Major changes coming to state's automotive tax
by By Jason Lowrey,
Feb 10, 2013 | 2207 views | 0 0 comments | 16 16 recommendations | email to a friend | print
On March 1, any vehicles purchased in Georgia, whether through a dealer or casual transaction, will be subject to a 6.5 percent title ad valorem tax. The sales tax and annual ad valorem tax payment, also called the birthday tax, will no longer apply to these vehicles.

The changes do not affect birthday tax payments on vehicles purchased prior to Jan. 1, 2012.

County Administrator Peter Olson described it as a major change in the automotive tax that, he believed, few citizens are aware of.

“The title ad valorem tax is replacing what the General Assembly called the birthday tax, or the annual ad valorem tax payment on your car, so you don’t have to pay the annual ad valorem tax payment and you don’t pay sales tax when you buy it anymore. You pay one lump sum title ad valorem tax that’s at least going to start off at 6.5 percent of the sales price,” Olson said.

The 6.5 percent payment will be based on the vehicle’s fair market value calculated by averaging the current wholesale and retail values of the vehicle, according to the Georgia Department of Revenue. If the vehicle is not listed in the motor vehicle valuation data base, the title ad valorem tax will be based on either the vehicle’s sales price or the value listed in a used car market guide designated by the state revenue commissioner. The higher of the two prices will be used.

“So if you’re somebody who normally buys a new car every three or four years or five or six or seven years, you like this system,” Olson said. “It’s going to save you money. You buy one time, pay one fee, instead of paying 7 percent sales tax and paying your ad valorem tax for the next seven years, you’re going to pay less.

“If you’re a person who tends to buy a used car from a friend, or from a casual acquaintance or whatever, through Craigslist, you’re not going to like this system because those sales weren’t taxed before. They didn’t have sales tax. They had ad valorem tax annually, but it was fairly small.”

Those purchasing a vehicle at a dealership will not have to go into the tag office to pay the tax. According to the Georgia Department of Revenue, the dealer will accept the title application and title ad valorem tax payment on the customer’s behalf and deliver the application and payment to the county.

For those who purchase a vehicle casually, the title ad valorem tax must be paid when the vehicle is registered with the county.

Stewart said there is an appeals process in place if residents believe their vehicle’s value is rated too high. Residents will be directed to the tax assessor’s office, where a personal property assessor will evaluate the vehicle. However, Stewart was unsure if the assessment would occur on the same day or at a later time. In either case, he said, 85 or 100 percent of the title ad valorem tax would have to be paid before an appeal could be filed.

One good aspect of the new law, Stewart believed, was the money it would save residents who own a vehicle for many years.

“The positive thing, though, [is] once you buy in, all you’ve got to do from now on with that vehicle — as long as you own it — is to come and buy a decal, which is $20 at this point,” Stewart said.

However, Stewart also saw the title ad valorem tax hurting buy-here, pay-here dealerships, as the tax must be paid every time a vehicle changes hands.

“Now they have to pay it all upfront,” Stewart said of the dealerships. “So they transfer the title to that person, that person has to pay the title ad valorem tax. Well, a lot of times, in those situations, the car will be repossessed. They’ve got to then put it back into their name — pay another title ad valorem tax. Then if they sell it again, which they will, [the customer] has got to pay another title ad valorem tax.”

Leighanne Lanham, chief deputy in the tag office, added casual sales could be hurt for the same reason.

“So the casual sale is what’s getting hurt worse, because with the regular birthday tax, you’ve got credit for what [someone else] payed in the ad valorem tax for that year. Title ad valorem tax, you don’t get to write it off on your taxes, and it goes from transfer to transfer,” she said.

One of the few ways to have previous payments count toward the title ad valorem tax is to opt into the new system. After March 1, those who bought a vehicle between Jan. 1, 2012, and March 1, 2013, will be able to pay the title ad valorem tax and remove the annual payments on their vehicle. Any birthday tax payments will then be credited toward the title ad valorem tax. This can be done, Stewart emphasized, when a resident comes in on his or her birthday to pay their normal tag fee. It does not, he repeated, have to be done on March 1.

Residents who purchased a vehicle prior to Jan. 1, 2012, will continue to pay the annual birthday tax for as long as they own the vehicle.

Other vehicles not subject to the title ad valorem tax include trailers, pull-behind campers, any vehicles manufactured prior to 1963 and any 1963 to 1985 model year vehicle that does not have a current Georgia title.

How leases will be handled, Stewart said, is still unclear. The current law states the leasing company will pay the title ad valorem tax and the individual leasing the vehicle will be subject to sales tax on the lease payments. However, Stewart believed this could be slightly altered in a bill, HB 80, which is now under consideration in the Legislature.

The title ad valorem tax will apply to heavy-duty vehicles as well, such as transfer trucks. It is an addition that could affect how Stewart’s office does business.

“What that means is we’re going to be getting much more money in this office than we’re used to having, and possibly a lot of bad checks. A lot more bad checks,” he said. “With more money comes more bad checks. We’re going to try ... we’re thinking about now what we’re going to do about that. We may have a check limit. We may have a service that collects them for us. I don’t know what we’re going to do just this minute, but we’re going to put our heads together and come up with something.”

Tax commissioner office personnel, Stewart said, have gone through the necessary training and are ready for the March 1 changeover. He asked that residents have patience when they come in to get their tags or pay their tax.

“We’ve all been to class and I think we’re ready for it. ... The thing that people can expect is longer lines when they come in because we’re going to have to explain to everybody title ad valorem tax,” he said. “... Still go by your birthday, just as it always have been. So don’t rush in here on March 1 thinking you’ve got to opt in on March 1, that’s not the case.”

For more information on the title ad valorem tax, visit the Georgia Department of Revenue at