Close to a hundred Floyd County citizens turned out Monday night to hear Floyd Tax Commissioner Kevin Payne’s explanation of the new law at a forum at the Floyd County Courthouse.
“The Georgia Department of Revenue didn’t start training us on this until three weeks ago,” Payne said.
The taxman said licensed automobile dealers should be relatively happy with the new law because it acts as a deterrent to causal, private-party sales.
In the past, if Citizen A sold his vehicle to Citizen B, chances are no sales tax was collected. Now, before Citizen B can get a title, he will have to pay the 6.5-percent title tax.
Tax Commissioner Kevin Payne answered a basic series of questions for the Rome News-Tribune:
Q: How does it work?
A: Beginning March 1, 2013, all purchases of motor vehicles will be exempt from sales tax and ad valorem tax on the owner’s birthday. Instead, these vehicles will be subject to a new, one-time, state and local title tax that is paid at the time the owner applies for a title and registers the vehicle with their county of residence. The new system only applies to a vehicle when the owner is transferred through a title exchange. All other vehicle owners will continue to operate under the current system and pay ad valorem taxes until they no longer own the vehicle.
Q: Are there any exceptions?
A: Owners of vehicles purchased in Georgia between Jan. 1, 2012 and March 1, 2013 may opt into the new system. If the owner can prove they have paid enough in sales tax and ad valorem tax in the past year to equal what the new 6.5-percent fee would be, they can opt in for free. If not, they would have to pay the difference or continue to stay in the old system until they buy another vehicle. Vehicles purchased last year from out of state cannot opt in to the new system, however there is legislation pending that may change part of that law this year.
Q: How is the value of the vehicle established?
A: The new tax is established by taking the invoice/bill of sale value, or the value as determined by the Georgia Deptartment of Revenue motor vehicle assessment guide, whichever is higher. If the DOR does not have an assessment available, a reputable used car guide may be used to determine the value. The Floyd County Tag office will have the ability to determine reductions based on high mileage vehicles. The trade-in value on dealer sales will be deducted before the tax is calculated as well.
Q: Will the tax always be 6.5 percent?
A: No, the rate will increase to 6.75 percent in 2014 and 7 percent in 2015. These changes take place on Jan. 1 of each year. After 2015, the rate will be determined by the commissioner of the Georgia Department of Revenue based on revenue projections set by law. The rate cannot exceed 9 percent.
Even after the new law goes into effect, Georgians will still have to pay the basic $20 tag fee, which could be higher if the vehicle owner has a vanity tag, prior to their birthday each year.