State News

April 21, 2013

New car tax creating confusion

AUGUSTA  (AP) — Georgia’s new automotive tax law is creating confusion in car deals, with companies, private sellers and courthouse officials all struggling to understand the requirements.

Mike Combs, general manager of Fairway Ford in Evans, told The Augusta Chronicle  in a story published Sunday there has been a steep learning curve and little training for his employees or tax officials dealing with the law.

No one was ready for the tax, which took effect March 1, he said.

“There should have been a trial period before this went into effect,” he said.

The new title ad valorem tax, which does away with sales tax on automobiles, imposes a 6.5 percent tax on every car purchase. It includes deals between private individuals, which were exempt under the old system.

Tax officials agree said many details need to be worked out before the system runs smoothly. Jenny Bales, director of motor vehicle collections for the Columbia County Tax Commissioner’s Office, said some of the problems involve companies that process titles for the dealers.

“There are many, many errors being made that we are having to clean up at the local tag office,” she said. “There’s still a lot of confusion with the dealers on what the taxable value is and what the tax is.”

Takiyah Douse, the motor vehicle director for Richmond County, said mistake involving the new law make for unhappy customers.

“I would describe the problems as a disconnect between the state and the implementation of the law and the system being able to carry out the demands of the new law,” said Douse. “Mainly, we are finding it commonplace that the customers are not aware of the new law.”

The law was meant partly to capture some of that lost sales tax revenue from private sales and to “level the playing field” between private sales and those that take place at dealerships, which always were responsible for collecting sales tax, said Bill Morie, president of the Georgia Automobile Dealers Association.

Morie’s organization was a strong backer of the legislation that changed the car tax law, but he said changes may be needed.

“When we do this kind of major overhaul, it is hard to think of everything,” said Morie said. “I think, in time, we believe a lot problems will work themselves out.”

In the meantime, he has been getting an earful from frustrated car dealers.

“I can imagine it is an administrative nightmare,” he said. “It is such a huge learning curve, but we are doing everything we can to answer their questions.”

Morie said about 38 percent of used car purchases nationwide were casual sales, but in Georgia that number was as high as 60 percent because the state was one of only three that previously did not tax private sales.

 

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