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New car title tax begins March 1

FAQ

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.

Happier birthdays?

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.

Adjustment period

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.”

Comments

bluepenguin 1 year, 2 months ago

Title tax: I think this is smart way to increase quick revenue for 5 years.

  1. The title tax will collect quick revenue on all new car sales. (The buyer would at least use cars more than 5 years to see the saving of not paying a birthday tax.)
  2. Keeping an ad valorem tax over 5 years or older cars are just nonsense if they are doing a title tax. Why? Because those cars are already paid in full for "Title tax."
  3. Running an ad valorem tax and "Title tax" system together equals like: Yeah, I will keep collecting a tax from your old cars, and I will get more 5 years of advanced tax on your new cars.
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Oliver 1 year, 1 month ago

Isn't this change just a chance for the government to pull revenues from to future to spend today??? It feels to me like they're just securitizing the future birthday taxes and collecting that cash today. They wrap it up with a nice bow and sell it to us as they're getting rid of the birthday tax, but I see them collecting more cash today to feed their ever-increasing appetite.
__ Imagine the scene if I told my boss I want the next 5 years of paychecks paid to me today.

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Mack711 1 year, 1 month ago

Still not sure if this is a good idea or not. It may actually hurt car sales in Georgia for a while. you remember when they tried to collect taxes on private car sales many years ago ane did away with that plan, well this plan may go the same way.Went to the Gwinnett tax site to calculate the cost of my vehicle and wound up paying more for a one time sale than what has been paid in 7 years. This plan does not make sense espically when a private sale is involved and they set the rate of what you pay regardless of what the actual cost is. Kind of like putting the fox in charge of the hen house or a payday loan. Think of some one who transfers into Georgia and has a large tax to pay to get 2 cars tagged here. May lose some companies wanting to come to our state and bring jobs.

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ACC12_SEC13Booster 1 year, 1 month ago

Mack711, you make a good point.

Of course, the possible ramifications of this new way of collecting car title taxes seems to have not been fully thought out by the geniuses in the Georgia Legislature (poorly thought out ideas from the Georgia Legislature, what a shocker, I know).

As others have stated, this new title tax scheme looks to be nothing more than a (poorly thought-out) cash-grab on future years' title taxes while giving the legislators' car-dealer cronies a huge leg-up on private car sales.

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Sandykin 1 year, 1 month ago

Holy cow, what a cash cow! I buy a new car and pay the tax. One year later, I sell that car to someone else and they pay the tax again. I now have to replace the vehicle I just sold and guess what? I get to pay another tax!

I guess it's my choice. I could hold on to my car for as long as it takes to break even on the tax, but what if I'm in a wreck and my car is totaled? I'm stuck paying another tax. What if my company transfers me out of state 6 months later, do I get a rebate? Bet not.

The only winner here is the government.

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R 1 year, 1 month ago

It seems for those who checked it takes an average of 5 years to break even... irrespective of make or model.

Then you have all those who lease cars/trucks, pay the tax up front and also in the monthly payment afterward too somehow...

Simply can’t wait for the addition of the mandatory HOT lane fee assessment / Peach Pass for all tags.

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NewsReader 1 year, 1 month ago

Don't act so surprised. Any time the legislature comes up with a new tax method, you can rest assured that it isn't doing you any favors. I'm just surprised that this law had such little visibility while it was being debated, why is it that virtually anybody I ask had never heard of it before until after it became law? They kinda slid this one in under the door didn't they. The decision was made to give us the shaft, and was executed in the same manner as a midnight requisition.

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BuzzG 1 year, 1 month ago

People who keep their cars for 10 or more years will make out well. Those who like to buy a new car every few years are getting screwed. One thing is sure, government will never do with less. They always want more.

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imurdaddy 1 year, 1 month ago

I think this is great. In 2013 you're only going to be paying 0.5% more than you would have previously. They are doing away with the sales tax (6%) and adding this fee (6.5%). According to the state's calculator, I will pay nothing to opt in (I bought a car in 2012 and paid the sales tax and four months later, on my birthday, had to pay $590 ad velorum). That more than covered the cost to opt in. They say I'll be saving $2890.00 over the next five years. Am I looking at it wrong?

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R 1 year, 1 month ago

Sure hoped you kept proof of tax paid and verifed your value on the website.

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imurdaddy 1 year, 1 month ago

Yes, I have all the paperwork and proof of what I paid. The website asked for my VIN and filled in all the blanks, which matched my numbers. They show the "Fair Market Value" which is considerably more than what I paid. Even so, it said $0.00 to opt in, based on what I already paid. I guess I'll find out in a few months when my birthday rolls around, again. Fingers crossed.

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bluepenguin 1 year, 1 month ago

Good for the new car buyers. This program will only benefit new car buyers. But not fair for those who are still paying "Birthday Tax." At least they have to come up with reducing "Birthday Tax" plans as well.

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