The first floor of the Hall County Government center was busier than usual Friday as residents sought to trade in annual payment of their car’s ad valorem tax for a one-time fee.
The former tax was paid every year along with license tag renewals and was often called the “birthday tax.”
Hall County Tax Commissioner Darla Eden explained that while the new fee looks like a sales tax, it’s not.
“It’s like a sales tax, but it’s a title and ad valorem tax,” Eden said. “Sales tax is going away. Ad valorem tax is here — 6.5 percent one time, up front, every time the vehicle changes hands, every time it’s titled. Every time that vehicle is titled, it’s subject to TAVT.”
The fee will go up to 6.75 percent in 2014 and 7 percent in 2015.
People who have purchased a car between Jan. 1, 2012, and Feb. 28, 2013, can come to the tax commissioner’s office at the Hall County Government center on Browns Bridge Road to opt into the one-time fee instead of continuing to pay the birthday tax.
Those who already own a car purchased before January 2012 won’t see any changes, and will continue to pay the ad valorem tax each year with their license tag renewals.
The change was popular with many residents and lawmakers, and local government officials have been waiting to see how the new program would work.
State Sen. Butch Miller of Gainesville noted the bill passed unanimously in the Senate last session.
The Special Committee on Tax Reform for Georgians and the Association County Commissioners of Georgia worked together on the legislation so counties wouldn’t lose money on the move, although some may lose or gain revenue, according to the ACCG website.
While it’s yet to be seen how the revenues compare, Eden said the first day of the opt-in process went smoothly.
“We’ve been full staffed, and wait times have been kept to about 10-12 minutes. So it’s not too bad,” she said. And that was with two tax deadlines going on, she said. March 1, procrastinating property owners rushed to pay their 90-day property tax dues before suffering a 10 percent penalty.
Many, though, were there about car purchases.
Eden pointed out one woman who had just walked in, title in hand.
“She bought from a private citizen two days ago, so she did not pay sales tax,” Eden said. “If she were to make that transaction today, then she would be subject to TAVT tax, 6.5 percent of the value of that vehicle.”
The tax office will help residents determine the ideal option, she said. Buyers should bring their bill of sale or sales contract from a dealer and county employees will look to see which option works best.
However people who may feel the most sticker shock are new residents to the state, who must title and register their cars and will then be charged 6.5 percent of the value of that car. The Georgia Department of Revenue Motor Vehicle assessment guide determines the value, Eden said. That resource is available online.
The state and local governments will split the funds from the new title tax, with local governments guaranteed a total base amount of $1 billion, plus 2 percent growth per year through 10 years. The state takes a larger percentage of the funds initially because the ad valorem tax will still be collected on vehicles. The local tax share starts at 43 percent in 2013 and rises to 72 percent in 2022.