Changes made to vehicle title tax law now in effect
Ronnie Thompson Ford manager Jeff Ellington adjusts a window sticker on a car at the East Ellijay dealership. New changes made to Georgia’s recently instituted title tax law affect both automobile owners and dealers.
Though a new state law replacing annual ad valorem taxes for car buyers with a one-time title tax went into effect March 1, the county’s chief appraiser and a local automobile dealer confirmed state legislators may not be finished rewording Title Ad Valorem Tax (TAVT) bill 386.
“I don’t think it’s went as smoothly as they thought it would. They’re changing stuff daily,” said Ford dealership owner Ronnie Thompson of recent amendments made to the title tax law.
Changes now in place
House Bill 266, passed into law March 3, amends the original bill by adding several new changes for car buyers and dealerships.
One of the changes redefines how a new vehicle’s fair market value is determined. It recommends using whichever number is greater –– the retail sales price of a vehicle or the value listed in the ad valorem assessment manual used by the state.
“This new rule now requires the dealership to compare the value listed in the assessment manual with the retail selling price. Whichever value is greater ... is the taxable amount,” read a recent bulletin published by the Georgia Department of Revenue.
The new rules stipulate that taxpayers will receive a reduction in their TAVT if they trade in a vehicle or receive a rebate or discount from an auto dealer.
No changes have been made to the original bill’s definition of fair market value for used cars.
Another change places a 1 percent title tax on vehicles made from 1963 to 1985. It’s not necessary for a title to be acquired for vehicles made before 1986, confirmed Gilmer County? Tax Commissioner Becky? Marshall. But if a title is available and the owner wants to acquire it, they will have to pay the one percent tax –– .50 percent goes to state and .50 percent stays local.
“If there’s a title available and its in a title state now if they want to title it they have that option,” said Marshall. “But they don’t have to on anything ‘85 and older.”
Marshall said things went smoothly at the county tag office Friday,?March 1. But with changes being implemented soon thereafter, the following Monday was hectic, she added.
“We didn’t have the outpouring I thought we would Friday. But Monday was a totally different story. It was crazy in here,” she said. “Part of the problem was they were working on the software we were using and it wasn’t working properly because of the changes and updates they were doing.”
Marshall said several customers are still confused or have been misinformed about the title tax.
“We’re doing a lot of explaining. There’s a lot of confusion out there,” she continued. “For example, some people have been told it costs $300 just to opt in.”
It doesn’t, she confirmed.?
Marshall said employees at the tag office have been giving customers a comparison between opting in to the title tax system –– an option available to those who purchased a vehicle between Jan. 1, 2012, and March 1 this year –– or continuing to pay the annual ad valorem fee.
“We’ve been giving them the difference –– this is what you’d pay if you opt in and this is what you’d pay with ad valorem. We’ve had several who want to stay with the old tax and several who want to opt in. It’s going both ways,” she said.
Marshall said anyone who opts in should not expect a refund from the state if the amount paid in sales tax is greater than the TAVT fee. Persons in that situation will get a TAVT credit for any sales tax paid, she said, but not a refund for the difference.
“There’s bad information that they will get a refund if their sales tax is more than their opt-in tax. That’s not happening. There is no such thing as a refund,”?she confirmed.
She added that car buyers wishing to opt in must come to the tag office to do so. The switchover is not atomatic for those who bought during the 2012-13 cycle, she said.
“One of the first questions our dealerwork asks us is, ‘Do you want to opt in?’ We have to answer that question to move forward. As of right now, we’re putting ‘no’ on them because the customer still has to come in and get their title. We’re telling the dealers to make sure and tell their customers to come by here or call us if they want to opt in,” said Marshall.
Auto owners can file an appeal with the local tax assessors office if they disagree with the value placed on their vehicle. But, as HB 266 states, the title tax must be paid before a value can be appealed.
“(We’re gaining) experience how to process it and log it in,” said Lamb about his office now keeping track of vehicle values.
Lamb said the assessors office will conduct vehicle inspections the second Thursday of each month. So far, only one appeal has been filed since the TAVT law went into effect, he added.
“I’m delighted that’s all (we’ve gotten). But there’s so many people out there that don’t know about it yet,” Lamb said.
Marshall said she thinks it will take a little time before the number of vehicle appeals increases.
“You don’t have an option after March 1. That’s when it’s really going to start hitting us. I expect the volume of appeals to go up greatly,” she added.
More changes coming?
Thompson said he thinks county and state revenues will be hurt by both the birthday tax overhaul and the elimination of motor vehicle sales tax instituted by the TAVT bill.
Previously, four of the seven percent sales tax on motor vehicles went to the state. The remaining three went to the county where the vehicle was sold, Thompson said.
“The counties were getting three (percent) of that,” he continued. “The counties were also getting the ad valorem or birthday tax when people got their tags.?Add that together and that was quite a bit of money coming in. To me, it seems like that would be more revenue than what’s (coming in now).”
Thompson said he expects further TAVT revamps and amendments to keep coming.
“I figure they’ll be making changes till the end of March,” he added.
Other changes and amendments made by HB 266 include:
•TAVT rate on leased vehicles follows the ordinary rate of 6.5 percent in 2013.
•Leased vehicles are now exempt from sales and use tax on the monthly lease payment.
•Lessor must register with DOR and pay a $100 a year fee or a $2,500 penalty for failure to register.
•30-day late penalty remains unchanged (10 percent of TAVT at day 30, 1 percent interest every 30 days thereafter), but now only applies to purchasers of a casual sale, not to dealers.
•Calls for vehicles subject to TAVT to also be exempt from TSPLOST.
•Extends loaner vehicle exemption period for dealers from 6 months to 366 days.
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