Georgia House Bill 386, which was passed in 2012, is causing quite a stir among Georgia automobile dealers as well as within the Bulloch County Tax Commissioner's office.
Among key reforms in the bill, the unpopular "birthday tax," or ad valorem tax that car owners pay each year when they renew their car tag, is being eliminated.
Specifically, individuals who purchase a new or used car after March 1, 2013, will no longer have to pay the annual tax. Instead, they will pay a one-time sales tax up front beginning at 6.5 percent in 2013 and increasing to 7 percent by 2015. The new sales tax will take the place both of the sales and use tax and the annual ad valorem tax. Then, each year, car owners will pay a $20 decal fee as they have done, as well as an $18 title fee.
The new program will be phased in over about 10 years as current car owners will continue to pay the previous ad valorem tax as long as they keep their current vehicles.
Bulloch County Tax Commissioner James Deal is asking local residents to be patient when they come to renew their car tag decals after March 1.
"Honestly, we are not entirely sure how this is going to work because a bill recently passed in the Georgia House changing some of HB 386," he said. "Some of HB 386 is fairly straightforward, and some of it is not."
One of the big changes that will be noticed immediately is the taxation of casual car sales that occur between individuals and not at a dealership.
"In a way, that levels the playing field," said Dan Cook, vice president of the Statesboro-based Franklin Automotive Group. "In the past, there was no sales tax when an individual sold their car to another individual. Now, when you go to transfer the title, the 6.5 percent TAVT, or Title Ad Valorem Tax, will be applied."
Another big change will affect those moving to Georgia as new residents. According to the Georgia Department of Revenue, new residents are required to pay 50 percent of the TAVT within 30 days of moving to the state, and the remaining 50 percent must be paid within the next 12 months.
"Conceivably, a new resident could be impacted in the following manner," Deal said. "Let's say they bought a car for $20,000 in another state just a few months ago, and paid sales and use tax from 6 to 10 percent on that vehicle. When they move to Georgia, and register their car with the state, they are going to pay a 6.5 percent TAVT on the estimated value of that car. It can be pretty significant for someone moving to this state with multiple vehicles. I need to stress that if you moved to Bulloch County and have been waiting for your tags to expire in another state, you need to get here now and register to avoid TAVT – title ad valorem tax."
State Rep. Jan Tankersley, R-Brooklet, is keenly aware of the concerns that have been voiced about the new law.
"We just did a big cleanup on HB 386 titled HB 80 where a number of concerns were addressed regarding different aspects of the bill," Tankersley said. "There were some problematic issues that needed to be resolved, and I am glad that we were able to do that. For example, amendments were done to prevent unintended consequences involving the application of tax for leased and rented vehicles. HB 80 has now been sent to the Georgia Senate for consideration."
Deal said his office is diligently preparing for the changes that are expected to take effect on March 1.
"Nobody in our office is taking March 1 off or the week after that for that matter," he said. "It is going to take us a while to work through the changes, especially the 'buy in' aspect of the new law, which allows car owners to pay into the TAVT if they purchased their vehicle from Jan. 1, 2012, to March 1, 2013. Please be patient with us."
Tankersley suggested that concerned citizens should visit the Georgia House of Representatives website, www.house.ga.gov, to read HB 386 and HB 80 for further clarification.