A month after District officials placed an emergency moratorium on the issuing of temporary tags by used-car dealers, the number of tags issued dropped 75 percent compared with a year ago.

The Department of Motor Vehicles issued 3,255 temporary tags during the first month after the 120-day moratorium started, said director Anne Witt. In May 2003 alone, 13,097 temporary tags were issued.

The moratorium is one of many steps District officials plan to take to combat widespread illegal sales of temporary tags, Witt said Monday at a public hearing before the D.C. Council's Committee on Public Works and the Environment.

A bill would allow the city to suspend or revoke vehicle registrations of owners or car dealers who use a fraudulent temporary tag. Under the proposal, the city may seize cars with the illegal tags. The penalty for the violations would increase from $300 to $1,000.

The problem began when some used-car dealers and car owners began misusing the temporary tags to allow thousands of cars to stay permanently unregistered with the city, and in the process skirt the District's insurance, residency and inspection rules.

According to city officials, owners of unregistered cars periodically bought temporary tags for as much as $150 to keep their cars out of the system. By law, the dealers were supposed to issue the tags only to those who had just bought cars from them.

"I don't know what took us so long to do it, but I'm glad we did it," said council member Carol Schwartz, (R-At Large), who is the committee's chairwoman. She said she expects the bill to be before the council by next month.

The DMV has changed the color of the official temporary tags to orange for used cars and pink for new cars. The department also has made the tags more difficult to counterfeit. Motorists purchasing a used car must come to the DMV with proof of residence, insurance and ownership to get temporary tags, a change that Witt said may become permanent.

The DMV is holding hearings twice a week to deal with the more than 30 used-car dealers whose licenses the department suspended or revoked during sting operations and other inspections, Witt said.

A group of used-car dealers filed a lawsuit to challenge the DMV's moratorium but later dropped the complaint after meeting with DMV officials, Witt said.

The city must work to get the thousands of fake tags in circulation off the street and outsmart those creating counterfeit tags, said David Catania, (R-At Large), who supports the legislation.

"There are few public safety issues more important than this one. We've got to stay ahead of these individuals," he said.

But getting rid of the tags and the vehicles isn't an easy matter, said Lt. Patrick Burke, traffic safety coordinator for the Metropolitan Police Department.

The city lacks impound space for the potential number of cars that could be pulled off the streets, he said.

Even so, the new tag system put in place by the DMV has made it easier for police officers to verify the authenticity of temporary tags, Burke said.

With fewer temporary tags available, Witt said, the illegal activity now centers on "dealer hard tags," which she said are being sold for $1,000 or more.

Dealer tags are license plates issued by the DMV to dealers for official business, including test drives. The DMV can suspend or revoke dealer tags that are used improperly, but often they remain out on the street, according to Witt.

"After we suspend and revoke a dealer tag, they are not returning them to the DMV," she said.

The DMV would like to revoke the business licenses of dealers who improperly use their license plates, a change that Schwartz supports. Meanwhile, a new series of dealer tags will be issued by September to help combat the problem.

The lack of information sharing by some District agencies has further complicated the process of finding, seizing and towing unregistered vehicles with temporary tags, Witt said. New integrated databases that will allow agencies to share information needed to seize cars with fake tags aren't expected to be ready until next May, she said.

Such a delay is maddening, said Schwartz, who pointed out that the city has invested millions of dollars in technology that isn't helping in practical applications such as this one.

Schwartz said the cars with fake tags must be seized as quickly as possible. She asked city officials to provide the council with information on the number of cars being ticketed and towed since the moratorium took effect.

"Let's take care of it," she said. "There's no reason why any community should have to go through this nightmare."