Here in Georgia, fall is approaching, which means cooler temperatures (finally!) and plans for Halloween. During this season of trick or treating, Georgia dealers are encouraged to review how their dealership handles loaner vehicles, demonstrators and rentals. Otherwise, dealers may receive a visit from a scary government auditor who will demand more than just candy before he leaves. Hopefully, this summary below will help dealers avoid that frightening experience by ensuring their operations comply with the law.
LOANERS
What is a loaner vehicle?
A loaner vehicle is a motor vehicle that is withdrawn temporarily from dealer inventory for exclusive use as a courtesy vehicle. A loaner is provided at no charge to a customer whose motor vehicle is being serviced by such dealer. A loaner vehicle may be loaned for a period not to exceed 45 days to any one service customer.
Can a dealership use dealer tags on loaners?
No. A dealership may not use dealer tags on service loaners. According to Georgia law, dealer tags may only be used on demonstrators, vehicles in transit for delivery and vehicles personally driven by officers and employees of a dealership. Vehicles withdrawn from inventory for use as service loaners must be titled and tagged in the name of the dealership or other dealership-affiliated entity.
If a loaner must be titled and tagged, doesn’t TAVT need to be paid?
No. When TAVT was implemented, GADA was successful in obtaining an exemption for service loaners. Therefore, when a dealer titles and tags a loaner vehicle, TAVT need not be paid, provided that the application for title is accompanied by GADOR Form MV-67.
Loaners are exempt from TAVT for a period of 366 days but ARE subject to use tax during the period of loaner service.
Is there any tax owed on loaners during the period of loaner service?
Yes. Use tax must be paid during the period of loaner service. Even though a loaner vehicle is exempt from TAVT, it is not exempt from all taxation. Consistent with the rule that applied prior to the implementation of TAVT, use tax must be accrued and paid during the period in which a vehicle is in loaner service. Use tax is calculated based on Daily Rental Value predetermined by the GADOR in Regulation 560-12-2-.09.
https://rules.sos.ga.gov/GAC/560-12-2-.09?urlRedirected=yes&data=admin&lookingfor=560-12-2-.09
GADA Word of Warning: The state Department of Revenue can and will audit dealers to ensure use tax is being collected on loaners!
Can loaners be titled and tagged using electronic titling and registration (ETR)?
No, service loaners cannot be titled and tagged using ETR. As explained above, service loaners are exempt from TAVT. Accordingly, because the ETR system is not programmed to process TAVT-exempt transactions, title and tag applications for loaners must be processed at the county tag office.
How long can a vehicle be in loaner service?
Loaners may be kept in loaner service for a period of up to 366 days. If a loaner vehicle is not returned to dealer inventory within 366 days, TAVT will be assessed on the DOR value of the vehicle at the time.
What needs to be done before the expiration of 366 days to make sure that TAVT is not assessed on a loaner?
For the GADOR and county tag offices to know that a vehicle has been removed from loaner service, the tag associated with the loaner vehicle must be surrendered for cancellation or transferred. If the tag isn’t surrendered or transferred before the expiration of 366 days, the DOR system will automatically assess the TAVT. Once TAVT has been assessed, it cannot be reversed. To cancel a tag, dealers should complete GADOR Form T-158.
https://dor.georgia.gov/documents/t-158-report-andor-surrender-georgia-license-plate
My dealership provides vehicles to customers for a charge. Are these vehicles considered loaners exempt from TAVT?
No. If a service customer pays to use a vehicle while his/her vehicle is being serviced, the vehicle is considered a rental, which is subject to different TAVT rules. For treatment of rental vehicles, see the section on “RENTALS” below.
DEMONSTRATORS
What is a demonstrator?
A demonstrator is any motor vehicle that has not been the subject of a retail sale but has been operated on the roads of this state in the course of a motor vehicle dealer’s business.
Can a dealership use a dealer tag on a demonstrator?
Yes, a dealer tag is for the purpose of demonstrating or transporting dealers’ vehicles or trailers for sale or lease. A dealer may allow a dealer tag to be used for personal use on vehicles owned by the dealership, regardless of whether the vehicle has previously been titled and registered, when such vehicles are operated by an employee or corporate officer of the dealer. An “employee” to which a demonstrator is assigned must work a minimum of 36 hours per week at the dealership.
https://files.constantcontact.com/4cd3539c001/460da04a-93b8-4a00-91ba-9f53a151322a.pdf
Is a dealership required to apply for a title to a new vehicle that will be used for demonstration purposes?
No, because a dealer tag may be used on a demonstrator vehicle, typically new vehicles that are used for demonstration purposes are not titled and tagged.
Must TAVT be paid on a new vehicle used for demonstration purposes?
As stated above, typically new vehicles that are used for demonstration purposes are not titled and tagged. Because TAVT is triggered by an application for title, TAVT would not be paid.
Can a pre-owned vehicle be used for demonstration purposes?
Yes, a pre-owned vehicle that has been taken in trade and then titled in the name of the dealership may be assigned for demonstration purposes. Once titled in the dealership’s name, a dealer tag may be used, and the vehicle may be operated by an officer or employee of the dealership, as defined above.
Must TAVT be paid on a pre-owned vehicle titled in the name of the dealership for demonstration purposes?
Probably not. Provided the vehicle used for demonstration purposes will be offered for sale and will be available for test drives during dealership hours, the dealership may apply for a TAVT exemption using GADOR Form MV-66 when applying for title.
Are there any taxes paid on a demonstrator?
Possibly. A vehicle may be used for demonstration purposes for six (6) months only. If used for more than six months, use tax will apply based on the cost price of the vehicle. In addition, if a demonstrator is driven for personal use by someone who is not an officer or employee of the dealership, use tax will apply.
https://files.constantcontact.com/4cd3539c001/460da04a-93b8-4a00-91ba-9f53a151322a.pdf
Is a demonstrator that has not previously been titled considered a “new” vehicle when sold to a retail customer?
No. Although a demonstrator that has not been previously titled is considered a “new” vehicle for purposes of Georgia’s titling laws, a demonstrator is deemed a “used” vehicle purposes of the FTC Used Car Rule. Therefore, a demonstrator vehicle must be sold as “used” and requires both a Monroney label and an FTC Buyer’s Guide.
GADA Word of Warning: Use of dealer tags by Georgia dealers has come under heightened scrutiny recently due to perceived abuses, particularly in the used car market. Please ensure your dealer tags are being used only for the purposes allowed.
RENTALS
My dealership provides vehicles to service customers for a charge. Are these vehicles subject to TAVT?
Yes, because customers are charged to use these vehicles, they are rental vehicles. Rental vehicles must be titled and tagged in the name of the dealership or dealership-affiliated entity and TAVT must be paid.
I heard that there is a discounted TAVT rate for rental vehicles. Is this correct?
Yes. A discounted TAVT rate of 1.5% is available to entities that are certified by GADOR as “rental motor vehicle concerns.”
What is required to be certified by GADOR as a “rental motor vehicle concern?”
To be eligible for certification as a “rental motor vehicle concern,” the following conditions must be met:
- In the prior calendar year, must have an average amount of sales and use tax attributable to the rental charge of each rental vehicle of at least $400
- Vehicles are rented for 31 days or less
- Vehicles carry 10 or fewer passengers
- Vehicles must be used primarily for transportation of people
- Must maintain an average of five (5) rental vehicles
What form do I use when I apply for certification as a “rental motor vehicle concern?
GADOR Form MV-15 must be used to apply for rental motor vehicle concern certification.
https://dor.georgia.gov/mv-15-rental-certification-affidavit
GADA Word of Warning: If you are charging customers for a “loaner” vehicle, it is not technically a loaner vehicle under Georgia TAVT law — it is a rental vehicle and would be subject to TAVT.
This article is intended for informational purposes only and is not intended to be legal advice. Dealers are advised to seek advice from dealership legal counsel or other competent professionals concerning dealership operations and regulatory compliance. The presentation of this article is not intended to encourage concerted action among competitors or any other action on the part of dealers that would in any manner fix or stabilize the price or any element of the price of any good or service.
