TAVT Calculation for New, Leased Vehicles - HB 340 (2017)

New Method of Determining Fair Market Value of New (MSO/MCO), Leased Vehicles – Effective January 1, 2018

What is the reason for this new method of calculation?

Effective January 1, 2018, Georgia House Bill 340 requires that the Department of Revenue (DOR) provide two methods of calculating TAVT for new, leased vehicles:

  1. Depreciation Plus Any Amortized Amounts Method: The TAVT Base Value is the total of Depreciation Plus Any Amortized Amounts, including any down payments. (“Down payments” means cash collected from the lessee at the inception of the lease, including (1) cash supplied as capital cost reduction and (2) any upfront payments by the lessee. Down payments shall not include (1) rebates, noncash credits, or net trade allowances, (2) taxes or fees imposed by law, and (3) monthly lease payments made in advance.)
  2. Agreed Upon Value Method: The TAVT Base Value is the vehicle value plus taxable fees specified in the lease agreement. Agreed Upon Value can only be used when (1) the vehicle is leased for business use and (2) the lease agreement states the rental price can be adjusted. The taxable fees include labor, freight, delivery, dealer fees and similar charges, tangible accessories, dealer add-ons and mark-ups. Taxable fees will not include federal excise tax or extended warranty, service contract, maintenance agreement or similar products.
  • If Option (1) is selected, the trade-in value (if present) and the value of any rebate (if present) will be subtracted to determine the fair market value (FMV), which determines the TAVT due. If Option (2) is selected, FMV may not be reduced by the values of trade-ins and rebates.
  • The FMV will then be multiplied by the applicable TAVT rate to determine the TAVT due.
  • Please note - the calculation of TAVT for all used vehicles (whether leased or purchased) and for new vehicles that are purchased will not change.
  • For additional information please see Ga. Comp. R. & Reg. § 560-11-14-.01.

What do dealers need to do?

  • As of January 1, 2018, the dealer will use one of the above methods of TAVT calculation for new, leased vehicles with a purchase date of January 1, 2018, or later. The dealer should use the calculation method selected by the lessor and the lessee.