Now that residents have to pay a one-time sales tax every time they register a vehicle in Georgia, buyers purchasing used cars may want to consider appealing what the state says their car is worth if that car has more wear and tear or damage than average.
According to a report in the Atlanta Journal Constitution, the Gwinnett County Tax Commissioner’s office anticipated that its office would see an increase of 3,000 to 5,000 appeals on vehicle appraisals over the next 12 months, compared to the 100 to 120 the office has normally handled in previous years.
While the Newton County Tax Commissioner’s office doesn’t expect to see much, if any, increase in motor vehicle appraisal appeals, there are still some people who could stand to save money this year and in future years by appealing their car’s value.
The reason for a possible increase in appeals is the change in the annual vehicle title ad valorem tax — widely known as the “birthday tax.” Now, instead of that birthday tax, a single 6.5 percent title fee based on the Georgia fair market value is charged whenever a car is sold and subsequently registered in the state, which has a particularly big effect on the purchase of used cars from dealers and private individuals.
Tommy Knight, chief tax appraiser for Newton County, said the state places a “fair market value” on a vehicle based on the assumption that the vehicle is in average condition — having an average mileage and being properly maintained.
The fair market value determines the amount an individual will pay on his or her title fee at the tag office. But in some cases, individuals may not agree with the “fair market value of their vehicle” and decide to go forth with an appeal, which is done at the tax assessor’s office. An appeal can be made whether the person purchased a car under the old system and continues to pay the annual birthday tax or whether the car was purchased under the new system, where a lump sum tax payment is now required.
“When you come in to renew your vehicle, you are going to go to the tax commissioner’s office first. They are going to tell you that based on the value of your vehicle, your ad valorem tax is X-amount of dollars,” Knight said.
“That person may ask, ‘What is the value of that vehicle?’ and they are going to tell them the value of that vehicle. But that person may say, ‘Well, I just bought that vehicle two weeks ago for $5,000.’ The state may have placed a value on it of $8,000. Well at that time, they would need to bring their bill of sale with them back to [the tax assessor’s] office.
“They are going to need some proof that they paid that lesser amount for it and we can account for it and adjust that accordingly.”
Just because a buyer bought a used car for a lower price that does not mean that is what the car is actually worth, but the sales price will be a factor in any revaluation.
Knight said once at the tax assessor’s office, a buyer can fill out an appeal form and the vehicle’s value may be adjusted based on the proof of sale or the Kelly Blue Book — an automotive vehicle valuation company — value, along with other conditions of the vehicle.
“If any of these situations occur, we will make sure they are adequately treated and taken care of properly and we will send them back to the tax commissioner’s office with an adjusted value so that Barbara [Dingler, the Newton County tax commissioner,] and her folks over there can adjust their ad valorem bill on their vehicle and get them out the door as quickly as possible,” Knight said.
To help with the expected increase in Gwinnett County, the board of commissioners approved a contract with an outside contractor for $175,000 to help process incoming appeals, according to the AJC. However, here in Newton County, Knight said their office doesn’t expect a rise in appeals, but there will always be certain cases where an appeal may be needed.
“I’m not really expecting an overrun of appeals. I mean, there are going to be some instances where an appeal is necessary,” Knight said. “Some vehicles travel farther than others. So mileage can be excessive. Vehicles may have a salvage title or it may have been wrecked and have what’s called a diminished value. The state doesn’t know about all of that.
“If that owner knows of that situation and they purchase that vehicle with that situation in place then they would need to come let us know that so we can adjust the value according to each individual situation that occurs,” Knight said.
“But for the most part — a typical vehicle — I don’t anticipate a large number of appeals. I don’t anticipate a line at the front door with anything here. I think it will be pretty much business as usual for us here in the assessor’s office.”
Knight said his office has had three appeals since the law went into effect March 1.