Tangible Personal Property Inventory Exemption; Application; Failure to File Application as Waiver of Exemption; Denials; Notice of Renewals

1. Law
2. Georgia Code
3. Revenue and Taxation
4. Ad Valorem Taxation of Property
5. Property Tax Exemptions and Deferral
6. Tax Exemptions
7. Tangible Personal Property Inventory Exemption; Application; Failure to File Application as Waiver of Exemption; Denials; Notice of Renewals

1. Any person, firm, or corporation seeking a level 1 freeport exemption from ad valorem taxation of certain tangible personal property inventory when such exemption has been authorized by the governing authority of any county or municipality after approval of the electors of such county or municipality pursuant to the authority of the Constitution of Georgia or Code Section 48-5-48.2 shall file a written application and summary of property with the county board of tax assessors on forms furnished by such board. Such application shall be filed in the year in which exemption from taxation is sought no later than the date on which the tax receiver or tax commissioner of the county in which the property is located closes the books for the return of taxes.
2. The application for the level 1 freeport exemption shall provide for:
   1. A summary, as prescribed by the department, of the inventory of goods in the process of manufacture or production which shall include all partly finished goods and raw materials held for direct use or consumption in the ordinary course of the taxpayer's manufacturing or production business in the State of Georgia;
   2. A summary, as prescribed by the department, of the inventory of finished goods manufactured or produced within the State of Georgia in the ordinary course of the taxpayer's manufacturing or production business when held by the original manufacturer or producer of such finished goods;
   3. A summary, as prescribed by the department, of the inventory of finished goods which on January 1 are stored in a warehouse, dock, or wharf, whether public or private, and which are destined for shipment outside the State of Georgia and the inventory of finished goods which are shipped into the State of Georgia from outside this state and which are stored for transshipment to a final destination outside this state. The information required by Code Section 48-5-48.2 to be contained in the official books and records of the warehouse, dock, or wharf where such property is being stored, which official books and records are required to be open to the inspection of taxing authorities of this state and political subdivisions thereof, shall not be required to be included as a part of or to accompany the application for such exemption; and
   4. A summary, as prescribed by the department, of the stock in trade of a fulfillment center which on January 1 is stored in the fulfillment center. The information required by Code Section 48-5-48.2 to be contained in the official books and records of the fulfillment center where such property is being stored, which official books and records are required to be open to the inspection of the taxing authorities of this state and political subdivisions thereof, shall not be required to be included as a part of or to accompany the application for such exemption.
3. 1. For purposes of this subsection, the term "file properly" shall mean and include the timely filing of the completed application for which exemption is sought on or before the due date specified in subsection (a) of this Code section. Any clerical error, including, but not limited to, a typographical error, scrivener's error, or any unintentional immaterial error or omission in the application shall not be construed as a failure to file properly.
   2. The failure to file properly the completed application shall constitute a waiver of the exemption on the part of the person, firm, or corporation failing to make the application for such exemption for that year as follows:
      1. The failure to report any inventory for which such exemption is sought in the summary provided for in the application shall constitute a waiver of the exemption on the part of the person, firm, or corporation failing to so report for that taxable year in an amount equal to the difference between fair market value of the inventory as reported and the fair market value finally determined to be applicable to the inventory for which the exemption is sought; and
      2. The failure to file timely such completed application shall constitute a waiver of the exemption until the first day of the month following the month such completed application is filed properly with the county tax assessor; provided, however, that unless such completed application is filed on or before June 1 of such year, the exemption shall be waived for that entire year.
4. Upon receiving the application required by this Code section, the county board of tax assessors shall determine the eligibility of all types of tangible personal property listed on the application. If any property has been listed which the board believes is not eligible for the exemption, the board shall issue a letter notifying the applicant, not later than 180 days after receiving the application, that all or a portion of the application has been denied. The denial letter shall list the type and total fair market value of all property listed on the application for which the exemption has been approved and the type and total fair market value of all property listed on the application for which the exemption has been denied. The applicant shall have the right to appeal from the denial of the exemption for any property listed and such appeal shall proceed as provided in Code Section 48-5-311. Except as otherwise provided in subparagraph (c)(2)(A) of this Code section, the county board of assessors shall not send a second letter of notification denying the exemption of all or a portion of such property listed on the application on new grounds that could and should have been discerned at the time the initial denial letter was issued. If, however, the county board of tax assessors fails to issue a letter of denial within 180 days after receiving the taxpayer's application, then the freeport exemption sought in the application shall be deemed accepted in its entirety.
5. If the level 1 freeport exemption has been granted to a taxpayer for a taxable year, the county board of tax assessors shall issue a notice of renewal to the taxpayer for the immediately following taxable year. Such notice of renewal shall be issued not later than January 15 of such immediately following taxable year to facilitate the filing of a timely completed application by the taxpayer for such taxable year.

(Code 1981, §48-5-48.1, enacted by Ga. L. 1982, p. 1101, § 1; Ga. L. 1983, p. 3, § 37; Ga. L. 1984, p. 1371, § 1; Ga. L. 1992, p. 2482, § 1; Ga. L. 1997, p. 963, § 3; Ga. L. 1998, p. 128, § 48; Ga. L. 1998, p. 1120, § 1A; Ga. L. 1999, p. 81, § 48; Ga. L. 2004, p. 464, § 1; Ga. L. 2012, p. 249, § 1/HB 48; Ga. L. 2016, p. 731, § 1/HB 935; Ga. L. 2017, p. 774, § 48/HB 323; Ga. L. 2018, p. 986, § 1/HB 888.)

The 2016 amendment, effective July 1, 2016, in subsection (b), deleted "and" at the end of paragraph (b)(2), substituted "; and" for a period at the end of paragraph (b)(3), and added paragraph (b)(4).

The 2017 amendment, effective May 9, 2017, part of an Act to revise, modernize, and correct the Code, substituted "January 1 is stored" for "January 1 are stored" in the first sentence of paragraph (b)(4).

The 2018 amendment, effective May 8, 2018, substituted "summary" for "schedule" in the middle of the first sentence of subsection (a) and near the middle of subparagraph (c)(2)(A); substituted "summary, as prescribed by the department," for "schedule" near the beginning of paragraphs (b)(1) through (b)(4); in paragraph (c)(1), substituted "completed application" for "application and complete schedule of the inventory" in the first sentence and added the second sentence; substituted "completed application" for "application and schedule" near the middle of the introductory paragraph of paragraph (c)(2), near the beginning of subparagraph (c)(2)(B), and near the end of the last sentence of subsection (e); in subparagraph (c)(2)(B), substituted "completed application is filed" for "application and schedule are filed" in the middle, and substituted "unless such completed application is filed" for "unless the application and schedule are filed" in the proviso; and, in subsection (d), inserted ", not later than 180 days after receiving the application," in the middle of the second sentence and added the last sentence.

Editor's notes.

- Ga. L. 1997, p. 963, § 5, not codified by the General Assembly, provides that the amendment to this Code section is applicable to all taxable years beginning on or after January 1, 1998.

Ga. L. 2012, p. 249, § 5/HB 48, not codified by the General Assembly, provides for severability.

Law reviews.

- For article, "Freeport Exemption from Property Taxes for Inventory Stored in Georgia But Destined for Shipment Out-of-State," see 28 Ga. St. B. J. 108 (1991).

JUDICIAL DECISIONS

Filings not required prior to statute.

- When "freeport" exemption was approved by voters, and at all times relevant to the instant appeal there was no state statutory provisions specifying that the exemption from taxation which had otherwise been granted to inventories was conditioned upon the taxpayer's timely filing of an application therefor, the subsequent enactment of O.C.G.A. § 48-5-48.1 calling for a timely filing in order to obtain the exemption was intended to change the existing law; therefore, the procedure denying an exemption for untimely filings used by the county board of tax assessors prior to the statutory addition was not an authorized penalty under state law. TEC Am., Inc. v. DeKalb County Bd. of Tax Assessors, 170 Ga. App. 533, 317 S.E.2d 637 (1984).

Failure to receive the application for exemption form does not excuse the taxpayer from meeting the taxpayer's burden to file the application. Rockdale County v. Finishline Indus., Inc., 238 Ga. App. 467, 518 S.E.2d 720 (1999).

Waiver by untimely application.

- When the only proof of timely mailing of applications for exemption was testimony of the corporation's tax specialist that the specialist placed the envelopes in the mailbox in the corporation's home office, and since the envelopes were not imprinted with U.S. Postal Service postmarks, but contained private postage meter stamps, the applications were untimely filed and the exemption was waived. Gwinnett County Bd. of Tax Assessors v. Makita Corp. of Am., 218 Ga. App. 175, 460 S.E.2d 538 (1995).

Amended application.

- It was arbitrary and capricious for a board of tax assessors to refuse, under O.C.G.A. § 48-5-48.1(c)(2)(B), to allow a taxpayer to retroactively amend a timely filed and valid freeport exemption when the board changed the board's valuation method. William L. Bonnell Co. v. Coweta County Bd. of Tax Assessors, 252 Ga. App. 151, 556 S.E.2d 159 (2001).

Taxpayer's understatement of value of personal property did not preclude taking the freeport exemption. Georgian Art Lighting Designs, Inc. v. Gwinnett County Bd. of Tax Assessors, 211 Ga. App. 510, 439 S.E.2d 687 (1993).

Since the parties stipulated that the county tax assessors board denied the taxpayer an exemption from ad valorem taxation of certain tangible personal property based on an undervaluation of its inventory, since the taxpayer properly filed for the exemption, and because statutory law stated that the exemption was waived for failing to report inventory, and not an undervaluation of inventory, the trial court properly granted summary judgment to the taxpayer on the issue of whether the county equalization board properly determined that the taxpayer was entitled to the exemption. Gwinnett County Bd. of Tax Assessors v. Std. Distrib. & Supply, 263 Ga. App. 128, 587 S.E.2d 262 (2003).

Untimely filing of freeport application.

- Court could find no statutory basis under state law to excuse an untimely filing of a freeport application by a debtor in bankruptcy. Scana Energy Mktg., Inc. v. Cobb Energy Mgmt. Corp., 259 Ga. App. 216, 576 S.E.2d 548 (2002).

Freeport exemption did not apply.

- Freeport exemption from ad valorem taxes did not apply to a taxpayer's inventory of barbecue grill bodies because the taxpayer's involvement with the grill bodies ended when the taxpayer sold the grill bodies to a producer of barbecue grills, and the final destination of the grill bodies was the producer's plant; the producer incorporated the grill bodies into finished barbecue grills, and it was the completed barbecue grills that the producer eventually shipped out of state. Muscogee County Bd. of Tax Assessors v. Pace Indus., 307 Ga. App. 532, 705 S.E.2d 678 (2011).

Extension of time for filing not authorized.

- County board of tax assessors was not authorized to extend the period of time for accepting applications beyond the date on which the books for the return of taxes in the county were closed. Committee for Better Gov't v. Black, 216 Ga. App. 173, 453 S.E.2d 772 (1995).

What becomes of inventory not relevant to determination of exemption.

- Under O.C.G.A. § 48-5-48.1(a), the entity seeking the freeport exemption is required to file a written application and schedule of the property for which the exemption is sought; thus, the statutory scheme looks to the property, that is, the inventory, held by the taxpayer, and what becomes of the inventory in the hands of a purchaser from the taxpayer is not relevant to the determination of the availability of the freeport exemption. Muscogee County Bd. of Tax Assessors v. Pace Indus., 307 Ga. App. 532, 705 S.E.2d 678 (2011).

Cited in Fulton County Tax Comm'r v. GMC, 234 Ga. App. 459, 507 S.E.2d 772 (1998); Delta Air Lines, Inc. v. Clayton County Bd. of Tax Assessors, 246 Ga. App. 225, 539 S.E.2d 905 (2000); Gwinnett County Bd. of Tax Assessors v. Std. Distrib. & Supply, 263 Ga. App. 128, 587 S.E.2d 262 (2003).

OPINIONS OF THE ATTORNEY GENERAL

Waiver by untimely application.

- Taxpayer who fails to file a timely application for the freeport inventory exemption in accordance with the requirements of O.C.G.A. § 48-5-48.1 has waived that exemption for the tax year. 1987 Op. Att'y Gen. No. U87-7.

RESEARCH REFERENCES

Deductibility of Home Office Expenses, 38 POF2d 555.

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