Updated: Wed, 06/26/2013 - 00:02

Changes in Georgia's ad valorem tax

Photo provided Joel Stettler is a CPA at Hancock Askew & Co., LLP.
Photo provided Joel Stettler is a CPA at Hancock Askew & Co., LLP.
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During 2012 the Georgia General Assembly passed legislation that provided a new method of taxation for certain motor vehicles.

Effective March 1, 2013, motor vehicles purchased in the state of Georgia are exempt from sales and use taxes and annual ad valorem taxes. These taxes have been replaced by a new title ad valorem tax fee (TAVT). The new TAVT is a one-time tax that is imposed on fair market value of the vehicle.

Title ad valorem taxes are assessed on the purchases of new and used vehicles. Fair market value is used to determine the taxable base of the vehicle, and it is important to note that the value is determined differently for new and old vehicles.

The TAVT is calculated by multiplying the fair market value by the tax rate at date of purchase. The TAVT rates are scheduled to increase throughout the years according to the schedule below. The rate will be adjusted for tax years after 2015 and according to the Georgia Department of Revenue the tax rate in future years will not exceed 9 percent.

TAVT rates:

• 6.50 percent — March 1 to Dec. 31

• 6.75 percent — 2014

• 7.00 percent — 2015

As a taxpayer it is important to understand how the fair market value of your vehicle is determined. Also, if you disagree with the fair market value that has been assessed, how do you file an appeal?

1. For new motor vehicles, the fair market value is the greater of the retail selling price or the value listed in the state motor vehicle assessment manual.

The state motor vehicle manual is calculated by averaging current wholesale and retail values of vehicles. The higher number that is used is then reduced by the trade-in value, as well as any rebate or cash discounts provided by the selling dealer at the time of sale.

2. For used motor vehicles, the fair market value is determined by the state motor vehicle assessment manual. A reduction is made for the trade-in when the sale is made by a dealer but not when made by a private individual.

If you disagree with the assessed value of the vehicle, you can appeal the value. The appeal process is similar to the appeal process for many other local taxes (real estate, personal property, etc.).

Appeal forms and procedures vary by county since appeals are administered at the county level. From my personal experience, I purchased a used vehicle in May 2013 and paid the TAVT at the local tax commissioner’s office.

At the time of registration, I disagreed with the valuation dictated by the state motor vehicle assessment manual. I was required to pay the full amount of TAVT and the tax commissioner’s office provided me with an appeal form.

I filed the appeal form with my local tax assessor’s office and provided them a copy of the bill of sale and explanation to support the reduced value. Several weeks later, I received a refund check in the mail and documentation that the value of my vehicle was reduced.

The new law regarding title ad valorem tax has also made several important changes to vehicles transferred between immediate family members, new residents to Georgia, veterans and nonprofit organizations.

To find more information regarding the changes, go to the Georgia Department of Revenue website or contact your local tax commissioner’s office.

Joel Stettler is a CPA at Hancock Askew & Co. LLP. He can be contacted at 912-234-8243 or jstettler@hancockaskew.com.

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