How did Georgia's 2013 TSPLOST transition apply to motor-vehicle lease payments, moves between counties, and the $5,000 cap?

Plain-English summary

The ruling explained Georgia's 2013 transition from lease-payment sales tax toward title ad valorem tax for motor vehicles:

• For a vehicle registered in a TSPLOST county, the one-percent tax was collected with each periodic lease payment, not all at inception, until aggregate taxable payments reached $5,000.
• Capitalized-cost reductions, ordinary lease payments, and end-of-term payments all counted toward the $5,000 cap.
• Moving into a TSPLOST county started collection while registered there; moving out stopped it. Moving between TSPLOST counties shifted the tax to the new county.
• Certain leases beginning from January 1, 2012 through February 28, 2013 could choose continued lease-payment tax or opt into title ad valorem tax during the stated transition window.
• Leases over 31 days beginning on or after March 1, 2013 were exempt from state and local lease-payment taxes, including TSPLOST, when title ad valorem tax was paid.

Common questions

Q: Could a lessor collect the maximum $50 TSPLOST at lease inception?

A: No. The ruling required collection with each monthly payment until the $5,000 transaction cap was reached.

Q: Which county received the tax after a move?

A: The vehicle's current registration county under the transition rules described.

Citations and references

• O.C.G.A. § 48-8-241 -- transportation special-purpose local-option tax
• O.C.G.A. § 48-8-252 -- credit between transportation tax districts
• O.C.G.A. §§ 48-5B-1(b)(1)(A), 48-5-441.1, 48-8-3(95) -- title ad valorem tax transition

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2013-09

Original ruling text

State of Georgia
Douglas J. MacGinnitie
Commissioner

Department of Revenue

Frank M. O’Connell
Director

Administrative Division – Office of Tax Policy
1800 Century Blvd., N.E., Suite 15107
Atlanta, Georgia 30345-3205
(404) 417-6649
June 12, 2013

Georgia Letter Ruling SUT No. 2013-06-12-01 Leases

This letter is in response to your request for guidance regarding the application of the one percent
transportation special purpose local option sales and use tax to certain lease transactions.
Facts
Effective January 1, 2013, a one percent transportation special purpose local option sales and use tax
(“TSPLOST”) took effect in forty-six Georgia counties. This tax is imposed on the first $5,000 of a motor
vehicle transaction, resulting in a maximum TSPLOST tax of $50 on a motor vehicle.
When a vehicle is purchased and will be registered in a TSPLOST county, the additional one percent tax up to a
maximum of $50 must be collected in full at the time of the transaction. However, a number of questions have
arisen as to the application of TSPLOST to lease payments when a vehicle is registered in one of the forty-six
TSPLOST counties.
Issues
1.

Assuming a vehicle is registered in a TSPLOST county, must the TSPLOST be collected on lease payments
made after January 1, 2013, even if the lease began prior to January 1, 2013?

2.

Can the TSPLOST be collected in full up to the maximum amount of $50 at lease inception or must the
TSPLOST be collected on each monthly lease payment up to the $5000 limitation?

3.

What happens when a lease originates in a non-TSPLOST county but then the lessee moves into and
registers the vehicle in a TSPLOST county?

4.

What happens when a lease originates in a TSPLOST county but then the lessee moves into and registers
the vehicle in a non-TSPLOST county?

5.

What happens when a lease originates in one TSPLOST county but then the lessee moves into and registers
a vehicle in another TSPLOST county?

6.

Are other payments, such as capitalized cost reduction (down payment) or end of term lease payments
counted toward the $5000 limitation and subject to TSPLOST?

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June 12, 2013
Page 2 of 3

Analysis
All retail purchases and sales of tangible personal property are taxable unless provided for otherwise. 1 Tax is
levied and imposed upon the retail purchase, retail sale, rental, storage, use, or consumption of tangible
personal property and on services described in this article that occur in this state. 2 "Retail sale" or "sale at
retail" means a sale to a consumer or to any person for any purpose other than for resale of tangible personal
property or certain services. 3 “Sale” means any transfer of title or possession, transfer of title and
possession, exchange, barter, lease, or rental, conditional or otherwise, in any manner or by any means. 4
The sales price paid is used as the basis of the tax. 5 When a trade-in credit or partial payment is allowed on
the sale of new or used articles, the tax must be paid on the value of the new or used article less the credit
allowed for the used article. 6 For motor vehicles taken in trade (without deduction for liens), the tax must
be paid on the value of the motor vehicle less the allowance for the used article. 7
Effective January 1, 2011 and before May 1, 2013, the lease or rental of motor vehicles, trailers,
semitrailers, or aircraft that do not qualify as transportation equipment is sourced as follows:
For a lease or rental that requires recurring periodic payments, each periodic payment is
sourced to the primary property location. The primary property location shall be as
indicated by an address for the property provided by the lessee that is available to the
lessor from its records maintained in the ordinary course of business, when use of this
address does not constitute bad faith. This location is not be altered by intermittent use at
different locations.
Twelve special transportation districts are created corresponding with the twelve regional commissions
under O.C.G.A. § 50-8-4. Subject to voter approval, each district is authorized to impose a one percent
special district transportation tax for ten years to fund transportation projects on an investment list to be
developed by the affected local governments and the state. The special district tax will be imposed on the
first $5,000 of any transaction involving the sale or lease of a motor vehicle. 8
A credit for the special district transportation sales and use tax paid in one special district may be allowed
for tangible personal property subject to the same tax in another special district or jurisdiction upon the same
property. If the amount of sales or use tax so paid is less than the amount of the use tax due, the purchaser
pays the difference. 9
Forty-six counties in a statewide referendum have approved the imposition of a 10-year, 1% TSPLOST
effective January 1, 2013. The counties are: Appling; Bleckley; Burke; Candler; Chattahoochee; Clay;
Columbia; Crisp; Dodge; Dooly; Emanuel; Evans; Glascock; Hancock; Harris; Jeff Davis; Jefferson;
Jenkins; Johnson; Laurens; Lincoln; Macon; Marion; McDuffie; Montgomery; Muscogee; Quitman;
Randolph; Richmond; Schley; Stewart; Sumter; Talbot; Taliaferro; Tattnall; Taylor; Telfair; Toombs;
Treutlen; Warren; Washington; Wayne; Webster; Wheeler; Wilcox; and Wilkes.
Effective March 1, 2013, sales and use taxes (other than TSPLOST) and the ad valorem tax on motor
vehicles will no longer be imposed on motor vehicles titled in Georgia. These taxes will be replaced by a
one-time title fee called the title ad valorem tax (TAVT). The TAVT is an alternative ad valorem property
tax authorized by Art. VII, §1, Paragraph III (b)(3), of the Georgia Constitution. Pursuant to the

1

O.C.G.A. §§ 48-8-1 and 48-8-30(b).
O.C.G.A. § 48-8-30.
3
O.C.G.A. § 48-8-2(6)(A).
4
O.C.G.A. § 48-8-2(33)(A).
5
O.C.G.A § 48-8-30(d).
6
O.C.G.A. § 48-8-44; Ga. Comp. R. & Regs. r. 560-12-1-.34.
7
O.C.G.A. § 48-8-2(34)(B)(vi); Ga. Comp. R. & Regs. r. 560-12-2-.09(1)(a).
8
O.C.G.A. §§ 48-8-241(a), 48-8-241(b), 48-8-241(d)(1), 48-8-241(d)(5).
9
O.C.G.A. § 48-8-252.
2

An Equal Opportunity Employer

June 12, 2013
Page 3 of 3

constitutional provision, motor vehicles that are subject to the state and local title ad valorem tax will be
classified as a separate and distinct class of tangible personal property for ad valorem property tax purposes.
Sales and use tax will continue to apply to leases or rentals of motor vehicles. 10
With the signing of House Bill 266 on March 6, 2013, motor vehicle lease payments are exempt from the
TSPLOST. The Department has taken the position that this exemption will be retroactive to March 1, 2013.
Thus, beginning March 1, 2013, all lessees will enjoy a full sales and use tax exemption on lease payments,
including the TSPLOST.
Rulings
1.

As a general rule, for vehicles registered in a TSPLOST county, leases exceeding thirty-one days that began
prior to January 1, 2013 are subject to TSPLOST effective January 1, 2013. However, for leases that
commenced on or after January 1, 2012 but before March 1, 2013, the lessee and/or lessor have the choice
of (a) continuing to subject the lease payments to sales tax, or (b) effective March 1, 2013, subjecting the
vehicle to title ad valorem tax and not subjecting the lease payments to sales tax. [The opt-in period ends
February 28, 2014.]

2.

The TSPLOST cannot be collected in full up to the maximum amount of $50 at lease inception. The
TSPLOST must be collected on each monthly lease payment (subject to the $5,000 limitation) in the same
manner as any other sales and use tax.

3.

When a lease originates in a non-TSPLOST county and subsequently the lessee moves into and registers
the vehicle in a TSPLOST county, the TSPLOST will be due on each lease payment (specifically, on the
first $5,000 of lease payments in the aggregate) made during the time the vehicle is registered in a
TSPLOST county.

4.

When a lease originates in a TSPLOST county and subsequently the lessee moves into and registers the
vehicle in a non-TSPLOST county, the TSPLOST will no longer be due on each lease payment while the
vehicle is registered in that non-TSPLOST county.

5.

When a lease originates in one TSPLOST county and the lessee subsequently moves into and registers a
vehicle in another TSPLOST county the TSPLOST will be collected for and remitted to the new TSPLOST
county of registration.

6.

All lease payments, such as capitalized cost reduction (down payment) and end of term lease payments are
counted toward the $5000 limitation and are subject to the TSPLOST.

It should again be noted that for lease transactions that exceed thirty-one days and that are commenced on or
after March 1, 2013, and are for a motor vehicle upon which a state and local title ad valorem tax is paid, the
lease payments are exempt from state and local sales and use taxes, including the TSPLOST
The opinions expressed in this ruling are based upon the information contained in your request and limited
to the specific transactions in question. Should the circumstances regarding the transactions change, or differ
materially from those represented, then this ruling may become invalid. In addition, please be advised that
subsequent statutory or administrative rule changes or judicial interpretations of the Statutes or Rules upon
which this advice is based may subject similar future transactions to a different tax treatment than those
expressed in this response.

10

O.C.G.A. §§ 48-5B-1(b)(1)(A), 48-5-441.1, 48-8-3(95).

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