Written by David Shivers

Albany, Ga – Dougherty County Tax Commissioner Denver Collins Hooten is asking for patience from local taxpayers as her office staff adjusts to new state rules regarding ad valorem taxes that will go into effect March 1.

The tax commissioner spoke to the Kiwanis Club of Dougherty County on February 11 in an effort to allay any confusion regarding House Bill 386, which was passed last year. While it has across-the-board implications for state tax revenues and collections, one primary focus of the bill is a change in how the motor vehicle tax is handled. From now on purchasers of vehicles will not pay the annual “birthday tax” on vehicles, but will be assessed a “one-time, non-recurring” title fee on the vehicle at the time of purchase, a percentage fee based on fair-market taxable value of the vehicle. The point-of-purchase fee replaces future ad valorem and sales taxes on new or used vehicle purchases.

An example: Under the new law, if an owner buys a new vehicle for $35,000 but receives $15,000 allowance on a trade-in, the fee will equal .065 x $20,000 (the taxable value), or $1,300. Under the old system, the buyer would have paid the sales tax of .07 percent on the $20,000 (or $1,400), plus the ad valorem tax rate (in Dougherty County) of 40.259 mills (an additional $563.63), for a total of $1,963.63. Under the new system, that represents a year-one savings of $663.63, plus the owner will pay no ad valorem tax in future years.

The same formulas also apply to non-dealer transactions between individuals, only with title application  and registration fees added.

The bill stipulates that the title fee is to be collected by the county tax commissioner, with 57 percent of it being remitted off the top to the state. The 47 percent balance is then to be distributed among the  county, cities, and school system, minus a 1 percent administrative fee for the tax office.

The rate from March 1 through December 31 of this year will be 6.5 percent, but will increase for at least the next two years. It will subsequently rise to 6.75 percent from January 1, 2014 through December 31, 2014; then 7 percent from January 1, 2015 until December 31, 2015. Hikes after 2015 are to be determined by the state revenue commissioner, but in any case will be permanently capped at no more than 9 percent.

Hooten stressed that owners of vehicles purchased prior to March 1 will continue to receive their annual pre-bills and pay the ad valorem tax, “just as you always have.”

The one-time fee does not apply to non-titled items such as pull-behind trailers or campers.

Information and frequently asked questions about HB 386 as it applies to motor vehicle transactions can  be found online at onlinemvd.dor.ga.gov/Tap/faqs.aspx.