The Union Recorder

March 18, 2013

Title tax changes challenge

Kyle Collins
The Union-Recorder

MILLEDGEVILLE — Tax reform, via House Bill 386, enacted by the Georgia General Assembly’s 2012 session created the title ad valorem tax (TAVT) effective March 1. 

Georgia’s new car tax eliminated sales and the annual ad valorem (birthday) taxes on automobile purchases in favor of a one-time title tax. Owners pay the title tax when they register a new or used vehicle and apply for the title at the county tax commissioner’s office.

The tax is calculated at 6.5 percent of the vehicle value. Next year, the TAVT rate bumps to 6.75 percent and could go as high as 9 percent in the future if revenue targets aren’t met.

This new system only applies when ownership shifts through title exchange. All others continue operation under the current system, paying the annual tax and fees.

Not even two weeks into the new state car tax system lawmakers acted quickly to clean up the old legislation by passing House Bill 266.

Several oversights including a double tax on leased vehicles were corrected. HB 266 removes the monthly sales and use tax from leases.

Leasing companies are required to pay just the title tax.

The opt-in parameters and fair market value also changed.

The original TAVT bill said owners who bought a vehicle between Jan. 1, 2012 and Feb. 28 can opt-in to the new system if the owner proves sales and property taxes already paid exceed the potential TAVT payment. If the amount is less, the individual can pay the difference and convert.

House Bill 266 changed the opt-in deadline from Dec. 31 to Feb. 28, 2014.

Now, vehicles purchased outside of the state can also jump to the TAVT.

These individuals will only be credited for Georgia sales tax paid not the old reciprocal agreement that credited owners for out of state dealer tax payments, according to Baldwin County tax commissioner Cathy Settle.

Under the clean up bill the greater of the new car’s retail selling price or the value determined by Georgia Department of Revenue (DOR) assessment manual sets fair market value. Previously, it was just the manual listing.

Settle anticipated logistical problems with the change. Her prediction came true.

“Right now, we don’t have the capability of putting in the higher of the two,” Settle said.

County tax offices are struggling to keep up. 

“You can prepare, train and program all you want to, but there are going to be issues that you just don’t think about it. It’s been hectic,” Settle said. “It’s been about 10 years since we implemented the last major piece of legislation, so you forget how bad it can be.”

Most of the technical issues stem from glitches in the Georgia Registration and Title Information System (GRATIS) when people want to opt-in to the TAVT. Some transactions require manual GRATIS input for automobiles not in the database, which adds processing time. 

As of this Wednesday, the tax commissioner’s office processed 200 opt-ins. Around 70 people were eligible to change but didn’t.

“There are about 300 to 400 people that can opt-in each month. We are asking people to at least wait until your birth month to come and opt-in. To keep the lines from being so long it would be better for them to wait,” Settle said.

Those eligible for the TAVT that wait until after their birthday to switch are still required to pay the old ad valorem tax attached on that earlier date.

Explaining the pros and cons of joining the TAVT system takes time. The tax office is working to streamline the brand new procedure.

“The wait line for every transaction is definitely longer now,” the tax commissioner said. “We are trying to make it as easy as possible for everyone.”

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