Although the majority Kentucky’s citizens pay their fair share of motor vehicle registration taxes, there are indications that a number of citizens evade motor vehicle property and usage tax through a variety of means. Some individuals license their cars in states that have no, or very low, property taxes on motor vehicles; others abuse the use of temporary tags, or simply fail to renew the registration on their vehicles. As a result, Kentucky is losing income that would be used to repair the state’s roadways and fund local services such as schools, libraries, health departments, and police and fire services.

Despite the efforts of the Kentucky Department of Revenue and Kentucky State Police, collections from vehicle usage tax and property tax evaders have never reached their potential. This is primarily due to the limited resources available to these agencies and past technological challenges that prevented the ready identification of tax evaders. The objective of this research was to study new investigative techniques and technologies that are now available, and which could help to improve and streamline the Department of Revenue’s collection efforts.

There are more tools available now to compliance staff within the Department of Revenue that will facilitate efforts to identify and verify a person’s residence. However, a more concerted effort is necessary to increase the collection of vehicle property and usage taxes. These tools have made the process more efficient, but additional resource commitments must be made in order to ensure that tax evaders — once identified — ultimately pay their taxes, penalties and interest.

Report Date


Report Number

KTC-11-12/SPR 391-10-1F

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© 2016 University of Kentucky, Kentucky Transportation Center

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The contents of this report reflect the views of the authors, who are responsible for the facts and accuracy of the data presented herein. The contents do not necessarily reflect the official views or policies of the University of Kentucky, the Kentucky Transportation Center, the Kentucky Transportation Cabinet, the United States Department of Transportation, or the Federal Highway Administration. This report does not constitute a standard, specification, or regulation. The inclusion of manufacturer names or trade names is for identification purposes and should not be considered an endorsement.