How does Minnesota calculate the registration tax on a new car: from the manufacturer's lowest price-list MSRP for a given VIN, or from the actual base price on the window sticker?

Plain-English summary

The Department of Public Safety's Driver and Vehicle Services Division (DVS) administered Minnesota's annual motor vehicle registration tax. The tax was 1.25 percent of the vehicle's "base value" plus $10, with base value defined in Minn. Stat. § 168.013, subd. 1a(b) (1992) as "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" (the window sticker required by federal law).

DVS asked the AG whether it was permissible to instead use the lowest manufacturer price-list MSRP associated with each Vehicle Identification Number (VIN) identifier code, when manufacturers cluster several different vehicle configurations (engine, transmission, body type, standard equipment packages) under one VIN identifier. The administrative reason for the question was practical: when one VIN identifier corresponds to multiple MSRPs, identifying the "right" base value for a particular vehicle was difficult, and DVS had been treating the difference between configurations as tax-exempt optional equipment "separately added."

The AG answered no. The base value had to be the window sticker base price plus destination charge.

The reasoning was statutory and structural. Section 168.013, subd. 1a(b) explicitly referenced 15 U.S.C. §§ 1231-1233, the federal Monroney Act, which sets the window sticker requirement. 15 U.S.C. § 1232(f) lists four prices that must appear on the window sticker:

1. The retail price of the automobile suggested by the manufacturer (the base price).
2. The retail delivered price suggested by the manufacturer for each accessory or item of optional equipment physically attached at the time of delivery to the dealer.
3. The transportation/destination charge.
4. The total of (1), (2), and (3).

The AG read the MSRP referenced in subd. 1a(b) as the § 1232(f)(1) base price, not the § 1232(f)(4) total. Several reasons supported the reading:

• The state statute used the same words ("manufacturer's suggested retail price") that appeared in § 1232(f)(1) ("retail price... suggested by the manufacturer"), simply reordered.
• The "accessory or item of optional equipment separately added" exclusion in subd. 1a(b) tracked the § 1232(f)(2) category almost word for word, indicating the legislature meant subd. 1a(b)'s MSRP to exclude those § 1232(f)(2) items, not to include them as the § 1232(f)(4) total would.
• The federal legislative history described § 1232(f)(1) as the "suggested price of the car" and § 1232(f)(4) as the "total manufacturer's suggested retail price."
• If subd. 1a(b)'s MSRP meant § 1232(f)(4), the destination charge would not have needed separate mention because § 1232(f)(4) already included it.
• The "separately added" language in subd. 1a(b) lined up with the § 1232(f)(2) language about items physically attached but not included in the § 1232(f)(1) price.

Different model configurations of standard equipment (a "Country" trim versus an "SE" trim, for example) were included in the § 1232(f)(1) base price and so were part of the taxable base value. They were not "separately added" to a base price and so did not qualify for the exclusion. Optional equipment listed separately on the window sticker (under § 1232(f)(2)) was excluded from the base.

The result: DVS's practice of using the lowest manufacturer-list MSRP for each VIN identifier did not comply with the statute. Even when multiple configurations shared a VIN identifier, each configuration's actual window-sticker base price was the registration tax base value for that specific vehicle.

Currency note

This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical context: what the AG concluded

The opinion gave DVS a clear statutory holding and rejected an administrative shortcut. The shortcut had real appeal: VIN identifiers gave DVS a clean lookup table, while window-sticker base prices required DVS to know which trim level was actually delivered. But the statute was explicit, and the federal MSRP framework left DVS with no room to substitute a lower price-list MSRP.

The AG quoted DVS's own framing of the problem and acknowledged that the legislative history was "bare" on whether the Legislature intended to capture all standard equipment configurations or only a stripped-down base. The conclusion was that "the statutory scheme set in place does not leave room to accommodate DVS's proposed definitions of extra or added equipment, tied as it is to the federal law."

The opinion's final paragraph put it in plain terms: "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." DVS had to redesign its lookup, not the legal definition.

The exhibits attached to the opinion (a 1994 Jeep Cherokee Country window sticker and Chrysler's August 1993 model-year price list) illustrated the point with a specific example. The Jeep's window-sticker base price (§ 1232(f)(1)) was $19,366; the manufacturer's price-list MSRP for that model code (corresponding to VIN identifier J78) was $19,266. The AG noted the $100 difference was probably due to a mid-year price adjustment between when the price list was published (August 1993) and when the window sticker was generated (March 1994).

Common questions

Q: Did the opinion mean Minnesota drivers had been paying too much or too little tax under DVS's old practice?
A: Drivers had likely been paying too little tax. DVS was using the lowest of several MSRPs in a VIN-identifier cluster, treating higher-priced configurations as having tax-exempt added equipment. The AG's reading of the statute meant each higher-priced configuration's actual window-sticker base price was the correct (and higher) tax base.

Q: What counted as the "destination charge"?
A: 15 U.S.C. § 1232(f)(3) defined it as the amount charged to the dealer for transporting the vehicle to the location where it was delivered to the dealer. In the Jeep example, this was $495.

Q: What counted as "separately added" optional equipment excluded from the base value?
A: Items listed under 15 U.S.C. § 1232(f)(2), meaning accessories or items of optional equipment physically attached at the time of delivery to the dealer but not included in the § 1232(f)(1) base price. In the Jeep example, these were items like the power group ($1,599), Selec-Trac 4WD ($304), air conditioning ($936), and so on, totaling about $3,406 above the base.

Q: Did standard equipment that came with a particular trim level count as tax-exempt?
A: No. The AG concluded that different configurations of standard equipment (in a "Country" trim vs. an "SE" trim, for example) were included in the § 1232(f)(1) base price and were not "separately added" to that base. They were part of the taxable base value.

Q: What about dealer-added accessories not on the window sticker?
A: Those were not on the window sticker pursuant to § 1232(f)(2), so they were not part of the registration tax base. The opinion did not address whether they might be subject to sales tax or other separate taxes.

Q: Did DVS have to recalculate prior years' tax?
A: The opinion did not address retroactive recalculation. It told DVS the statute required a specific method going forward and that the existing administrative system needed to be modified to comply.

Background and statutory framework

Minnesota's annual motor vehicle registration tax was tied through Minn. Stat. § 168.013, subd. 1a (1992) to the federal Automobile Information Disclosure Act of 1958 (codified at 15 U.S.C. §§ 1231-1233 and commonly called the Monroney Act). The Monroney Act required manufacturers to attach a window sticker disclosing four prices: the suggested retail base price, the suggested retail price of each separately attached accessory, the transportation charge, and the total.

Minnesota's statute pegged its tax base to the federal disclosure. Subd. 1a(b) defined "base value" as the MSRP "as reflected on the price listing affixed to the vehicle in conformity with United States Code, title 15, sections 1231 to 1233."

The administrative problem for DVS was that manufacturers' internal model-code lookups sometimes clustered multiple distinct vehicles under one VIN identifier. The Jeep Cherokee VIN identifier J78 covered the Country 4-door 2-wheel-drive at $17,781 and the Country 4-door 4-wheel-drive at $19,266 (per the August 1993 price list). DVS wanted to use $17,781 for both and call the $1,485 difference tax-exempt added equipment.

The AG read § 168.013, subd. 1a(b)'s reference to the § 1232(f)(1) base price as foreclosing that approach. Each specific vehicle's actual window-sticker base price was the tax base for that vehicle.

The Monroney Act framework gives the tax base an objective, federally-mandated value that does not depend on what the dealer charged the consumer or what the manufacturer's internal price list said.

Citations and references

Statutes:
- Minn. Stat. § 168.013, subd. 1a (1992) (motor vehicle registration tax)

Federal law:
- 15 U.S.C. §§ 1231-1233 (Automobile Information Disclosure Act, "Monroney Act")
- 15 U.S.C. § 1232(f)(1) (suggested retail base price)
- 15 U.S.C. § 1232(f)(2) (separately attached optional equipment)
- 15 U.S.C. § 1232(f)(3) (transportation/destination charge)
- 15 U.S.C. § 1232(f)(4) (total of the above)

Federal legislative history:
- 1958 U.S. Code Cong. and Adm. News, p. 2903

Source

• Landing page: https://www.ag.state.mn.us/Office/Opinions/
• Original PDF: https://www.ag.state.mn.us/Office/Opinions/632e1-19940818.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

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-1
August 18, 1994

John R. Wildes
Assistant Director
Department of Public Safety
Driver and Vehicle Services Division
120 Department of Transportation
395 John Ireland Boulevard
St. Paul, MN 55155

In your memorandum to Attorney General Hubert H. Humphrey, III, you present substantially the following:

FACTS

The Department of Public Safety, Driver and Vehicle Services Division (DVS) administers the motor vehicle registration tax provision in Minn. Stat. § 168.013, subd. 1a (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 vehicle models. These price lists include 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 motor 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 assign each vehicle a different MSRP. The vehicles usually 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.

You then ask substantially the following:

QUESTION

Does Minn. Stat. § 168.013, subd. 1a(b) permit DVS to assign the lowest Manufacturer's Suggested Retail Price (MSRP) for each Vehicle Identification Number (VIN) identifier category as the motor vehicle's "base value" for purposes of the annual registration tax?

OPINION

We answer your question in the negative.

Minn. Stat. § 168.013, subd. 1a(a) sets the annual motor vehicle registration tax at "$10 plus an additional tax equal to 1.25 percent of the base value." Section 168.013, subd. 1a(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 retail price exists, and shall not include the cost of each 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 interrelated questions must be answered:

(1) What is the "manufacturer's suggested retail price" (MSRP); and
(2) What are "accessor[ies] or item[s] of optional equipment separately added to the vehicle and the suggested retail price."

Section 168.013, subd. 1a(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. § 1232. The price listing requirements for the window sticker are found in 15 U.S.C. § 1232(f), which states that the following information must be disclosed:

(1) the retail price of such automobile suggested by the manufacturer;
(2) the retail delivered price suggested by the manufacturer for 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 (1);
(3) the amount charged, if any, to such dealer for the transportation of such automobile to the location at which 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 1994 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)(1) (the "base price" on Exhibit A) is the MSRP referred to in Minn. Stat. § 168.013, subd. 1a(b). It is readily apparent that neither section 1232(f)(2) nor section 1232(f)(3) are MSRPs. That leaves a choice between section 1232(f)(1) and section 1232(f)(4). In our judgment, section 1232(f)(1) is the MSRP for several reasons.

First, the parallel language and structure of the statutes suggests that section 1232(f)(1) is the state's definition of MSRP. Section 168.013, subd. 1a(b) refers to "manufacturer's suggested retail price." The identical words are simply reordered in section 1232(f)(1) as "retail price... suggested by the manufacturer." This language is not found in section 1232(f)(4). Also, neither the state definition of MSRP nor section 1232(f)(1) 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 subdivision 1a(b), i.e., "each accessory or item of optional equipment." These items' inclusion in the section 1232(f)(4) price but exclusion from both the state MSRP and section 1232(f)(1) suggests that the latter two refer to the same MSRP.

Second, the federal legislative history supports the above interpretation. It refers to section 1232(f)(1) as the "suggested price of the car," and to section 1232(f)(4) as the "total manufacturer's suggested retail price" (emphasis added). 1958 U.S. Code Cong. and Adm. News, p. 2903.

Third, if the MSRP were section 1232(f)(4), it would not have been necessary to separately specify the transportation or destination charges in subd. 1a(b), because they are already included in section 1232(f)(4).

Fourth, a parsing of the statutory language leads to the conclusion that the separately added items exempt from state tax are the section 1232(f)(2) items. As noted before, the state exemption language and section 1232(f)(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. 1a(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 (1)]" (section 1232(f)(2)). Note that the counterpart to the "suggested retail price" in subd. 1a(b) is the price in "paragraph (1)" i.e., section 1232(f)(1), referenced in section 1232(f)(2). Importantly, the counterpart to the "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 manufacturers on the window sticker. As a result, they are separately added to the section 1232(f)(1) base price, just as are the items listed pursuant to section 1232(f)(2) when computing the total pursuant to section 1232(f)(4).

The options are also not included in the manufacturers' 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 manufacturer as options but which are in fact added to the vehicle at the factory. Thus, they appear to be "separately added" to the vehicle. Since the options are separately added both to the vehicle and to the section 1232(f)(1) price, the section 1232(f)(1) price is the "suggested retail price" referenced at the end of section 168.013, subd. 1a(b). It should also therefore be the "manufacturer's suggested retail price" referenced at the beginning of section 168.013, subd. 1a(b), which is the base value when combined with the destination charge.

The fifth reason why the MSRP in section 168.013, subd. 1a(b) is the section 1232(f)(1) price is that the different model configurations of standard equipment are included in the section 1232(f)(1) price listed on the window sticker. The standard features are also included in the MSRPs on the manufacturer's price 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 section 168.013, subd. 1a(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)(1) price reflected on the window sticker, all equipment included in the section 1232(f)(1) 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)(1) price and are thereby part of the base value and subject to the tax.

Finally, the manufacturer's price list MSRP, which DVS has used as the MSRP under subd. 1a(b), appears to be the same actual dollar amount as the section 1232(f)(1) price on the window sticker. For the Jeep, the section 1232(f)(1) or base price of $19,366 is nearly identical 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. 1a(b) refers to the price listed on the window sticker pursuant to section 1232(f)(1), or the "base price." The "base value" under Minn. Stat. § 168.013, subd. 1a(b) is, therefore, the 15 U.S.C. § 1232(f)(1) price plus the destination charge. It does not include accessories or options listed pursuant to section 1232(f)(2) or added at the dealer.

Also for these reasons, DVS' practice of using the lowest MSRP for each VIN identifier on the manufacturer's price list conflicts with section 168.013, subd. 1a(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 listed as their own section 1232(f)(1) base prices on the window stickers for the respective vehicles. Therefore, each of these several MSRPs represent different base values for registration tax purposes.

DVS has suggested that the Legislature intended only to tax the more basic, pre-multiple-standard configuration vehicle, and, to capture some of the value of various combinations of extra equipment, added $10 and 1/4% to the original proposal of 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 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