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New car tax law takes effect Friday

POSTED: February 27, 2013 4:00 a.m.

A new law that changes the way motor vehicles are taxed takes effect Friday and is expected to cause a few headaches at tax offices across the state.

"Transactions will most definitely take longer," said Dawson County Tax Commissioner Linda Townley. "We've all trained on [the new system] to get us ready, but we've had no practice on the screens."

The law eliminates sales-and-use tax and the annual ad valorem tax on vehicles bought on or after March 1. They will be replaced by a one-time fee imposed on the fair market value of the vehicle.

Taxpayers who likely will see the biggest jump on their bill will be those who buy vehicles from another person rather than a dealer.

"People now who buy cars from an individual, when they come in to title their car, they will have to pay the 6.5 percent title ad valorem tax based on the state's determined value of the car, not what is on the bill of sale," Townley said.

As an example, Townley calculated the tax on a vehicle valued by the state at $3,000, though the buyer may have paid $1,800 for it.

"The purchaser will be required to pay the 6.5 percent ad valorem tax of $195, rather than the $18 he would have paid before for his title," she said. "I have people come in to purchase titles that have put every cent they have to buy the car and then [must] add this tax on top of that."

The bright side, Townley said, is they "won't have to pay any more ad valorem tax ever" and there is the option for appeal with the county's assessor's office.

"But that could take some time," she said.

For those who buy a vehicle from an authorized dealer on or after March 1, the dealer will collect the 6.5 percent tax at the time of sale. There will be no difference for those who bought their vehicles before Jan. 1, 2012.

"They will continue to pay their ad valorem tax every year," Townley said.

An option to "opt-in" to the new program is available for people who bought vehicles in 2012 through February of this year, or they may also stay in the annual ad valorem system.

"If they bought a car in 2012 or the first couple of months of this year, they can bring their paperwork that shows how much sales tax they paid when they bought the car," Townley said.

"So they can opt in to the new program, most likely free of charge, and not pay any more ad valorem tax as long as they own that car."

Under the new system, all vehicle owners will continue to pay an annual license plate fee in the month they were born.

"I would like to request that people who want to opt in wait until their birthday because they have all of this year to do it," Townley said. "If they'll come in when they renew their tag for this year and opt in at that time, the cost won't be any different. But it won't have everyone standing in line at one time."

The Georgia Department of Revenue's Web site, www.newtitletax.com, provides a calculator designed to help owners decide which option is best for them. There is also a listing of frequently asked questions.

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