2 E - SPORT 1' "' 15,994// 495 w/(G, 2ȟH - COUNTRY f 78 17,781 495 14,312·' 495 20R4WO - SE XJJL72 w/2 495 0, 2 E - SPORT w/2:G, 2:H - COUNTRY 16,469/ 18,256; 495 :s 7 / 40R4WO - SE w/2 0, 2 E - SPORT w/(G, 2:H - COUNTRY 17,479'/ 19,266 2-0r. RHO 2-NO- XJUL72 16324- ,.. 495 495 4-0r. RHO 2MO- XJUL74 17334,... 2-0r. RHO 4WD- XJBL72 tJ • 7 17809' 495 4-Dr. RHO 4WD- XJ8L74 N. Q 18819 / 495 GRAND CHEROKEE 'iNYD SE 4X4 SE UMrrED XJJL74 ZJTL74 ZJJL74 w/2_G z. (,. '2.1 15,322,- 21,156 ./ 22,osej 29,618 495 495 495 495 495 495 Exhibit B Pricing & Competitive Analysis c:\ddrive\cds\state\msrp94.wk3 Auuust 12, 1993 (5:36 pm) Page 3ol 6