$29M BMV mistake leads to 180,000 refunds

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by Megan Trent

INDIANAPOLIS, Ind. (September 16, 2014) - The BMV announced Tuesday that a computer problem had resulted in 180,000 Hoosier drivers being overcharged when registering their vehicles.

Don Snemis, Commissioner of the Indiana Bureau of Motor Vehicles, says the problem goes back to 2004, when the BMV's System Tracking and Record Support, or STARS, was first implemented on a limited basis. The system was fully implemented in 2006.

Snemis says some vehicles were misclassified when calculating excise taxes. The classifications are based on vehicle value and adjustment factors that take into account Consumer Price Index data. The STARS system is supposed to automatically calculate the excise taxes, but Snemis says the system did not always factor in the necessary adjustments.

"We discovered that in some instances, STARS used a zero CPI adjustment factor, instead of the most recent data, which it was supposed to use," Snemis explains.

The problem, he says, was identified in late July. Refunds are expected to total $29 million plus interest, although exact figures are still being calculated.

"We are building a database right now of the people who were affected and the amount by which they were affected. We will then issue everyone a letter who was affected, and if you get the letter all you will have to do is sign a claim form and return it and we will cut you a check," says Snemis.

Drivers who were overcharged will get a claim form in the mail within 30 days, says Snemis. He hopes to have claims processed in 30 days or less, although he says the amount on each refund check will vary widely.

Since the BMV distributes excise taxes to county and local governments, Snemis says the state is paying for the refunds in an effort to reduce the overall impact.

"The state is going to cover the initial payments, and then we are going ot recoup that from future excise tax distributions over time, so that the local governments don't see a big spike. Plus, any interest is going to be paid by the state, not the counties."

In June 2013, the BMV announced that it had overcharged anyone who had renewed their driver's license within the past six years. So after Tuesday's announcement, some drivers are wondering if there is a larger, systemic problem within the state agency. Snemis insists there is not.

"We are not batting a thousand. We're going to start batting a thousand for sure. We are hiring an independent auditing firm to come in and just sort of double check all the systems that we haven't checked already to make sure that we are doing things completely right," he says.

The BMV will interview firms in the coming weeks, but a timetable for completing the audit has yet to be determined.

"Judge us by the way we've handled this situation. We've brought it to the public's attention. We are notifying the people who were involved going all the way back to 2004. We are compensating them with interest, and all we are asking is that they sign a claim form and return it."

Snemis says customers should feel confident that the BMV is working to fix any and all problems.

"Every single day we are doing everything we possibly can to make sure that all the transactions they are making with the Bureau of Motor Vehicles are done properly."

Shalonda Anderson just registered her vehicle with the BMV. She says she understands how problems could arise, but she expects more from the BMV.

"I think it's something that happens with businesses, but it's just unfortunate that it happens with a business that everybody has to deal with."