But Carroll County Tax Commissioner Vickie Bearden appeared before the Board of Commissioners Thursday to warn the county lawmakers that it’s going to be a major headache for everybody involved.
Bearden said that when the law goes into effect March 1, it’s going to create long waiting lines at the tax office, due to the time it takes clerks to explain the law’s provisions. She also warned that it will cause “sticker shock” among people who have bought used cars in private sales, only to discover they owe a large, one-time title fee, which is replacing the ad valorem tax.
“After March 1, they will have to bring in their bill of sale and pay a 6.5 percent title tax,” Bearden said. “If they don’t have enough money to pay the title tax, they’ll have to come back when they have the money.”
For example, if a person pays $5,000 to buy a used vehicle from an individual, the new owner will face a $325 title fee. Bearden said some owners may be outraged by such a large fee and county workers could face a security problem from aggressive customers. Car buyers now, who buy from places other than dealerships, pay only an $18 application fee and a $20 tag fee when they register their vehicle.
She said those who buy a car from dealerships probably won’t notice the difference at first. While they will no longer have to pay sales tax on the car, the savings will be about the same as the cost of the new title tax. The cost of the tax is usually part of the financed cost of the vehicle.
To further confuse the issue, car buyers who purchased a vehicle between Jan. 1, 2012, and before March 1 of this year, have an option to either pay the 6.5 percent, one-time title tax, or stay with the annual ad valorem tax.
“If somebody plans to keep a vehicle for 10 or 15 years, it will benefit them to pay the one-time tax,” Bearden said. “We have a tax calculator that will show how much they would pay under ad valorem and help them weigh the difference.”
She said all that information is going to take time to explain, while letting the customers decide if they want to opt in or opt out.
“We’re putting together a brochure to explain the law, which we’ll send out with the tag bills,” Bearden said. “Hopefully, we can have it ready before the April bills go out. We’re also notifying people who purchased vehicle during last year and the first two months of this year, about the options.”
Here are a few of the provisions under House Bill 386:
• Under the new law, the fee for all vehicles titled between March 1 and the end of this year will be 6.5 percent of the vehicle’s worth. The rate will rise to 6.75 percent in 2014 and 7 percent in 2015. It could eventually climb to 9 percent.
• Those who bought cars between Jan. 1, 2012 and Feb. 28, 2013, will have the option to pay the ad valorem tax for the life of their car, or to opt into the new title tax. The opt-in period lasts from March 1 until the end of 2013. Those who opt in will not get refunded for any ad valorem tax they have already paid, but will get credit for paying sales tax, if the car was not purchased in a private sale.
• The old ad valorem tax system will continue for vehicles titled in 2011 and earlier.
• People who move into Georgia with a car after March 1 will have to pay the new tax on any vehicles when they register the cars in Georgia. New out-of-state residents can pay half the fee up front and will have the remainder of the year to pay the balance.
• Vehicles passed between immediate family members — spouses, parents, children, siblings, grandparents or grandchi—ldren will pay a reduced fee of 0.5 percent of the car’s worth to title the vehicle, provided the full one-time title tax has already been paid.
• People who were exempt from paying the annual car tax, such as disabled veterans, are exempt from the new tax.
• Vehicles that are older than 1985, and are not required to have titles, are only affected if the owner decides to get a title after March 1.
• Vehicles that aren’t titled, such as boats and trailers, aren’t affected by the new law.