GEORGIA DEPARTMENT OF REVENUE TAX GUIDE

GEORGIA DEPARTMENT OF REVENUE

TAX GUIDE

FOR MOTOR VEHICLE

DEALERS

Department of Revenue - Motor Vehicle Division 4125 Welcome All Road Atlanta, Georgia 30349

Revised: June 14, 2013

EDITOR'S NOTE The purpose of this guide is to assist motor vehicle dealers with the implementation of the title ad valorem tax fee provisions of O.C.G.A. ? 48-5C-1 created by HB 386 passed during the 2012 session of the Georgia General Assembly, and as amended by HB 266 passed during the 2013 session of the Georgia General Assembly. Any statutory revisions that have occurred after March 5, 2013 are not addressed in this version of the manual. Updated versions of this manual will be released, as appropriate.

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TABLE OF CONTENTS Introduction....................................................................................4 TAVT Quick Reference Guide for Dealers..............................................5 Contents I. State and Local Title Ad Valorem Tax Fee..............................................7 II. Circumstances When Sales and Use Tax May Still Apply.............................15 III. Leases............................................................................................19 IV. Rental Motor Vehicle Concerns ............................................................21 V. ETR..............................................................................................22 VI. Exemptions and Special Circumstances...................................................23 VII. Examples.......................................................................................26 VIII. FAQs for Dealers and Customers..........................................................30

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INTRODUCTION Beginning March 1, 2013, the Georgia tax rules applicable to motor vehicles changed significantly. Generally, any motor vehicle purchased on or after March 1, 2013 and titled in Georgia is exempt from sales and use tax and the annual ad valorem tax, also known as the "birthday tax." These taxes are replaced by a one-time tax called the title ad valorem tax fee ("TAVT"). Dealerships will be required to collect the TAVT on behalf of the customer and submit both the TAVT and the application for certificate of title to the county where the vehicle will be registered. Like purchased vehicles, leased vehicles are also subject to TAVT. However, lease payments are exempt from sales and use tax on a leased motor vehicle for which TAVT has been paid. Such leased vehicles are also exempt from annual ad valorem taxes. The purpose of this manual is to provide dealerships with a general understanding of the new Georgia tax rules applicable to motor vehicle transactions. For additional information, please visit:

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TAVT QUICK REFERENCE GUIDE FOR DEALERS

? Dealers should collect the state and local title ad valorem tax fee ("TAVT") from customers purchasing vehicles on or after March 1, 2013 that will be titled in Georgia, unless an exemption applies. Payment of the TAVT provides an exemption from sales tax on the motor vehicle and the purchaser will also be exempt from the annual ad valorem tax, or "birthday tax".

? TAVT should be collected by the dealer and submitted, along with the application for certificate of title Form MV-1, to the county where the vehicle will be registered. o A list of Georgia tag offices with respective mailing addresses can be found here:

? The TAVT and application for title must be received by the county within thirty (30) days of the date of purchase or a late penalty will be assessed against the dealer. Additional dealer penalties accrue every subsequent thirty (30) days for which the TAVT and title work have not been submitted.

? Generally, the TAVT is calculated by multiplying the applicable rate times the Fair Market Value ("FMV"), as defined by law.

? FMV is defined differently depending on whether the motor vehicle is new or used. o For new motor vehicles, FMV is defined as the greater of the retail selling price (or in the case of a lease, the agreed upon value) or the value listed in the Department of Revenue motor vehicle assessment manual. The higher number that is used is then reduced by any rebate, cash discount, and trade-in when the sale is from a dealer. "Retail selling price" is defined to include the sales price, plus any fees, mark-ups or add-ons such as doc fees. The assessment manual values are available here: o For used motor vehicles, FMV is the value listed in the Department of Revenue motor vehicle assessment manual, minus trade-in for dealer sales. For a used motor vehicle not listed in the manual, FMV is the value from the bill of sale or the base "average trade-in" value provided by NADA (National Automobile Dealers Assoc.) from January of the current year, whichever is higher, minus trade-in for dealer sales.

? The TAVT rate is 6.5% in 2013, 6.75% in 2014, and 7% in 2015. Thereafter, the rate is variable and may go as high as 9%.

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