Georgia’s change in how pre-owned vehicles are taxed is fast approaching. It has been almost a year since we discussed this but as you know, the sales tax and the ad valorem tax will be replaced with a title tax. This is part of House Bill 386 which was signed by Governor Nathan Deal.
The sales tax will be replaced with the (TAVT) Title Ad Valorem Fee beginning on March 1, 2013. The state of Georgia has been working for some time to bring the state up to speed with the level of technology so in turn we can stream line the title, taxing, and the tag process.
Our previous sales tax will go away and the 6.5% fair market value tax will apply to all pre-owned vehicles. On January 1, 2014 this tax will increase to 6.75% and on January 1, 2015 this tax will go to 7% and will be payable at the time of the sale.
So what does this mean to our BHPH Dealers? Well under this new law, the complete tax will need to be collected at the time of the sale and this can create a hardship to these Retailers. With the average down payment dropping and the level of risk for our BHPH Retailers increasing, this additional fee can be the breaking point for a few of these Dealers.
Currently the GIADA is working with the state of Georgia to provide some sort of payment plan for our BHPH Dealers. As to date nothing has been solved but hopefully we can find some sort of solution. I recommend that every Dealer review the changes taking place in our industry and reach out to embrace these changes.