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. Last Updated: 07/27/2016

Drivers: Put Your Car Papers In Order

Drivers beware. If you don’t have papers proving that customs duties were paid on your imported luxury car, you could be forced to pay thousands of dollars in back taxes or have your vehicle impounded.

Customs officials are working with the police to crack down on shadowy import schemes that dealers of luxury vehicles use to circumvent hefty duties at the border.

Hundreds of cars have already been impounded in recent months, and many more will follow if drivers cannot prove that they — or their cars’ previous owners — paid import duties, the State Customs Committee said Tuesday.

"We think that those who can afford to buy a luxury car can afford to pay the proper customs duty on it," customs committee spokesman Vladimir Yemelyanov said in an interview.

The crackdown should bring much-needed cash into the federal budget and teach drivers a lesson about buying vehicles with "a murky past," Yemelyanov said.

Cars belonging to diplomats and foreign correspondents based in Russia remain exempt from paying duties, he said. Such a vehicle can stay in Russia until the owner’s accreditation expires and can then be re-registered in the name of his successor.

But the duties must be paid if the car is sold, Yemelyanov said.

Other drivers with imported vehicles had better make sure that they can prove that duties were paid on their cars, he said.

Those duties amount to a staggering 60 percent of the vehicle’s sticker price, a sum that has led importers to look for schemes to get out of paying.

Moscow-based car dealership Olte Motors saw 54 of its Mercedes, BMWs and Toyotas impounded last month by customs agents after it used one of the more popular schemes.

Olte Motors imported its cars through Belarus, a country with a more liberal legislature and much lower duties on imported cars.

Russia and Belarus signed an agreement in 1998 to form a common customs system. Although each country is supposed to keep separate customs tariffs in place until 2002, many importers already turn to the agreement as a pretext to avoid paying Russian duties, Yemelyanov said.

Alexei Bakal, deputy head of Olte Motors, said customs agents showed up at the dealership and demanded that full duties of $4 million be paid on the 54 cars.

When the company refused to pay, the vehicles were promptly confiscated.

"We were acting in accordance with the agreement on the common customs system … the law was never broken," Bakal said.

Yemelyanov said the traffic police has helped find almost 900 cars in downtown Moscow that were brought into the country under the Belarus scheme. Lost duties on those cars amount to $18 million, he said.

Owners of such cars are expected to pay the difference between the Russian and Belarussian duties, which can amount to several thousand dollars.

Another popular scheme uses the special status given to citizens such as veterans and cosmonauts to avoid duties. These recipients of the Hero of Russia award are not specifically exempted by law from car duties, but a number of people have used the law as an excuse, Yemelyanov said.

In the Smolensk region alone 123 heroes have registered a total of 863 cars, he said.

Such a practice was made illegal after a 1999 Supreme Court ruling.

Customs is now casting a suspicious eye on refugees, who are exempt from car duties and can claim them as property when they flee to Russia.

As customs and the traffic police mount their crackdown, they are ruffling the feathers of drivers and car dealers alike.

"How would you feel if someone comes to your house and confiscates all of the furniture?" said Bakal at Olte Motors.

He said the dealership has protested the seizure of its cars and customs is looking into the complaint.