HB386 New Law Affecting Motor Vehicles - Registration/Titling

There were many issues included when lawmakers recently passed House Bill 386. One of the new laws that will affect you as a consumer when purchasing a vehicle and in the title/registration process with your local tag office. Beginning March 1, 2013, when you purchase a vehicle from a dealer, the purchase will be exempt from sales tax and ad valorem tax or more commonly known as “birthday tax.” It will now be subject to what the state is currently calling a “State and Local Title Tax Fee,” which is an alternative ad valorem tax of 6.50%. This is a one-time fee at the time of purchase. You still must purchase a decal each year on your birthday, which is currently $20.00, but no other taxes will apply each year. The new title tax fee will start at 6.50% in 2013 and increase to a rate of 7% by 2015. Should the target amounts of revenue that are required for the state and county not be reached at this rate, the Georgia Revenue Commissioner has the ability to raise the rate to a limit of 9%.

A notification would be made to a county no later than August 31 to be effective on January 1 of the next calendar year. The targeted revenue for the state and counties that will be lost with the exemption of the yearly “birthday tax” will now be made up by “casual sales.” This is a sale between an individual to another individual. Currently, there is no tax imposed on a sale between individuals, but beginning in March 2013, the purchaser will be required to pay the new title tax fee when they come into the local tag office to title and register their new vehicle. This new title tax fee will be based on the fair market value of the vehicle that is set by the state. If the sales price on the Bill of Sale is greater, then the state will require the tag office to calculate the fee on that amount. In the past, you were allowed to title your vehicle in any county and later proceed with the registration in the county of residence. This new law requires the titling, registration process, and payment of the new fee to be completed at one time and location.

Dealers will be required to pay the fee to the county the purchaser resides. For folks who are keeping their used vehicle, you will continue to come in yearly on your birthday and pay the birthday/ad valorem tax and purchase your decal as you always have. There will be no charge to you until you purchase a new or used vehicle. These changes start March 1, 2013, but if you have purchased a vehicle between January 1, 2012, and February 28, 2013, you will have the option to opt-in beginning in March 2013 and ending December 31, 2013. Your tag office will calculate the sales tax and ad valorem tax that has been paid and compare to the new title tax fee. If what you have already paid is less than the new fee, you would be required to pay the difference. If what you have already paid is greater than the new fee, no additional payment will be required.

If you have any questions concerning this new law, contact our office at 706-782-3613