Government

More News | | | Editor

Car dealers, taxpayers confused by new title tax

  • Follow Business

Mike Combs has one word for Georgia’s new automobile tax law: “nightmare.”

Combs, the general manager at Fairway Ford in Evans, said it has been tough since the new law was implemented March 1.

That’s not because his car sales have dropped. It’s because of confusion over how to abide by the law that does away with the annual “birthday tax” on automobiles and replaces it with a one-time title tax that has to be paid at the time of purchase.

Combs says there’s been a steep learning curve and little training for his employees or tax officials on the complexities involved with collecting the tax and distributing it to the proper authorities.

“Nobody was ready for this,” he said. “There should have been a trial period before this went into effect.”

Georgia’s new title ad valorem tax does away with sales tax on automobiles and imposes a 6.5 percent tax on every car purchase, even those that take place between private individuals – which were exempt from sales tax under the old system.

Part of the intent of the law was to capture some of that lost sales tax revenue from private sales and to “level the playing field” between private sales and those that take place at a dealership, which was always responsible for collecting sales tax, said Bill Morie, the president of the Georgia Automobile Dealers Association.

Morie’s organization was a strong backer of the legislation that changed the car tax law.

“We supported parts of the original bill that we were involved in,” he said, referring to those sections that address private, or “casual,” sales. “There were parts that we had to amend after the original bill passed.”

Morie said that on average about 38 percent of used car purchases nationwide were casual sales, but in Georgia that number was as high as 60 percent. He said that was because Georgia was one of only three states that did not tax casual sales. He said there were many individuals who were basically unlicensed car dealers taking advantage of that loophole. The new law will change that, he said.

He said not every aspect of the new law is to his liking, but he thinks issues will be ironed out in coming legislative sessions.

“When we do this kind of major overhaul, it is hard to think of everything,” Morie said. “I think, in time, we believe a lot problems will work themselves out.”

In the meantime, he has been getting an earful from frustrated car dealers.

“I can imagine it is an administrative nightmare,” he said. “It is such a huge learning curve, but we are doing everything we can to answer their questions.”

Dianne Lacey, the controller at Fairway Ford, said there are problems in collecting the correct amount of tax because there can be small differences in interpreting the law county to county. In addition, tax officials are learning the system at the same time as car dealers, so mistakes are being made.

“This past month has been a disaster,” she said.

One new aspect she and other dealership accountants have to deal with is distributing the taxes. Before, when it was only sales tax being collected, it was fairly simple – a portion went to the county and a portion went to the state.

Now, it all depends on where the new owner resides. Money collected for the new tax has to be sent to the owner’s county tag office. In some cases, such as sales to military members, the new law doesn’t apply.

“That’s a paperwork nightmare,” she said, explaining it requires pay stubs, orders, letters from commanding officers and other paperwork to apply the military exemption.

Tax officials agree that there are still many details to work out before the system runs smoothly.

Jenny Bales, the director of motor vehicle for the Columbia County Tax Commissioner’s Office, said some of the problems involve companies that process titles for the dealers.

“There are many, many errors being made that we are having to clean up at the local tag office,” she said. “There’s still a lot of confusion with the dealers on what the taxable value is and what the tax is.”

Takiyah Douse, the motor vehicle director for Richmond County, said such mistakes make for unhappy customers.

“I would describe the problems as a disconnect between the state and the implementation of the law and the system being able to carry out the demands of the new law,” she said. “Mainly, we are finding it commonplace that the customers are not aware of the new law.”

Douse said she has been explaining the law to baffled taxpayers who are surprised that they will have to pay a tax that amounts to 6.5 percent of the automobile’s fair market value.

Before March 1, purchasing a used car through a private or casual sale meant the taxpayer had to pay $38 – $20 for the tag and $18 for the title. Now, the 6.5 percent title ad valorem applies. For a used car valued at $5,000, the tax would be $325.

By state law, taxpayers have only seven days to pay the tax. After that, they will be driving illegally.

Columbia County Tax Commissioner Kay Allen said that can be a shock for unsuspecting taxpayers.

“We’ve had some people who have walked out because they just didn’t have the money,” she said. “We can’t give them a tag, so I don’t know what they do.”

Comments (7) Add comment
ADVISORY: Users are solely responsible for opinions they post here and for following agreed-upon rules of civility. Posts and comments do not reflect the views of this site. Posts and comments are automatically checked for inappropriate language, but readers might find some comments offensive or inaccurate. If you believe a comment violates our rules, click the "Flag as offensive" link below the comment.
dichotomy
32906
Points
dichotomy 04/20/13 - 08:41 pm
4
0
Is there a publicly available

Is there a publicly available listing of what the STATE "fair market value" is for every year, make, and model vehicle? It would be nice if the public had easy access to those values so that they could calculate the tax if they were buying a used car from a private party or even a dealer. Lord knows a dealer is going to be reluctant to tell people what the REAL market value is a something they are selling.

ccay
7
Points
ccay 04/21/13 - 08:30 am
2
0
New Car Tax

Scenario.. (Case is true, dealers, money and vehicles not) Col Co resident trading a leased SUV at B. Jones Ford before end of current lease.. i.e. current vehicle worth 25K, new SUV MSRP 50K.. Tax was paid on current vehicle at inception of Lease, plus $50/month tax built into lease.. To trade, customer must purchase current vehicle from Toyota leasing co., (pay 6.5% of state appraised value).. Then PAY another 6.5% on almost full MSRP of new SUV. This appears to be Double Taxation, but is actually paying TRIPLE Tax on the transaction.. The law as written (explained), customer would/could pay appx $9,000 in Tax on one trade, depending whether you lease or buy.. Negotiating with the State (law) is far tougher than negotiating with dealer.

ccay
7
Points
ccay 04/21/13 - 08:30 am
1
0
New Car Tax

Scenario.. (Case is true, dealers, money and vehicles not) Col Co resident trading a leased SUV at B. Jones Ford before end of current lease.. i.e. current vehicle worth 25K, new SUV MSRP 50K.. Tax was paid on current vehicle at inception of Lease, plus $50/month tax built into lease.. To trade, customer must purchase current vehicle from Toyota leasing co., (pay 6.5% of state appraised value).. Then PAY another 6.5% on almost full MSRP of new SUV. This appears to be Double Taxation, but is actually paying TRIPLE Tax on the transaction.. The law as written (explained), customer would/could pay appx $9,000 in Tax on one trade, depending whether you lease or buy.. Negotiating with the State (law) is far tougher than negotiating with dealer.

soapy_725
43676
Points
soapy_725 04/21/13 - 09:33 am
0
0
Online calculator
Unpublished

http://onlinemvd.dor.ga.gov/TAP/Welcome.aspx or http://onlinemvd.dor.ga.gov/Tap/vinnumber.aspx

Both are user friendly with one only needing he VIN number.

Another good source of vehicle value would be ye) they have no interest in overvaluing a vehicle.

soapy_725
43676
Points
soapy_725 04/21/13 - 09:55 am
0
0
Sadly we have another example of
Unpublished

unqualified representatives who cannot manage their personal lives or finances writing laws. We have to pass it to understand it and see if it works properly. " My aids spent many hours writing this legislation and they say it will work"

Remember the law that required auto insurers to notify the state when an auto liability policy lapsed. Then a marshal would go and confiscate the license plate of the illegal driver/owner. This was to save legal drivers money and insure compliance with minimum liability insurance. Everybody would be safer and the cost of insurance would go down. Never happened. Too complicated. No notification. So we have another law that is unenforceable. So we have the untold number of vehicle driven without insurance. And no one will know until they either run over you or they are stopped for other violations. The paper is full of the travesty everyday. No driver's license, no proof of insurance. But they are still driving illegally. And the law abiding citizens are forced to carry large amounts of "uninsured motorist" coverage because the laws are not enforced.

The government, state, local or federal has no problem enforcing laws that bring in tax money. Those that defend the right of the taxpayers are a problem to enforce. It must be a cost benefit ratio problem.

We are currently in a world of government feces and the future forecast is a 100% chance of diarrhea.

JRC2024
8854
Points
JRC2024 04/21/13 - 09:56 am
2
0
I purchased a new Escalade

I purchased a new Escalade last year and mailed in the yearly tax on several cars and trucks last month even thought they were not due until May and the lady at the tax office called me and said I needed to come down and opt in to the new tax structure because of the new car. I did that Friday and the check I mailed was returned to me and the tax went down over $1100.00 because I had paid sales tax on the new car and the advolorum tax on the other vehicles was done away with. Now I only have to pay a tag fee of $20.00 each year for each vehicle.

nocnoc
42520
Points
nocnoc 04/21/13 - 11:35 am
3
0
Planned Confusion?

or just Stultus est sicut stultus facit for the politicians we elect.

Or will they collect a bunch of money up front to cover recent tax collection short falls, and then revert to the old way in a year or 2 using a new "Tax collection" name to double dip?

SemperParatus
3225
Points
SemperParatus 04/22/13 - 05:07 am
1
0
State senators and representatives...

...should be forced to face the music and have "town hall" meetings for car dealerships to explain the new program in detail. And while they're at it, have some meetings for their constituents as well. They pass these laws behind our backs in Atlanta and then crawl home not to be heard from again until next election time.

SemperParatus
3225
Points
SemperParatus 04/22/13 - 05:24 am
2
0
Unelected person making policy statements

I don't know about y'all but I am not comfortable with the guy quoted above, Bill Morie, president of the Georgia Automobile Dealers Association. To hear him tell it, "this was "his" legislation." He goes on to say, "When we do this kind of major overhaul, it is hard to think of everything. I think, in time, we believe a lot problems will work themselves out.” This guy heads a lobbying group. He is not an elected official and he thinks that all will be well in time. Not very comforting in my book. Why are our senators and representatives allowing this guy to speak out on their behalf on such an important issue impacting so many Georgians? It just doesn't make sense.

Back to Top

Top headlines

'Go Downtown' initiative gets mixed reviews

The "Go Downtown" initiative aims to foster a downtown environment that welcomes the college community and creates business for merchants. The event is held every third Thursday of the month ...
Search Augusta jobs