TAVT Reform Bill Passes
Following significant negotiations and with input from ACCG’s Policy Council, late last night the General Assembly passed
(formerly HB 327), which makes substantial changes to the Title Ad Valorem Tax (TAVT) system.
Under the present system, local governments receive a percentage share of TAVT proceeds that is annually adjusted and tied to a “target collection amount”. The result of this formula has been that local governments have received a significantly lower percentage of TAVT proceeds than contemplated. For 2018, local governments are receiving 51.6 percent of TAVT proceeds. Those local proceeds are then distributed first by applying toward local governments’ loss in ad valorem taxes from vehicles in 2012, and second by distributing any remainder in a manner that tracks sales tax distributions.
Under HB 329, local governments will receive 65 percent of TAVT proceeds, and there will no longer be any annual adjustment to that figure. That local share will then be distributed as follows:
1) for vehicles registered in unincorporated areas, the county will receive 51 percent and the school district will receive 49 percent; and
2) for vehicles registered in incorporated areas, the school district will receive 49 percent, the county will receive 28 percent, and the city will receive 23 percent. Local governments will also continue to receive ad valorem taxes on pre-2013 vehicles.
Other changes include reducing from 7 percent to 3 percent the TAVT paid by those moving to Georgia and registering their cars, reducing TAVT when a vehicle is re-titled as a result of a divorce, and lowering the TAVT for vehicles donated to non-profit organizations.
If signed by the governor, this bill will become effective in July 2019; until then, the current TAVT system will remain in place.
Internet Sales Tax Bill Gains Final Approval
Among ACCG’s 2018 Legislative Priorities was expanding the collection of sales and use taxes on Internet and other “remote” sales from out-of-state vendors. Under present law as pronounced by the Supreme Court more than 25 years ago, a state cannot force an out-of-state vendor to collect sales taxes unless that vendor has a physical presence within that state. The Supreme Court is currently considering whether to overrule the physical-presence requirement. If it does,
would increase obligations on those out-of-state vendors that either
1) generate at least $250,000 annually from sales to Georgia customers or 2) conduct 200 or more retail sales to Georgia customers. Those vendors would be required to either 1) collect and remit all Georgia sales taxes or 2) send an annual sales tax statement to its Georgia customers who purchased from that vendor at least $500 in property, showing the total paid and notifying the customer that it may owe Georgia sales tax; a copy of that statement would also be filed with the state.
HB 61 does not create a new tax. Under present law, sales and use taxes are owed by the purchaser regardless of where the purchase is made; however, purchasers rarely (if ever) voluntarily pay such taxes, and the state has no effective mechanism to enforce that obligation. HB 61 will benefit Georgia-based businesses that already collect sales taxes, by eliminating the advantage enjoyed by out-of-state vendors that do not collect Georgia sales taxes.