Property tax law offers new
Published 12:00 am Sunday, July 30, 2000
benefit on automotive tax
By BETH LAKEY
July 29, 2000 10 PM
If selling a car after Aug. 1, owners can claim a tax credit on property taxes paid on the vehicle.
Beginning Tuesday, a new state law goes into effect allowing vehicle owners to claim a tax credit on property taxes paid on the car if the owner sell or trades before the end of his or her current registration period.
Act 2000-565 amended Alabama’s Synchronized Taxation and Registration System law that was passed in 1999. STARS requires property taxes be paid in advance vehicles registered on or after Jan. 1, 2000.
Under the 1999 law, if a vehicle owner sold his or her vehicle before the end of the current registration period, the owner could not claim a credit for taxes paid on the previously-owned vehicle and apply it to another vehicle. The new owner could claim a credit for taxes paid by the previous owner.
The 2000 law reveres that procedure.
"We have currently installed the equipment and software necessary to administer this voucher program," said Pike County Probate Judge Bill Stone.
He said everyone needs to understand the program doesn’t go into effect until Aug. 1 and any transactions prior to that date do not qualify under the new law.
Stone said residents of Pike County also need to remember they must have proof they no longer have possession of the vehicle, such as a signed affadavit obtained at the Probate Office or paperwork showing they have sold the vehicle.
Here’s an example: Bob Davis, a Pike County resident, renews his tag in January 2001, paying property tax for the following 12 months. On Apr. 1, 2001, Davis trades his car to a Troy dealership and receives a voucher from Pike County for the pre-paid taxes. If he purchases another vehicle and registers it in Pike County, the voucher will be used toward payment of the tax on his new vehicle from the date of purchase until his renewal in January 2002.
Mary Jones purchases Davis’ old car from the local dealership. She registers the car in her name and pays property tax from the date of purchase until her renewal month.
"Basically, the new law allows the vehicle owner who paid the taxes on the vehicle to claim any remaining credit of the property taxes applicable to the vehicle when it is sold or traded and apply that credit to the newly-purchased ‘replacement’ vehicle," said State Commissioner of Revenue Michael L. Patterson.
Tax credits will be in the form of a credit voucher and will be issued to the vehicle owner who paid the property taxes on the vehicle. Cash refunds will not be issued.
In order to claim the credit, the previous owner will have to provide county tax-collecting officials with a copy of the vehicle’s bill of sale or a signed affadavit by both the new owner and previous owner, showing the date of the sale of the vehicle.
If the previous owner has purchased a new vehicle, the probate office will apply any credit of property taxes paid to the new vehicle when it is registered.
If there is not a replacement vehicle at the time the property tax credit application is made, the probate office will issue the previous owner a credit voucher which will be good for one year. The voucher may be applied to property taxes due on any subsequent vehicle purchased by that individual or may be applied to the next registration renewal to another vehicle owned by that person.
"There are several very important provisions of the new law that define the validity of the vehicle property tax credit voucher and we want to ensure that vehicle owners are aware of these," Patterson said. "First, the new law requires the original credit voucher to be presented to the county tax-collecting officials when claiming the property tax credit."
The law does not provide for duplicate or replacement vouchers to be issed.
"It specifically states that the original must be presented in order to claim the credit," Patterson said. "We urge individuals who receive a credit voucher to apply the credit voucher as soon as possible to avoid the risk of its being lost or destroyed."
Also, the property tax credit is not automatic. In order to claim the credit, the previous owner must apply for the credit voucher within 60 days following the sale, trade or transfer of the vehicle.
The law specifically states no voucher will be issued after 60 days of the date it is sold, traded, destroyed, permanently removed from Alabama, stolen without recovery or tranferred.
Patterson also said the credit voucher can be used only in the county where the original taxes were paid on the vehicle.
For example, a former Montgomery County resident who paid taxes on a vehicle and received a credit voucher, cannot apply the Montgomery County credit to vehicle property taxes due in Pike County, where the owner now resides. The voucher, however, can be transferred to a spouse, dependent child or any person or corporation that rented or leased the motor vehicle from the owner and applied to vehicle taxes due in the county where the original vehicle taxes were paid. The law prohibits the tax credit voucher from being sold or otherwise used.
For more information concerning vehicle property taxes, contact the Alabama Department of Revenue, Property Tax Division at (334) 242-1525 or visit the department’s Web site at www.ador.state.al.us.