Motor Vehicle Commission (MVC) and Surcharges SURCHARGES General. MVC partners with the New Jersey Division of Revenue and Enterprise Services (DORES) to manage the New Jersey Surcharge Violation System (NJSVS). Surcharges are in addition to any court fines, penalties or personal auto insurance premiums. Surcharges are authorized in statute (N.J.S.A. 17:29A-35). Assessments are based solely on offenses posted to driver records for violations occurring in New Jersey and other states. Moving out-of-state does not void payment obligations. The Surcharge Billing and Collection System (STARS) was developed by the State Office of Information Technology (OIT) in consultation with MVC and DORES. The STARS system is maintained by OIT. The STARS system receives information about driving violations from MVC s information system via courts. STARS will initiate a process to produce billing notices for drivers liable for a surcharge on certain driving violations or events. The collection of money associated with surcharge payments is primarily handled by the billing and collections contractor managed by DORES. The DORES manages cash control and revenue processing associated with surcharge collections. The contractor along with another collection firm works with MVC who also collects payments at field offices. The violations for which NJSVS Surcharges are imposed are (i) driving while intoxicated; (ii) receiving six (6) motor vehicle points or more during a three-year period; (iii) driving without a license; (iv) driving without insurance; and (v) driving with a suspended license. Typically, NJSVS Surcharges are levied over a three-year period following the event giving rise to the surcharge. Driving While Intoxicated. Drivers convicted of driving while intoxicated are fined one thousand dollars ($1,000) a year for each of the first two convictions and one thousand five hundred dollars ($1,500) a year for each successive conviction. Surcharges are levied with respect to New Jersey drivers convicted of driving while intoxicated in New Jersey or in another state with a similar statutory violation. This surcharge is established by statute. Excess Points. Drivers who accumulate six (6) motor vehicle points during the preceding three (3)-year period must pay a surcharge of one hundred and fifty dollars ($150) and an additional twenty-five dollars ($25) for each point over six (6) points. The surcharge is established by statute; however, the violations for which points are assigned and the number of points assigned for a specific violation are determined by regulations promulgated by MVC. There are currently over fifty-five (55) violations for which a driver may be assessed points, including one (1) violation for which eight (8) points may be assessed (leaving the scene of an accident in which there was personal injury), seven (7) violations for which five (5) points are assessed, six (6) violations for which four (4) points are assessed, five (5) violations for which three (3) points are assessed and (thirty-nine) 39 violations for which two (2) points are assessed. Regulatory Violations. The Commissioner of Banking and Insurance in consultation with the MVC Chief Administrator is authorized to impose regulatory surcharges ( Regulatory Surcharges ) for non-point violations, namely, driving without a license, driving with a suspended license or driving an uninsured vehicle (each a Regulatory Violation ). The following Regulatory Surcharges are imposed with respect to the Regulatory Violations: one hundred dollars ($100) for driving without a license or failing to have insurance on a moped and two hundred and fifty dollars ($250) for driving with a suspended license or failing to have liability insurance on a motor vehicle. The following table sets forth the number of NJSVS Surcharges allocated respectively to Regulatory Violations, Points and DWI for each year from 1995 through 2012.
Calendar Year Regulatory Violations Points DWI Total 1995 262,618 389,482 71,922 724,022 1996 338,484 387,759 85,634 811,877 1997 336,333 573,281 81,814 991,428 1998 331,607 568,275 79,977 979,859 1999 253,870 560,652 61,751 876,273 2000 250,800 442,420 60,135 753,355 2001 256,478 420,038 62,274 738,790 2002 254,734 384,695 58,484 697,913 2003 264,319 356,373 58,694 679,386 2004 280,763 341,981 61,022 683,766 2005 293,266 312,231 62,455 667,952 2006 2007 297,046 298,205 314,983 320,567 59,957 57,720 671,986 676,492 2008 300,189 336,013 66,918 703,120 2009 302,464 126,094 69,870 498,428 2010 294,440 115,935 72,995 483,370 2011 284,505 102,924 63,588 451,017 2012 276,293 93,250 61,406 430,949 Source: New Jersey Motor Vehicle Commission. No assurance can be given that (i) convictions will continue at historic rates for violations for which NJSVS Surcharges are imposed or with respect to which points are assessed, (ii) collections of NJSVS Surcharges, together with other Revenues, will be sufficient to pay principal of, premium, if any, and interest on the 2007 Bonds, (iii) the State Legislature will appropriate NJSVS Surcharges to the Authority in amounts required to pay principal of, premium, if any, and interest on the 2007 Bonds, (iv) the State Legislature will not enact legislation that would reduce collections of NJSVS Surcharges, (v) the Commissioner of Banking and Insurance, in consultation with the Chief Administrator, will not amend or repeal regulations imposing surcharges for Regulatory Violations or (vi) the Commission will not amend or repeal regulations imposing or assessing points for certain offenses. See RISK FACTORS above. The motor vehicle laws are enforced by local law enforcement and State police personnel. Under State law, a portion of the fine for violating certain motor vehicle laws (but not the NJSVS Surcharges) is retained by the local government which issues the summons for a violation. Billing and Collection Procedures for NJSVS Surcharges: The billing and collection procedures detailed herein do not apply to the Unsafe Driving Surcharge (N.J.S.A. 39:4-97.2), which is collected by the courts. See above, SURCHARGES Unsafe Driving Surcharges Court Procedures for Assessment and Collection. In March 1996, the New Jersey Department of the Treasury entered a contract (the First Contract ) with Lockheed Martin, IMS ( IMS ) to bill and collect Surcharges. On August 24, 2001, IMS was sold to Affiliated Computer Services, Inc. ( ACS ), and ACS assumed IMS responsibilities under the First Contract. The State entered into a new contract with ACS, effective September 10, 2008, with terms similar to the first contract. In 2010, ACS was acquired by Xerox Corporation and now operates under the name Xerox State and Local Solutions. The State is now responsible for programming, operating and administering the surcharge database (STARS) instead of Xerox. The contract with Xerox was extended to September 2014. DORES and MVC are currently discussing future options for billing, mail, remittance and collection services. Xerox and a secondary collection vendor use a series of collection techniques including noticing, skip tracing, outbound collection calls, and legal activities. The collection vendors will use various name and address databases including National Change of Address, Accurint and Experian to find delinquent debtors.
With respect to the process that leads to surcharge billing and collections, a driver receiving a summons has until the scheduled court date to pay the penalty or to contest the violation. When a driver is convicted of any violation which could result in a NJSVS Surcharge, the local court entering such conviction notifies the Commission generally within seven days of the conviction. MVC maintains a computerized database of all drivers with licenses and suspended licenses and all drivers convicted of motor vehicle offenses in the State and update such database daily to reflect convictions for violations. Violations are transmitted to MVC from the State courts, every Monday and Thursday evening. The violations are posted to individual driving records. During the following weekend, the violations are transmitted to the Surcharge database. Typically, within ten days of receiving the violation from MVC, an initial notice of surcharge is mailed by the contractor to the driver. The driver is requested to pay all or part of the initial bill within 35 days. Generally, about ten days after the due date of a surcharge payment, a Proposed Notice of Suspension of the driver s license is mailed to the driver. If the driver fails to pay the NJSVS Surcharge or enroll in a payment plan within 35 days of the issuance of the Proposed Notice of Suspension, the driver s license is suspended on the weekend following the 35th day from date of issuance of the Proposed Notice of Suspension. STARS will notify the MVC information system of the failure to pay the debt and MVC sends out an Order of Suspension (driving privileges are suspended.) The following weekend, if an account is considered delinquent, a Notice of Proposed Judgment is sent to the driver. The driver has 35 days in which to pay or enroll in a payment plan. If driver fails to do so, a judgment is filed with the Superior Court of New Jersey, a 20% collection cost is added to the original value of the NJSVS Surcharge and interest begins to accrue on this sum at current rate allowed by law. Once a surcharge moves into judgment status, four post-judgment notices are mailed to the driver encouraging the driver to either pay or enroll in a payment plan. The Notice of Filing of Judgment is sent first, followed by a series of three notices from LDC collections (LDC), the collection agency used by Xerox. The notices also address the driver s license suspension, the adverse effects of the judgment, the potential reporting to the Credit Bureaus, and the use of the SOIL Program (as defined below) to satisfy the NJSVS Surcharges. LDC will send a notice to the driver informing the driver that his or her account has been assigned to LDC and that he or she must address this surcharge debt immediately to avoid further legal action. Four post-judgment notices are mailed to the driver over a 35-day period encouraging the driver to either pay or enroll in a payment plan. The Notice of Filing of Judgment is sent first, followed by a series of three notices from the Division of Revenue and Enterprise Services, Department of the Treasury. The notices address the driver's license suspension, the adverse effects of the judgment, the reporting to the Credit Bureaus, and the use of the SOIL Program (as defined below) to satisfy the NJSVS Surcharges. If the driver still does not pay, LDC Collections ( LDC ), the collection agency used by XGS, will send a notice to the driver informing the driver that his or her account has been assigned to LDC and that he or she must address this surcharge debt immediately to avoid further legal action. Once the account has been assigned to LDC, initial telephone contact is made with a driver. LDC encourages the driver to enroll in a payment plan which can start the process of license restoration. The driver is advised that if he or she fails to satisfy the debt, the account will be forwarded to a law firm for additional legal action. The account is assigned to one of three law firms for collections. The assigned law firm sends out a series of letters including an information subpoena issued pursuant to the Rules Governing the Courts of the State of New Jersey. The law firm then decides on the course of action for the account, such as wage garnishments or asset seizure. If the driver still fails to satisfy the debt, the account will then be assigned to GC Services in Oklahoma City for collection, which is the second debt collector. Typically, GC Services uses more assertive tactics to facilitate collection. GC Services contract expires in March of 2013. The State s Division of Purchase and Property is reviewing bids to replace the current contract. All NJSVS Surcharge accounts are currently in one of the above-described stages of the billing and collection process. Accounts without payment activity for ten years remain open in the system and cannot be closed due to statutory provisions. The following table sets forth the dollar amount of the NJSVS Surcharges billed from calendar year 1995 through calendar year 2012.
Regulatory Calendar Year Violations Points DWI Total 1995 $50,081,750 $30,464,650 $72,580,000 $153,126,400 1996 71,833,950 24,718,725 86,453,500 183,006,175 1997 73,315,500 31,006,100 82,584,500 186,906,100 1998 71,446,000 30,457,600 80,693,500 182,597,100 1999 53,298,200 29,587,999 62,340,500 145,226,699 2000 51,288,300 22,991,900 60,712,000 134,992,200 2001 51,409,700 21,599,350 62,867,000 135,876,050 2002 50,342,800 19,797,700 59,031,000 129,171,500 2003 51,679,100 18,356,725 59,195,000 129,230,825 2004 54,780,300 19,978,100 61,526,500 136,284,900 2005 57,151,850 21,394,225 62,876,500 141,422,575 2006 2007 56,848,250 55,718,750 21,347,675 21,635,900 60,321,000 57,989,000 138,516,925 135,343,650 2008 54,977,450 22,626,600 67,300,500 144,904,550 2009 55,429,300 22,610,175 70,234,500 148,273,975 2010 54,228,400 20,651,500 73,330,000 148,209,900 2011 52,496,700 18,240,225 63,881,500 134,618,425 2012 50,897,450 16,403,850 61,654,500 128,955,800 Source: New Jersey Motor Vehicle Commission In 2012, surcharge collections of $111,752,813 were 86.7% of billing. This compares with surcharge collections of $117,846,822 (87.5%) in 2011. The difference is a.9% decline. These calculations include amounts billed in prior years and exclude SOIL (as defined below) revenue. There is a significant delay between billing and receipt of NJSVS Surcharges. A significant portion of NJSVS Surcharges are not collected until after judgments are recorded. Remedies of the Commission. The remedies detailed in this subsection do not apply to the Unsafe Driving Surcharge which is collected by the courts. Remedies of the courts are detailed herein in SURCHARGES-Unsafe Driving Surcharges Court Procedures for Assessment and Collection above. MVC s remedy for failure to pay a NJSVS Surcharge is to suspend the license of the driver; and MVC is also authorized: (i) to use the State s Setoff of Individual Liability Program (the SOIL Program ) pursuant to which unpaid debts are deducted from the obligor s income tax refunds and homestead property tax rebates; (ii) to file a certificate of indebtedness for the NJSVS Surcharge and proceed as though collecting a civil judgment in Superior Court (including garnishing wages and placing a lien on real property); (iii) to accept payment of NJSVS Surcharges by credit card; and (iv) to impose a fine of $3,000 upon a person driving with a suspended license who has not paid NJSVS Surcharges imposed upon them. This fine shall be waived by a court upon proof that the person has paid the total NJSVS Surcharges imposed upon them prior to the court date. This fine does not constitute a NJSVS Surcharge. The United States Court of Appeals for the Third Circuit has held that the NJSVS Surcharges create a lien which is not dischargeable in bankruptcy. In Re Schick, 418 F. 3d. 321 (3rd. Cir. 2005).
Selected Information Licensed Drivers. Set forth below are the total licensed drivers in the State. Fiscal Year Number of Licensed Drivers 1997 5,681,164 1998 5,711,263 1999 5,682,425 2000 5,736,996 2001 5,707,907 2002 5,713,520 2003 5,706,951 2004 5,741,036 2005 5,668,712 2006 5,629,451 2007 5,519,976 2008 5,501,596 2009 5,500,932 2010 5,484,565 2011 5,578,814 2012 5,589,993 Source: New Jersey Motor Vehicle Commission. Surcharge-related Enactments In January 2010, Senate Bill No. 2903 was signed into law as P.L.2009, c.224. This law requires the Chief Administrator of the New Jersey Motor Vehicle Commission ( MVC ) to periodically establish promotional payment incentives and offer such incentives to any driver who has failed to pay any motor vehicle surcharges levied for accumulated motor vehicle points and those levied for motor vehicle violations or convictions for which points are not assessed. Any driver whose outstanding surcharges include any levies imposed for a drunk driving conviction or refusal to submit to a blood alcohol content test are not eligible to participate in any promotional payment incentives. The law required the Chief Administrator to establish the first payment incentive within six months of the date of enactment. The initial MVC Surcharge Payment Incentive Program, which ran from June 15, 2010 through July 30, 2010, consisted of three main components: 1. 48-month payment plans. Suspended drivers who were not making regular payment were allowed to sign up for a 48-month payment plan. Additionally, drivers who were making regular payments could extend their payment plans from 24 to 48 months. 2. Waiver of interest for eligible individuals who paid the principal and collection costs in full by July 30, 2010. 3. An automatic write-off of interest for eligible drivers with interest-only balances. Approximately 1,700 individuals (out of about 273,000 who were eligible to participate) took advantage of the 2010 MVC Surcharge Payment Incentive Program. The following provides a financial summary of the program:
Financial Summary (12-Month Program Impact) Revenue: New Revenue 48 month plans $ 431,940 Restoration Fees (estimated) $ 42,900 Principal Paid-in-Full $ 682,727 Expenses: Deferred revenue (conversion from 24 to 48 month plans) ($ 172,380) Interest Write-off ($ 380,007) Mailing and printing costs ($ 84,000) Debt collection commissions ($ 67,924) Annualized Revenue Impact $ 453,256 No promotional payment incentives have been established since the 2010 program described herein, and no such programs are currently scheduled for future implementation.