HB 386, HB 266, and HB

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Georgia Department of Revenue
Changes to Georgia Law Impacting
the Taxation of Motor Vehicles
HB 386, HB 266, and HB 463
Georgia Department of Revenue
Legislation
• HB 386 (2012 Session): Tax Reform Legislation
Part of a larger initiative to spur economic growth
Effective March 1, 2013
Title Tax
Sales tax
Income tax
• HB 266 (2013 Session): Adjustments to HB 386
Effective March 5, 2013
Georgia Department of Revenue
Overview
• What changes occurred for a motor vehicle purchased
on or after 3/1/2013?
Generally:
 Pay one-time state and local title ad valorem tax (“TAVT”)
 Exempt from sales and use tax
 Will not pay annual ad valorem tax, aka “birthday tax”
 Titled as required in Title 40
Subject to title & registration fees in Title 40
Georgia Department of Revenue
Overview (cont.)
 Title work must be presented in county of owner’s
residence/county is collector of TAVT
No title transfers at MVD headquarters
 Payment of TAVT + $18 title application fee must
be paid at time of applying for title
 With limited exceptions, all changes in ownership
trigger payment of TAVT – this means casual
sales are also subject to TAVT
 TAVT is imposed on the Fair Market Value
(“FMV”) as defined in the law; often different than
sales price
Georgia Department of Revenue
State & Local Title Ad Valorem Tax
Tax Year
Tax Rate
State %
Local %
2013
6.5%
57%
43%
2014
6.75
55%
45%
2015
7%
55%
45%
2016*
7%
53.5%
46.5%
2017*
7%
44%
56%
2018*
7%
40%
60%
2019*
7%
36%
64%
2020*
7%
34%
66%
2021*
7%
30%
70%
2022 – forward*
7%
28%
72%
* = may fluctuate, but capped at 9%
Georgia Department of Revenue
Fair Market Value
• TAVT is applied to Fair Market Value (“FMV”) of
the motor vehicle, which is defined in different
ways depending on whether the vehicle is new
or used and what valuation data is available for
that vehicle in the state assessment manual.
• State Motor Vehicle Assessment Manual
– the average of the current fair market value and the
current wholesale value for all motor vehicles as
determined by the commissioner.
Georgia Department of Revenue
Fair Market Value (New)
• The greater of the “retail selling price” (or in the case of a lease,
the “agreed upon value”) or the value listed in the state motor
vehicle assessment manual. The higher number that is used
should then be reduced by the trade‐in value, as well as
reduced by any rebate or cash discounts provided by the selling
dealer at the time of the sale. “Retail selling price” (or in the
case of a lease, the “agreed upon value”) includes charges for
delivery, freight, doc fees, and other such fees and is meant to
mirror the taxable base that was formerly used for sales tax.
Georgia Department of Revenue
Fair Market Value (Used)
• The value listed in the state motor vehicle assessment
manual less any reduction for the trade-in value when
the car is purchased from a dealer.
Georgia Department of Revenue
Fair Market Value (Used)
• USED motor vehicle not listed in the state
motor vehicle assessment manual
– The greater of the bill-of-sale or the value from a
reputable Used Car Market Guide designated by
the Commissioner
OR
Georgia Department of Revenue
Definitions
• Trade in Value
– Value of the motor vehicle as stated in the bill of
sale for a vehicle which has been traded in to the
dealer when purchasing another vehicle from the
dealer
Georgia Department of Revenue
Calculation of Title Ad Valorem Tax
Dealer Sale
Casual Sale
(FMV – trade in) * TAVT
Rate = TAVT Due
FMV * TAVT Rate =
TAVT Due
(35,000 – 15,000) * 6.5% =
$1,300 TAVT
35,000 * 6.5% =
$2,275 TAVT
Georgia Department of Revenue
Comparison
NEW:
$35,000 FMV
$15,000 trade in
$20,000 taxable value
Title Ad Valorem Tax Due =
$1,300.00
OLD:
$35,000 sales price for new vehicle
$15,000 trade in
$20,000 taxable value
$20,000 * 7.0% Sales Tax = $1,400
Ad valorem @ 25 mills = $350
Year 1 taxpayer pays $1,750
Savings $450 first year and the annual ad
valorem tax for every year he owns the
vehicle
12
Georgia Department of Revenue
Exceptions
• State and local title ad valorem tax fee does not
apply to the following titles:
– Titles being corrected, replaced, or reissued to
same owner
– Addition or substitution of lienholders
– Bonded titles issued to registered Georgia dealers
– Titles issued to certain persons acquiring
abandoned vehicle
– Titles issued to insurance company paying claim on
stolen vehicle
Georgia Department of Revenue
Exceptions (cont.)
• State and local title ad valorem tax fee does not
apply to the following titles:
– Titled issued to registered builder, retail dealer, or
manufacturer for the purpose of resale
– Foreclosed title issued in the name of the security
interest holder pursuant to Article 9 of Title 11
– MV where TAVT was paid and owner moves out of
state and subsequently returns & retitles same MV
– Motor Vehicles registered in IRP
Georgia Department of Revenue
Remember
• Regular sales tax rules are still applicable for
any sales other than the sale of a vehicle that
is subject to TAVT
– Parts for repair work
– Pull-behind trailers
– Etc.
Georgia Department of Revenue
Dealers
• Used or new car dealer must accept the
application for title and TAVT funds on behalf
of the purchaser of a new or used motor
vehicle and submit them to the purchaser’s
county of residence
• TAVT funds should not be sent to the state
• Addresses for all Georgia tag offices available
here:
http://motor.etax.dor.ga.gov/tagoffices/selecttagoffice.aspx
Georgia Department of Revenue
Dealers
• Dealer must transmit documents & full TAVT
within 30 days of date of purchase to the county
where the vehicle will be registered
– Penalty is 5% of the TAVT after 30 days
– Penalty increases for every 30 days thereafter
Georgia Department of Revenue
Dealers
• Date of purchase on Form MV-1 to determine if
subject to penalty
• If guilty of converting fees for own use shall be
guilty of theft by conversation & if convicted
punished as provided in O.C.G.A. 16-8-12
Georgia Department of Revenue
Purchaser
• Purchaser on casual sale must transmit
documents & full TAVT within 30 days of date
of purchase to the county where the vehicle will
be registered
– Penalty is 10% of the TAVT after 30 days
– 1% Penalty for every 30 days thereafter
Georgia Department of Revenue
Changes to ETR Process
• ETR:
 ACH agreements with 159 counties
 Counties will receive ACH reconciliation reports
 Provide DOR with ACH data to each county
 Continue to ACH title fees to state
 Allow address changes
 Affidavit required but will change address even if deal not completed
 ETR will use purchase date assigned when PEND title is
created
 Used to calculate applicable penalty
 If penalty due not paid, ETR transaction will be rejected
Georgia Department of Revenue
Leased Vehicles
• Pre - 3/1/13 Process
– MV is exempt from sales tax
– Ad valorem tax paid in lessee’s county of residence
– Sales & use tax paid on monthly lease payment
• New process
– TAVT paid to county where vehicle to be registered
– Monthly payment in NOT subject to sales & use tax,
and no more ad valorem
Georgia Department of Revenue
Lessor Registration
• Lessor is required to register with DOR and pay
a $100/year fee.
– $2,500 penalty for failure to register
– Process is in development; DOR will send out
notice on when and how this will work and allow
lessors time to get in compliance.
Georgia Department of Revenue
Loaner Vehicle
• Definition: Dealer owned vehicle (in dealer inventory)
used for less than 30 days within the calendar year to
any one customer
• Allowed for 366 days
• Invoice will be sent if not returned to inventory within
366 day period
Georgia Department of Revenue
Rental Motor Vehicle Concern
• TAVT rate for qualifying Rental Motor Vehicle Concern
is 1.25%
• To qualify, entity must own or lease five or more rental
motor vehicles, and must have averaged $400 of
sales tax attributable to the “rental charge” of each
vehicle in previous year
• Applies to “motor vehicle(s) designed to carry 15 or
fewer passengers and used primarily for the
transportation of persons that is rented or leased
without a driver”
Georgia Department of Revenue
Exemptions
• Motor vehicles owned or leased by state,
county, city, school district, or other
governmental entity is exempt from the state
and local title ad valorem tax
• Motor vehicle exempt from sales tax for
disabled veteran is exempt from the state and
local title ad valorem tax
Georgia Department of Revenue
Veterans Exemptions
• Motor vehicles exempt from ad valorem tax for
certain veterans:
– Disabled Veterans (48-5-478)
– Former Prisoners of War (48-5-478.1)
– Purple Heart Recipients (48-5-478.2)
– Medal of Honor Recipients (48-5-478.3)
Georgia Department of Revenue
Opt In Provisions
• Vehicles purchased between January 1, 2012 and
February 28, 2013 may opt in beginning March 1,
2013 but the opt-in can only occur through February
28, 2014 and after compliance with:
(1) Calculate the amount of state and local title ad valorem tax
that would be due if bought after March 1, 2013 and
(2) Add the amount of sales tax paid plus the amount of ad
valorem taxes paid in 2012 (old) and if applicable ad
valorem taxes paid in 2013 (old) and
– If (1) is greater than (2) the owner shall remit difference to
tag agent or
– If 2 is greater than (1) no additional amount is due
Georgia Department of Revenue
HB 463
• Passed during 2013 session
• Meant to simplify and expedite the IRP process
in Georgia
• Effective January 1, 2014
• DOR currently creating program requirements
Georgia Department of Revenue
Overview
• Current Law
– IRP fees on motor vehicle
– Apportioned ad valorem on motor vehicle must be
paid at the county level
• New Law as of 1/1/14
– Increased IRP fees
– No more apportioned ad valorem on motor vehicle
– Apportioned ad valorem still exists on trailers
Georgia Department of Revenue
Questions/Discussion
Calculator and Other
Information available at:
www.newtitletax.com
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