Effective March 1, all automobile sales are exempted from ad valorem tax however purchasers have to pay a one-time 6.5 percent title tax based on the value of the vehicle. The owner cannot receive title to the vehicle until the tax is paid.
Anyone who purchased a vehicle between Jan. 1, 2012 and March 1, 2013 has the option to opt into the new system. If he or she paid enough in sales and ad valorem taxes at the time of purchase to meet the 6.5 percent threshold, they can opt in and pay only a yearly tag fee annually going forward.
Tax Commissioner Kevin Payne said that he might have had as many as 15 people lined up at one time Friday. “We’re doing a lot of opting in and the system seems to be working fine,” Payne said. “A lot of them had March 1 birthdays and might have bought a car last year.”
Payne said that instead of paying the old “birthday tax,” an ad valorem tax on vehicles associated with their birth month, which could cost anywhere from $300-$600, if they opt in to the new system they’re paying $20 for their new tag and that’s all. “I’m sure they’re thrilled, Payne said.
The tax commissioner said that his office has not gotten a lot of casual sales activity yet. “People may be buying cars over the weekend and they’ll bring those titles in next week,” Payne said. If individual A sells his or her car to Individual B, the buyer must come to the county tax office and pay the 6.5 percent title tax, which is entirely new to the system.
“That’s when we’re going to see some opposition to his law and more people appealing values, “That’s when we’re going to see some opposition to his law and more people appealing values and things like that,” Payne said. “Instead of paying $38 for their tag and title they may have to pay $300-$600 dollars depending on their value of the vehicle.”
New and used car dealers are no longer required to charge sales tax when they strike a deal. Dealers simply add the 6.5 percent title tax fee into the sales price and remits that fee to the county tax office.
Biff Peace, the new car sales manager at Riverside Toyota Scion said transactions involving new cars were no problem Friday. He said the state’s website used to assess taxes for used cars is apparently based on average values. “I think they’re going to have to work on it because it’s going to cost some people more than it should and others less,” Peace said.
The title tax will go up to 6.75 percent in 2014 and up again to 7 percent in 2015. Beyond that, the title tax fee will be established by the Georgia Department of Revenue however the rate is not allowed to exceed 9 percent.