When does the birthday tax end?
There is no set date for the annual ad valorem tax to end, although a new title tax begins Friday. People who purchase cars after that date will pay a one-time title tax instead of the annual bill, but those who still drive an older car will continue to pay on their birthday (and everyone will pay an annual $20 tag registration fee). People who purchased automobiles between Jan. 1, 2012 and Feb. 28, 2013, may opt in to the title tax system.
How much is the title tax?
The rate is set at 6.5 percent in 2013, and rises to 6.75 percent in 2014 and 7 percent in 2015. Bill is based on the fair market value of the vehicle, as determined by the Georgia Department of Revenue.
What if I just bought a new car?
Cars purchased in the transition period will be credited sales taxes paid on the car. To determine if you should opt into the program, try the title tax calculator on the county website at www.GwinnettTaxCommissioner.com.
Does this apply to used cars?
Yes. For people who buy a new or used car from a dealer, the tax can be wrapped into a car loan, but officials worry that people who buy used cars from a classified ad or a neighbor will not be aware of the tax.
For more information about the new tax and to find more answers to questions, go to www.GwinnettTaxCommissioner.com.
LAWRENCEVILLE — Thanks to a new state law, tax officials expect to see a lot more credit cards at the tag office this year. And calculators. Maybe even tissues.
The law, which was hailed a year ago as the end to the dreaded “birthday tax” is causing confusion for customers and more than a few headaches as the March 1 implementation day approaches.
But Gwinnett Tax Commissioner Richard Steele said the benefits and drawbacks have to be considered on an individual basis. That’s why lines are a little longer at local tag offices, as clerks help people understand the new law and how it applies to each situation.
First off, Steele wants people to know that the ad valorem vehicle tax — the one that comes due on your birthday — is not gone.
Until you buy a new vehicle (unless you did so within the last year) the tax will continue to come due. And even when you do invest in a new car or truck, a $20 tag fee will still be due every year you own a vehicle.
Steele, who began his first full term as tax commissioner earlier this year, worries that the hype from the law will keep people away from the tag office, and could mean people getting a ticket or worse.
“We need people to still come on their birthdays,” said Paula Martin, spokeswoman for the tax commissioner’s office, which has spent the last year trying to mount a public awareness campaign on the new rules.
“There will be a lot of people who won’t realize what happened until they walk into the tag office,” Steele added.
In general, the 6.5 percent title tax, due after the purchase of a vehicle, replaces the current annual ad valorem tax. It increases over the next two years.
For people who purchase from a dealer, the tax can be wrapped into a loan and taxpayers may not even notice a difference, that is, until they realize they do not have to pay the annual ad valorem tax on top of the tag fee.
In fact, any cars purchased during the transition period, which lasted through 2012 and goes through the end of the month, Steele said many will likely choose to pay the remainder of the title tax than go forward with annual payments.
But since most people don’t pay sales tax when they buy a car through a neighbor or one advertised in the classifieds or on the side of the road, the title tax could be a big shock when they come to the tag office.
“The folks who deal with dealers probably won’t see any difference,” he said. “It’s those casual sales (that could provide a surprise).”
While the legislature is considering a change, the fee will be based not on the price that someone pays on the car, but on the fair market value determined by the state Department of Revenue. That means that a teen whose benevolent uncle gives him a break on buying his first car could still have to pay a hefty bill at the tag office.
And people who move to Georgia and try to register their car could be in for a shock, having to pay the title tax, which could amount to thousands of dollars for a family with multiple vehicles.
While March 1 seems like a key date in the life of the bill, the impact of the new tax could hit Georgians any time over the next decade.
The tax commissioner’s office will continue to issue annual ad valorem bills until the last old Ford pickup truck dies, and the old system will continue to apply to things like trailers.
“We’re going to have to maintain the two systems now,” said Mike Sweigart, chief deputy tax commissioner. “It’ll be a good long time before (the ad valorem) disappears.”
And the impact is hard to predict, Steele said, talking both of state and county coffers and on car owners’ wallets.
For now, though, he is hoping to keep the lines running smoothly and keep people from suffering shock. He has talked to every group he can think of, aired public services announcements on the county government’s cable television station and beefed up a frequently asked questions section and a cost calculator on his website — GwinnettTaxCommissioner.com.
“There will be an adjustment period,” Steele said. “I imagine there will be some complaints. ... There’s a lot that remains to be seen. How is this going to affect how people buy a car?
“We’ll see a lot more use of credit cards in the tag office,” Steele said, adding that clerks are preparing for tears. “We’ll do our best to try to explain it to them.”