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The fender-bender tax

As if car accidents weren't costly enough, you may be charged a crash tax for police and fire department assistance.

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By Gerri Willis, CNN personal finance editor

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NEW YORK (CNNMoney.com) -- How mad would you be if you got into a fender bender and a few weeks later got a bill for hundreds of dollars to cover police and emergency responders' costs?

Jay Middleton doesn't have to imagine. Two years ago he was rear-ended by his daughter Jillian who was following him home in her car. "Six weeks later, I get a bill from the accident," recalls Middleton. "I thought it was a joke."

It was far from funny. The Pennsylvania township where the collision occurred billed Middleton for $276.08. The fee is an accident or crash tax, charged by a company that acts as a "safety services billing department" for police and fire departments. The policy targets out-of-town drivers with insurance.

"I felt like I was robbed," recalls Middle. "I felt like someone picked my pocket.

His daughter, Jillian, says it was the size of the bill that surprised her. "The police officer was only there for five minutes and to fill out one piece of paper, it was a little excessive I thought."

Excessive, maybe. But it's definitely widespread. Drivers from 26 states have been billed for the tax, according to the Property Casualty Insurers Association of America.

Budget pressures have led some local governments to institute the fees. Steve Westermann, fire chief for Jackson County, Mo., says the fees are defendable because they are charged to people who don't pay local taxes. "Our motto is to protect and serve people that pay taxes and live within our district. These particular people are passing through our district but needing our services and could be taking our services away from constituents that already pay."

Drivers, though, are getting even. Eight states have passed laws banning the fees. In Florida, where the practice was rampant, Governor Charlie Crist signed a bill outlawing such levies this week.

State Senator Mike Bennett, who sponsored the legislation, said it was taxpayer anger that led him to act. "Basically, we had a lot of consumers that had contacted us, concerned that some of their local governments were charging things that their property taxes had paid for and so we started looking into it. It's insane."

Accident taxes are still legal though in most states. And, Middleton says drivers should beware. "Even though your town has one of these ordinances and you may be exempt from it, the town next to you where you don't live, if they adopt one, you're going to pay."

Got a financial dilemma? Go to CNNMoney.com/helpdesk to submit questions, read the Help Desk articles and check out new Help Desk videos. And tune in to CNN's Newsroom Tuesdays and Fridays, when Gerri Willis and other experts answer your questions. To top of page

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