Ga. Comp. R. & Regs. R. 560-11-14-.17 - Directly Financed Dealer Sale

(1) As used in this regulation, the term:

(a) "Directly Financed Dealer Sale" means the sale of a motor vehicle by a Georgia used motor vehicle dealer as defined by O.C.G.A. § 43-47-2(17)(A) which:

1. Is financed by a Direct Finance Dealer or a Related Finance Company;

2. Is financed pursuant to an installment contract evidencing such transaction which allows for a deferred payment price for a minimum of twenty-four (24) months from the date of sale; and

3. Has either the Direct Finance Dealer or Related Finance Company listed as the lienholder on the Certificate of Title Application (Form MV-1).

4. The term does not include leases, rentals, or a retail sale of a motor vehicle in which a person other than the seller provides the financing for the sale and retains a lien on the motor vehicle as collateral.

(b) "Direct Finance Dealer" means a Georgia used motor vehicle dealer as defined by O.C.G.A. § 43-47-2(17)(A) which:

1. Is licensed in accordance with applicable law;

2. Is registered with the department pursuant to part (5) of this regulation; and

3. Sells no less than 90% of its motor vehicle inventory as Directly Financed Dealer Sales.

(c) "Related Finance Company" means an entity having at least 90% common ownership with a Direct Finance Dealer, as determined by the voting rights and value of ownership interests as set forth in the operating agreements or other governing documents of the respective entities, which:

1. Is licensed in accordance with applicable law; and

2. Is registered with the department pursuant to part (5) of this regulation.

(2) Imposition

(a) Except as otherwise provided in this regulation, any motor vehicle purchased from a Direct Finance Dealer pursuant to a qualifying Directly Financed Dealer Sale shall be subject to the state and local title ad valorem tax at a rate equal to 2.5 percentage points less than the rate in effect pursuant to division (b)(1)(B)(ii) of O.C.G.A. § 48-5C-1.

(b) Any motor vehicle sold by a Direct Finance Dealer that is not a Directly Financed Dealer Sale shall not qualify for the reduced rate identified in part (2)(a) of this regulation.

(3) Transfer of Installment Contracts

(a) The reduced rate of state and local title ad valorem tax specified in part (2) of this regulation shall only apply to Direct Finance Dealers who retain, either directly or through a qualifying Related Finance Company, no less than 90% of the installment contracts originated from Directly Financed Dealer Sales.

(4) Disqualification

(a) Prepayment of an installment contract in part or in full by the owner of the motor vehicle before the expiration of the agreed upon term shall not disqualify the owner from the reduced rate of state and local title ad valorem tax provided by this regulation.

(b) Notwithstanding the allowance of prepayment of an installment contract as provided by part (4)(a) of this regulation, the Direct Finance Dealer may lose the right to provide a reduced rate in the event that their sales of motor vehicles are not at least 90% Directly Financed Dealer Sales. In determining compliance with this part, the department shall base such calculation on the ninety (90) days of business operations prior to the calculation being made. Such calculation shall be made:

1. Upon initial request for certification by the department;

2. Annually upon recertification; and

3. At the discretion of the department.

(c) In addition to the requirements of part (4)(b) of this regulation, the Direct Finance Dealer may lose the right to provide a reduced rate in the event that more than 10% of its Directly Financed Dealer Sales have liens released prior to twenty-four (24) months from the date of sale. Such calculation shall be made at the discretion of the department. In determining the percentage of liens that have been released, such calculation shall not take into account the following:

1. Liens foreclosed due to a vehicle being repossessed by the Direct Finance Dealer or Related Finance Company;

2. Liens released due to a vehicle being traded-in;

3. Liens released due to a vehicle being subject to a total loss claim or otherwise rendered as inoperable;

4. Liens released due to a vehicle being relinquished pursuant to O.C.G.A. § 10-1-780, et seq., also known as the "Georgia Lemon Law"; and

5. Liens released due to a vehicle being transferred to another owner as part of a legal proceeding.

(d) Upon disqualification pursuant to part (4)(b) or 4(c) of this regulation, the disqualified Direct Finance Dealer shall revert back to the rate specified in division (b)(1)(B)(ii) of O.C.G.A. § 48-5C-1 and shall be subject to such rate for a period of ninety (90) days. At the conclusion of the ninety (90) day period, the Direct Finance Dealer may be reinstated once again to the reduced rate upon a showing to the department that during the previous ninety (90) days that the Direct Finance Dealer has made a good faith effort to be in compliance with this regulation. If the Direct Finance Dealer has a subsequent violation of part (4)(b) or 4(c) of this regulation, the commissioner in his discretion may determine an amount of time in which the Direct Finance Dealer will be disqualified to receive the reduced rate in consideration of the facts and circumstances of the violation. Such a determination may be appealed to the commissioner by the Direct Finance Dealer.

(5) Registration

(a) A Direct Finance Dealer and its associated Related Finance Company must each register annually with the department prior to making Directly Financed Dealer Sales at the reduced rate provided by part (2)(a) of this regulation. Registration shall be made on a form prescribed by the commissioner and shall be accompanied by a registration fee equal to $100.

(b) In order to be permitted to register, each entity must be in compliance with its state tax obligations.

(c) The commissioner may develop and implement continuing education programs to ensure compliance with this regulation as well as other applicable policies and procedures.

(d) The annual registration provisions contemplated by part (5) of this regulation shall be implemented in such manner as the commissioner shall prescribe.

Notes

Ga. Comp. R. & Regs. R. 560-11-14-.17

O.C.G.A. §§ 40-2-12, 40-3-3, 48-2-12, 48-5C-1.

Original Rule entitled "Directly Financed Dealer Sale" adopted. F. Nov. 14, 2013; eff. Dec. 4, 2013.