Georgia law change means one-time vehicle tax

Recent buyers can opt in to one-time tax to avoid paying annually

jgaines@macon.comFebruary 28, 2013 

Starting Friday, vehicle buyers in Georgia will be taxed differently.

“There’s three different areas that will go into effect,” said Jud Seymour, Georgia Department of Revenue communications director.

Anyone who buys a vehicle from March 1 or after won’t pay the annual ad valorem “birthday tax” but instead will pay a one-time title ad valorem tax.

“If it’s done with a dealership, it’ll be very similar to the sales tax that is currently in place,” Seymour said. The cost can be worked into financing arrangements like other taxes, he said.

Owners who bought their vehicles before Jan. 1, 2012, will remain under the old tax system until that vehicle is sold.

“Nothing at all will change. They will continue to get the birthday tax,” Seymour said.

Then there’s a “middle ground” for any vehicle bought between Jan. 1, 2012, and Feb. 28, 2013. People who purchased an automobile during that period can keep paying the old tax every year, or they can opt into the new system with a one-time payment, he said.

Some of those eligible buyers may be able to convert to the new system for free, if they can prove the taxes they’ve already paid exceed the new tax rate, according to the Association County Commissioners of Georgia. Otherwise, they can opt in by paying the difference between the two. Vehicle owners who want to use the new system can do so at their local tag offices before Dec. 31, 2013.

Kevin Franchi, general sales manager at Youmans Chevrolet in Macon, said he plans to call several customers who bought cars in the past year to let them know about the opt-in provision that might save them money.

But even as the first buyers pay the new tax, legislative maneuvering over some of the tax’s provisions is still going on in Atlanta. Franchi said he still expects some changes to emerge.

“I think there has been a lot of confusion,” he said. But Franchi expects the situation will sort itself out without too much trouble. In the end, he thinks, the changes will be beneficial for dealers and buyers alike.

“I think it’s got some positive aspects to it,” Franchi said. “Anytime the customer’s saving money, I don’t have to tell you it’s a little easier to sell the car.”

As he reads the new law -- for now -- it should relieve buyers of paying sales tax on any rebate amounts, he said.

One important change is that “casual sales,” like buying a car from a neighbor, are subject to the new tax, Seymour said. The one-time fee would be charged at the county tag office when the vehicle is registered to its new owner.

“When a person transfers a title, it has to be paid or the title will not transfer,” said Wade McCord, deputy tax commissioner for Bibb County. “There’s no way around it.”

The new tax will be collected by county tax commissioners before the vehicle is registered and a new title is issued, according to the Association County Commissioners of Georgia.

Applying the tax to individual sales is likely to have more impact than it has on dealerships, Franchi said.

“I do not intend for it to change the way we do business in any way, shape or form,” he said.

The new law will mean some changed procedures in county tax commissioners’ offices, but not a major change in function, McCord said.

The old system taxes vehicles annually at the local city or county millage rate, he said. The new one-time tax is a flat 6.5 percent of fair market value. But only for the next year. In 2014, the rate will rise to 6.75 percent, and to 7 percent in 2015, according to House Bill 386.

The rate is calculated to bring in about the same amount as current ad valorem taxes. If it doesn’t, the tax can be adjusted downward, or up to a maximum of 9 percent, according to the Association County Commissioners of Georgia.

Non-titled vehicles such as trailers and other non-motorized vehicles will remain subject to the annual ad valorem tax, according to the state.

The Georgia Department of Revenue has a website to answer common questions about the tax change. It also includes a calculator to help recent buyers decide whether to opt into the new system:

To contact writer Jim Gaines call 744-4489.

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