By Sharon Troglin
Pickens County Tax Commissioner
State regulations for motor vehicle ad valorem taxes are changing this Friday, March 1.
Currently, motor vehicle owners pay a sales tax at the time of purchase and an annual ad valorem tax on motor vehicles when they renew the vehicle’s tag. However, that will change for any vehicle purchased on or after March 1.
Under House Bill 386, a comprehensive revision of the state’s tax and revenue code that was signed into law by the governor last year, vehicles purchased beginning March 1 will be taxed a single time only at the time of purchase and initial registration. That tax, known as the title ad valorem tax or TAVT, initially will be 6.5% of the vehicle’s value as determined by the state Department of Revenue’s motor vehicle assessment manual.
The tax is charged whether the vehicle is purchased new or used. In the case of used vehicles, “the tax is based on the vehicle’s value, not the price for which it is sold.”
Owners of vehicles on which the one-time TAVT is paid will not have to pay an annual ad valorem tax. Instead, they will pay only the registration fee when they renew their vehicle tag.
Owners of vehicles purchased before March 1 will continue to pay the annual ad valorem tax as in the past, with one possible exception.
Owners who purchased a vehicle any time between January 1, 2012 and February 28, 2013 may choose to “opt in” to the TAVT system if they wish. if the amount of sales tax and ad valorem tax they have already paid is more than the 6.5% TAVT, there is no additional cost to opt in.
However, if the combined sales and ad valorem tax already paid is less than what the TAVT would be, they may opt in by paying the difference between the two.
The advantage to opting in to the TAVT system would be that no future annual ad valorem tax would have to be paid.
For those persons who have purchased an automobile since January 1, 2012 and want to decide whether to remain under the current annual ad valorem tax system or opt in to the new TAVT system, Greg Elton, a spokesman for the Georgia Department of Revenue Motor Vehicle Division said the Department of Revenue has a calculator available on its website at http://onlinemvd.dor.ga.gov/Tap/welcome.aspx that can be used to compare the two systems, or you can go to www.newtitletax.com
According to that calculator, a person who purchased a $20,000 car on February 1, 2013 and paid $1,200 in sales tax could opt in to the new TAVT system for an additional $100 and then pay no additional tax.
By remaining in the current ad valorem tax structure, over the next five years that person would pay additional taxes totaling $819.28 on that vehicle, the calculator shows.
The regulations are different for vehicles whose titles are transferred between family members. For vehicles purchased after March 1, the family member who is titling the vehicle must pay a .5% TAVT.
If the vehicle was owned prior to March 1, the family member who is titling the vehicle must either pay the full TAVT or continue to pay the annual ad valorem tax under the old system.
The new law provides exemptions for certain veterans. Veterans who have a 100% service-connected disability are exempted from the tax, as are former prisoners of war, Medal of Honor recipients or Purple Heart recipients.
Under the new law, the sales tax paid on a vehicle at the time of purchase would be eliminated in favor of the TAVT, including any Local Option or Special Purpose Location Option sales taxes.
However, the new TAVT is supposed to supplement the local sales taxes that are collected under the current regulation. You do not have to come into our office on March 1, 2013 to “opt-in” you have until December 31, 2013 if you choose to do so. This will be a new experience for all of us, but together we will try to make this transition as smooth and as accommodating as possible.