Vehicle Registration In Oregon Under Fire -- Washington, Other States Want Tighter Controls

BROWNSVILLE, Ore. - State records show 56 vehicles registered to 37750 Highway 228 on the edge of this Willamette Valley farm town. But all that's parked at this remote address is a big windy field, a small empty house and a mobile home. The only vehicle around is a weathered International Harvester with a handwritten sign that says "$450 O.B.O."

It's not that everyone is at work, or on vacation. This desolate outpost is just one of Oregon's many mail-forwarding businesses sprouting like dandelions across the state and offering people convenient access to the state's tiny vehicle-registration fees.

Getting a car licensed in Oregon is cheap and easy and can be done by mail. But in most cases, it's tax evasion if you don't live there. The scofflaws are costing other states, particularly Washington and California, millions in lost revenue. States as far away as Nebraska and Oklahoma are suddenly reporting large numbers of Oregon-plated cars, too.

The problem has become so widespread and notorious that Oregon is feeling pressure from other states to devise ways to discourage the fraud.

The reason for the tax-evasion rage is simple economics. Oregon charges just $15 to register a car for a year and is one of the few states without a sales tax. In Washington, buying a $30,000 Ford Explorer costs $2,500 in sales tax and $700 more to register it for a year. The same purchase in Oregon, with a two-year registration, costs $30.

The lure of an Oregon address is so enticing these days that some Oregon car dealers are getting busted for offering the use of their home addresses to sweeten deals for out-of-state customers.

For example, five salesmen for a Guaranty RV dealership in Junction City pleaded guilty to fraud charges after an FBI investigation found they helped customers elude taxes on the purchase of expensive motor homes - tax dollars that should have gone to Washington, California, Hawaii, Florida and Georgia.

A Juanita couple stung by the probe had bought a $380,000 Country Coach Motor Home from Guaranty and claimed an Oregon address to avoid more than $45,000 in Washington fees. The same RV cost $251 to register in Oregon. But the couple will pay more than $100,000 after pleading guilty in July to fraud charges in Seattle District Court.

The FBI's investigation into similar tax evasion continues. "This is a huge problem," says Chris Cardani, assistant U.S. attorney in Eugene. "I expect further charges."

Meanwhile, the Washington Department of Revenue and the Washington State Patrol are inundated with complaints about Washington residents tooling around with Oregon plates. The patrol's Bellevue office alone fields 25 to 50 leads a day.

"When we talk to them, their first response is, `I'm an Oregon resident,' " says Detective Randy Hullinger. "They almost have themselves believing it.

"We'll have some people who never had an Oregon tie in their lives, but somehow think they can call themselves a resident. Yet they own their home here. Their kids go to school here. They have a phone in their name here. They go shopping at the local Safeway. Everything they do is in Washington."

Vehicle-registration fraud is a misdemeanor in Washington, with penalties of up to a year in jail and fines equal to double the registration fees. The number of cars investigated for out-of-state plates increased fourfold in the past two years, and the annual recovery for the state treasury doubled to $2.8 million.

Washington officials estimate that the state loses about $21 million a year in tax and licensing revenue (excise tax and licensing fees) from people registering their vehicles elsewhere, primarily in Oregon.

Other states are resenting Oregon plates, too. Earlier this year, officials in Sarpy County, Neb., publicly vented after almost 400 cars with Oregon plates were counted in the county.

"I just kept seeing those plates with the Christmas tree on them," says Deputy Treasurer Rene Dreiling, who has e-mailed Nebraska's U.S. senators, asking for help.

Tax collectors in Oklahoma noticed hundreds, if not thousands, of Beaver State plates.

"Whenever we talk about car tags, Oregon seems to be the subject," says Paula Ross of the Oklahoma Tax Commission. "In the last few years, we've started seeing them everywhere."

The problem with Oregon's tax haven is not new. For years, the state has had little incentive to deal with it. The problem hasn't been costing it any money. Nor is the low vehicle-registration fee about to rise. It's a sacred cow in a state where residents face a 9 percent state income tax.

But pressure from other states may force changes.

Officials at Oregon's Department of Motor Vehicles (DMV) are now "brainstorming" with the state Attorney General's Office on ways to make it harder to register in Oregon and elude taxes elsewhere, says Lana Tribbey, vehicle-programs manager.

People may have to show multiple forms of identification to prove they are residents, she says. The policies on mail-in registrations might be tightened, too.

Now, people just have to sign a registration form that certifies - in tiny print - their home is in Oregon.

Tribbey says out-of-state registration has grown so popular her staff is stumped at how to police it. "Without having the rules, and having a real vague statute, it's really hard for our employees to know what to do."

She also says her agency has no unit to investigate bogus registrations, noting it was overwhelmed just trying to respond to calls from Oklahoma residents after alerting them that their registrations were suspect and likely to be revoked.

Tribbey says the DMV doesn't have the time or staff to determine how many of the vehicles registered to the 470 mail drops known to the state are illegitimate. But she says computers at DMV offices are now programmed to flag mail drops as suspect addresses.

That's news to Bill Walther, a veteran customer-service representative for the DMV's Roseburg office. In fact, Walther says that's exactly what DMV needs, a computerized way of recognizing potentially bogus addresses.

"People come in and tell us their address and, well, we write them down," he says, noting that his office has only a printout of known mail drops. Walther says even if his office catches a bad address, people just go "DMV shopping," driving from office to office until they get the address approved.

Debbi Ragland lives at the top of a steep gravel road in Boring, Ore., a two-stoplight town near Mount Hood. Ragland runs a mail-forwarding business from her home while horses graze in the back yard.

She collects and forwards mail for 140 clients, about half of whom she says live outside Oregon, and most of whom she says are often on the move. Ragland has plenty of company. The number of mail-forwarding services in Oregon has grown about 500 percent in 10 years; the DMV is aware of 103 in Portland alone.

Most are legitimate enterprises providing convenient mail drops for businesses and individuals in need of a mail box. Many are chains such as Mail Boxes, Etc. Many others, like Ragland's, are run from homes.

Using mail-forwarding addresses to receive vehicle registrations is perfectly legal, as long as an Oregon residence address is also provided. But a review of vehicle registrations at six mail-forwarding addresses indicate far more than half of them provide no other address.

Like many of her colleagues, Ragland advertises in travel magazines read by RV buffs and others who might want to pay $10 a month for her service.

One of the first questions she always hears: What do I have to do to register a vehicle in Oregon? DMV records indicate there are 38 cars registered to her address.

Ragland blames the Oregon DMV for costing her about 25 clients earlier this year after it sent out letters warning people that their registrations would be revoked if their claims of Oregon residency were false.

Sandy Oglesby, another mail-forwarding entrepreneur, says she "terminates" clients if she discovers they are simply using her service to evade registration taxes in other states.

More than 800 people get their mail sent to 964 Little Valley Road in Roseburg, where Oglesby serves clients across the country and as far away as Germany and England.

The side entrance to her home opens into a room crammed with plastic baskets stacked 5 feet high. The baskets are cluttered with mail.

Oglesby says most of her clients are RV travelers, almost constantly on the move. "If the only thing they're interested in is DMV mail, I terminate them."

But Oglesby also says she doesn't see any problem with RV travelers picking Oregon as their home, and her address as theirs. "If somebody sold their home and buys a big bus or something, then they have the right to call whatever state they want their home," she says.

That's a mistaken impression the Department of Motor Vehicles is attempting to change, Tribbey says, adding that, technically, even the state's current vague statute requires people to live in the state six months - and not in an RV park - before they can call it home.

Detective Mike Little of the Washington State Patrol says Oregon mail-forwarding addresses pop up in many of the registration-fraud cases he investigates, but that the cases often are difficult to prove.

For example, Little ran a check on Oglesby's Roseburg address a few years ago and found that 17 of her clients, with vehicles registered in Oregon, also popped up in a database of King County residents. But Little says his investigation went nowhere because he couldn't locate the motor homes in Washington.

Dorothy Lyon is looking to leave her mail-forwarding business on Highway 228 in Brownsville, the one with 56 vehicles registered but only the International Harvester present.

Lyon is certain none of her clients has used the Brownsville address simply as a way to elude taxes elsewhere. She says many of them often camped on her land in the past. "They lived in Oregon half of the time," she says.

Whether that would qualify as residency is less than clear. One thing is clear, though: the state has far more than its share of motor-home and travel-trailer registrations.

There are 162,251 RVs registered to the state of Oregon - one for every 20 residents. Washington has 2.5 million more people and 10,000 fewer RVs.

Walther of the DMV's Roseburg office understands why the nation's RV crowd wants to call Oregon home with the rules as lenient as they are. "If I lived in California, I'd be the first one up here to register."

Washington fights back

Last year, the Washington State Patrol put two detectives on the registration scam full time in Clark County to handle cases where fraud is suspected - as opposed to more common cases where people procrastinate on changing plates after switching states. The Patrol plans to almost double its staff by Jan. 1. to combat the problem.

Trooper Mike Kesler sets up monthly ramp checks in Vancouver, Wash., at which police jot down license numbers in the morning stampede of Oregon plates crossing from Clark County into Portland.

Some suspects are easy to spot, such as the Oregon-plated cars with the bumper stickers that boast about their honor-roll kids in Washington schools. Kesler sifts through a stack of as many as 10,000 suspected scofflaws at any one time. He tries to stay realistic.

"It's a war that we're not going to win," he says. "But we're going to take some casualties with us."