Pittsburgh is a city with a lot of fond memories for the AutoSlash team and lies at the confluence of three rivers (the answer to today's trivia question is at the end of this article). Those of us raised on the East Coast remember when Pittsburgh International Airport was a major hub for U.S. Airways (now American Airlines). And PNC Park happens to be my favorite setting for Major League Baseball. Even the band They Might Be Giants included an ode to Pittsburgh in their venues series.
What brings the Fee Detective to the City of Pittsburgh (well, Allegheny County)? There's a tax called the Allegheny County Rental Vehicle Tax that's obviously specific to Allegheny County. Passed in late 2007, this tax went into effect on January 1, 2008. The tax applies to all rental vehicles for noncommercial use at any rental car company with more than five vehicles and is due monthly. The rental car companies file reports (and payments) with the Allegheny County Treasurer by the 15th of the following month. The tax is $2 per day (or partial day), so it adds up quickly!
Why does Allegheny County have a Rental Vehicle Tax? Simply because Allegheny County has the ability to tax. We're accustomed to regulations to pay for stadiums, conference centers, and hotels. We're not accustomed to rental car taxes "just because". Yet that's what this tax is -- a tax "just because", going directly into the County's General Fund. As such, there was no need to state any purpose for the tax in the enacting regulation.
Just how lucrative is this tax? In Allegheny County's budget, it's a decent sized number -- it's effectively the same as raising property taxes throughout the entire county by 2%. The next time you rent a car in Pittsburgh, remember that you're paying for Allegheny County's courts and jails, rather than any service that you'll use during the stay. And if you live in Pittsburgh, the tax will catch you every time you want to rent a car for a road trip or if your car's in the shop.
Two dollars per day makes sense (and millions) for Allegheny County
Allegheny County (at some point) became Serious about this Tax
There are few times that a tax has led to multiple amusing vignettes. Allegheny County apparently didn't realize how lucrative this tax would be, so the monitoring of the tax collections was initially "poor" to say the least. Multiple companies collected the tax but didn't send the funds to the Allegheny County Treasurer, which led to both public shaming and a major embarrassment to a familiar name in the rental car industry.
Allegheny County is not above public shaming of the companies that collected this tax but didn't send the funds to the government. Most people would call this action "fraud" and we're not sure why that behavior is allowed to persist. The public list of companies that collected these taxes but never paid the county only contains two independent operators at the moment but once contained one of the best-known names in the global rental car industry.
The Tax Hurt Hertz
Hertz apparently missed part of the memo on the tax, in a story that's hilarious to everyone except Hertz.
- Hertz collected the tax starting on January 1, 2008.
- Hertz sent much (and sometimes all) of the Allegheny County Rental Car tax to the State of Pennsylvania each month through April 2013.
- The Allegheny County Rental Car tax was supposed to go to Allegheny County (the instructions are really clear now).
This raises some questions:
Question: How long did it take Allegheny County to realize they weren't receiving the proper tax payments from Hertz?
Answer: Approximately 64 months, despite payments that were due monthly.
Question: If the government is going to impose a tax on rental car companies, wouldn't highly variable payments and sometimes absence of reports from Hertz be a grievious lack of oversight by the County?
Answer: Yes, but the Treasurer's Office noted that tax burdens could indeed fluctuate month by month.
Question: Why did the May 2010 through April 2013 tax liability get settled first?
Answer: The May 2010 through April 2013 tax liability got discovered first. After that settlement, the County then went back and reviewed the January 2008 through April 2010 records.
Question: Could Hertz just ask for a tax refund from the State of Pennsylvania, then pay off Allegheny County?
Answer: For the 36 month period from May 2010 through April 2013, yes.
Question: What about the first 28 months?
Answer: Well, there's a statute of limitation on tax appeals in the State of Pennsylvania. So the money sent to the State between January 1, 2008 and April 2010 was now considered the State's.
Question: So Hertz had to pay the taxes twice, plus penalties to Allegheny County?
Answer: Yes. On the bright side, Hertz is now very clear that the Allegheny County Tax gets remitted to Allegheny County.
Question: How did Hertz finally resolve the missing $743,107 from the first 28 months of the tax?
Answer: By writing a check of more than $2.5 million (after interest and penalties) to Allegheny County after accidentally sending the first $743,107 to the State of Pennsylvania. Ouch.
There's a life lesson, courtesy of Hertz! If you owe a payment to your county (such as property tax), don't send the money to your state. The state will be happy to cash your check without asking questions!
Trivia Answer: The Three Rivers of Pittsburgh that led to the previous MLB ballpark being named Three Rivers Stadium are the Allegheny, the Monongahela, and the Ohio.
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