RD692 - Virginia Department of Motor Vehicles Peer-to-Peer Vehicle Sharing Study – December 2019
During the 2019 General Assembly session, legislators considered House Bill (HB) 2813 and Senate Bill (SB) 1733, which concerned electronic peer-to-peer vehicle rental. In its simplest form, peer-to-peer vehicle rental is a business model in which a software application is provided to facilitate a transaction between two parties in which one party rents a vehicle from the other. The Chairman of the Senate Transportation Committee, Senator Charles W. Carrico, Sr., requested the Virginia Department of Motor Vehicles (DMV), in consultation with the Virginia State Corporation Commission (SCC) and the Virginia Department of Taxation (TAX), to convene a group of stakeholders to study electronic peer-to-peer vehicle rentals in Virginia and to address insurance, taxation, and consumer protection issues involved with the activity.
In a traditional vehicle rental transaction, the owner of the vehicle, a rental vehicle company, rents the vehicle to a consumer. An established body of law governs the responsibilities imposed on each party in that transaction, including which party maintains insurance on the vehicle, which party’s insurance is primary in the event that both parties maintain insurance, what taxes apply to the transaction, and which party is responsible to pay, collect and remit those taxes. Additional law has developed to protect consumers involved in vehicle rental transactions. Peer-to-peer vehicle rental introduces a new party to the transaction, a third-party facilitator, who neither owns nor uses the vehicle. This study addressed what legal responsibilities might be imposed on the third party facilitator and in what instances the facilitator assumes the responsibilities borne by the vehicle owner in the traditional vehicle rental transaction. The study also explored consumer protection issues that arise as a result of this new business model.
For the most part, Virginia’s current registration and tax regulatory schemes contemplate that a vehicle is either purchased and used as a personal vehicle or that it is purchased and used as a rental vehicle. The Code of Virginia does not anticipate a mixed use vehicle in the way vehicles are used in the peer-to-peer vehicle rental business model. A vehicle can currently be registered as a rental vehicle or a personal vehicle but not both. A vehicle’s registration status affects what taxes are imposed on vehicle ownership and rental. Discussing taxation requires consideration of the policy on how to levy taxes based on this mixed use because in some cases the levy of one tax excludes the levy of another tax unless changes are made to current law. Additional policy considerations include whether to consider the total tax burden on the business transaction and vehicle owner when establishing a levy against peer-to-peer vehicle rental or whether to establish the levy against the rental transaction without consideration of other taxes paid.
Insurance requirements for motor vehicles are typically imposed on the owner of the vehicle, and stakeholders considered what insurance requirements should be imposed on a peer-to-peer vehicle sharing platform as the facilitator of the peer-to-peer vehicle sharing transaction.
During the course of the study, stakeholders were unable to reach consensus on comprehensive recommendations. Therefore, this report documents the research presented, stakeholder discussions, and the different positions articulated for issues involving the registration and use of the vehicles, taxation, and insurance. Draft legislation used for discussion purposes and all submitted stakeholder responses to this study report are included in the appendices. The report contains no recommended legislation due to the lack of consensus.