The Georgia Independent Automobile Dealers Association is entering the third year on the front lines of the battle against a massive tax increase on used motor vehicle sales. Despite our repeat victories, we cannot forget that the threat to go from calculating TAVT based on FMV to a “higher of the two” method, is still real. In fact, there has already been an attempt to initiate a new bill – HB327 in the current legislative period.
Title Ad Valorem Tax (TAVT) Reform
House Bill 340, which passed during the 2017, originally provided for a general revision of the TAVT. This bill, which was 27 pages in length when passed by the House and 26 pages in length when passed by the Senate, was reduced to one page after a Conference Committee was convened for the bill. The provisions removed from the bill would have affected how a used vehicle is valued when calculating the TAVT due on the vehicle; imposed a limit on the amount of taxes that could be imposed on a vehicle being registered from a new arrival to the state; and reconfigured how TAVT revenue is distributed between the state and various local governments. The final version of this bill did not address these issues, but only addressed an issue regarding how the TAVT is charged on leased vehicles. Legislation may be introduced in the 2018 Legislative Session to once again address these topics.
Currently, the Title Ad Valorem Tax (TAVT) due on the sale of a used car is based upon “the average of the current fair market value and the current wholesale value of a motor vehicle” as listed in the State Revenue Commissioner’s Manual (the “Manual Price”) as provided in O.C.G.A. § 48-5C-1(a)(1)(A). This was established in 2013 as the method to most fairly assign a value to vehicles across the board. Citizens, dealers, counties, the Department of Revenue, and the Legislature have learned the new system. The current system helps eliminate fraud, it is fair, and it works.
In fact – GA DOR, Legislature, and other official entities did an extensive study on funding, monies coming in, and the overall TAVT rate going up or down for the next three years (as is required by the TAVT legislation passed three or four years ago). After this was completed recently, the decision was made to keep it at the same TAVT rate for the next three years. Reason being that sufficient money has been and is coming in.
Title Ad Valorem Tax (TAVT) is currently calculated from 7% of that vehicles Fair Market Value (FMV).There are now some that recommend adjusting this so that TAVT for all vehicles would once again be based on “The Retail Sales Price”, thus creating a tax increase for car dealers and consumers since Retail Costs are often significantly higher than their current FMV.
GIADA supports a system that is fair to Used Vehicle Dealers, New Vehicle Dealers and Casual Sales.
That being said, GIADA opposes increasing the TAVT base to “Retail Price” for multiple reasons:
Any system that incorporates the Retail Sales Price lends itself to fraud.
Bogus invoices can be submitted to the Tax Commissioners Office so that unscrupulous dealers or individuals will never pay “The Higher of the Two” thus giving them an advantage over Dealers and Individuals that follow the rules. With the current system of calculating TAVT there is no way to submit a fraudulent amount. There is also an appeal process for when the Manual Price is significantly incorrect.
This would constitute a significant tax increase.
Used Car Customers Cannot Afford to Pay More
In most cases, consumers are paying much less than they would if they had to pay 7% of the sales price – making it a little easier to sell a vehicle, with fewer costs over the selling price. Not to mention, it allows independent dealers to have a fighting chance against franchise dealers who are advocating for this change.
Information is what drives the will to make change. It’s important to stay connected with what is going on, especially in the legislative sense.
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