(Code 1981, §48-5-48.2, enacted by Ga. L. 1984, p. 1058, § 4; Ga. L. 1992, p. 2482, § 2; Ga. L. 1996, p. 926, § 1; Ga. L. 1998, p. 295, § 3; Ga. L. 1998, p. 1120, § 2; Ga. L. 2012, p. 249, § 2/HB 48; Ga. L. 2013, p. 83, § 1/HB 304; Ga. L. 2016, p. 731, § 2/HB 935; Ga. L. 2017, p. 774, § 48/HB 323; Ga. L. 2018, p. 986, § 2/HB 888; Ga. L. 2019, p. 763, § 1/HB 405.)
The 2016 amendment, effective July 1, 2016, added paragraph (b)(4); redesignated former paragraph (b)(4) as present paragraph (b)(5); added paragraph (b)(6); redesignated former paragraph (b)(5) as present paragraph (b)(7); deleted "or" at the end of paragraph (c)(2); substituted "; or" for a period at the end of paragraph (c)(3); and added paragraph (c)(4).
The 2017 amendment, effective May 9, 2017, part of an Act to revise, modernize, and correct the Code, in the first sentence of paragraph (c)(4), substituted "January 1, is stored" for "January 1, are stored" and "which is" for "which are"; and revised punctuation in the first sentence of subsection (e).
The 2018 amendment, effective May 8, 2018, in paragraph (c)(1), inserted "by the taxpayer or the taxpayer's designated agent" in the middle of the first sentence and inserted "combined," in the middle of the second sentence; deleted "and" at the end of subparagraph (c)(1)(B); added "and" at the end of subparagraph (c)(1)(C); and added subparagraph (c)(1)(D).
The 2019 amendment, effective July 1, 2019, added paragraph (b)(1); redesignated former paragraphs (b)(1) through (b)(7) as present paragraphs (b)(2) through (b)(8), respectively; substituted "internet" for "Internet" in the middle of paragraph (b)(5) and in the middle of the first sentence of paragraph (c)(4); inserted ", the taxpayer's affiliate," in the middle of the first sentence of paragraph (c)(1); deleted "and" at the end of subparagraph (c)(1)(C); added "and" at the end of subparagraph (c)(1)(D); and added subparagraph (c)(1)(E).
Editor's notes.- Ga. L. 1984, p. 1058, § 9, not codified by the General Assembly, provides: "In the event of any conflict between this Act and any other Act of the 1984 General Assembly the provisions of such other Act shall control over the provisions of this Act."
Ga. L. 2012, p. 249, § 5/HB 48, not codified by the General Assembly, provides for severability.
Ga. L. 2013, p. 83, § 2/HB 304, not codified by the General Assembly, provided that the amendment to this Code section shall apply to all taxable years beginning on and after January 1, 2014.
Law reviews.- For article, "Procedure and Problems in Georgia Ad Valorem Tax Appeals," see 26 Ga. St. B. J. 98 (1990). 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
Purpose of statutory language.
- By using the all-encompassing descriptive term "inventory of finished goods," instead of "tangible property," the General Assembly intended to include all classes of tangible property under the constitution without enumerating each so that there would be equal treatment to avoid constitutional implications as to equal protection, rational purpose, and disparate treatment. Fulton County Tax Comm'r v. GMC, 234 Ga. App. 459, 507 S.E.2d 772 (1998).
"For resale purposes", as used in O.C.G.A. § 48-5-48.2(a)(4), expressly excludes from the freeport exemption any merchandise sold at retail, regardless of whether the sale is made to a resident or nonresident of Georgia. Aircraft Spruce & Specialty Co. v. Fayette County Bd. of Tax Assessors, 294 Ga. App. 241, 669 S.E.2d 417 (2008).
O.C.G.A. § 48-5-48.2 gives county discretion as to: (1) whether to submit the exemption issue to a voter referendum; (2) what types of inventory will be submitted to the voters for exemption; and (3) the percentage of the value of goods to be exempted. Levetan v. Lanier Worldwide, Inc., 265 Ga. 323, 454 S.E.2d 504 (1995).
Accounting methods.
- O.C.G.A. § 48-5-48.2(b)(1) and (2) (now paragraphs (b)(2) and (b)(3)) did not require a particular accounting method to be used for valuation, so it was arbitrary and capricious to apply a particular accounting method to a taxpayer's freeport exemption application, because the application did not disclose a particular accounting method. William L. Bonnell Co. v. Coweta County Bd. of Tax Assessors, 252 Ga. App. 151, 556 S.E.2d 159 (2001).
Grain merchandising and storage.
- Under its pre-1998 version, O.C.G.A. § 48-5-48.2 did not apply to farm products stored for a grain merchandising and storage business. Board of Assessors v. McCoy Grain Exch., Inc., 234 Ga. App. 98, 505 S.E.2d 832 (1998).
Evidence to show timely filing.
- Without evidence of a United States post office postmark date to prove an application for freeport exemption was mailed timely, or other evidence to show compliance with an internal policy, the taxpayer was unable to prove the taxpayer's return was timely filed. DeKalb County Bd. of Tax Assessors v. Lanier Worldwide, Inc., 208 Ga. App. 435, 430 S.E.2d 595 (1993).
Charge on risk of using mail system needed.
- Because the instruction sheet for the application for freeport exemption makes it clear that the taxpayer bears the responsibility for ensuring that the postmark date is the same as the mailing date, the charge that one who selects the United States mail takes all the risks that are usually incident was relevant. DeKalb County Bd. of Tax Assessors v. Lanier Worldwide, Inc., 208 Ga. App. 435, 430 S.E.2d 595 (1993).
Packaging materials are not "raw materials." Murray Bakery Prods., Inc. v. Board of Tax Assessors, 186 Ga. App. 559, 367 S.E.2d 852, aff'd, 258 Ga. 484, 371 S.E.2d 393 (1988).
Merely assembling purchased packaging materials was not a substantial change of personal property in the ordinary course of a cookie maker's manufacturing business, and such materials did not qualify for the freeport exemption. Murray Bakery Prods., Inc. v. Board of Tax Assessors, 258 Ga. 484, 371 S.E.2d 393 (1988).
Business involving both transportation and manufacture.
- Fact that a company is in the transportation business is not fatal to the company's claim for a freeport exemption because the company functions as a manufacturer of aircraft parts and a remanufacturer of aircraft engines in the regular course of the company's business and those operations are located in this state. Delta Air Lines, Inc. v. Clayton County Bd. of Tax Assessors, 246 Ga. App. 225, 539 S.E.2d 905 (2000).
Inventory sold from a taxpayer to a purchaser.
- 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).
Inventory being held for leasing purposes.
- Computers owned by taxpayer and held in storage until leased to travel agencies, after the period of which lease the computers are returned to the taxpayer, were not "finished goods" being held for "final destination outside this state" within the meaning of O.C.G.A. § 48-5-48.2, and therefore did not meet the requirements to qualify for the exemption under § 48-5-48.2. Apollo Travel Servs. v. Gwinnett County Bd. of Supvrs., 230 Ga. App. 790, 498 S.E.2d 297 (1998).
Inventory of finished goods.
- Aircraft parts stored at the company and destined for shipment to airport stations outside Georgia qualified for the freeport exemption. The company was not required to prove that the parts were intended for resale. Delta Air Lines, Inc. v. Clayton County Bd. of Tax Assessors, 246 Ga. App. 225, 539 S.E.2d 905 (2000).
Inventory included in freeport exemption.
- Component parts of self-checkout systems purchased by a retailer and which were held in Georgia for shipment to retail stores in other states were exempt from ad valorem tax under the freeport exemption in O.C.G.A. § 48-5-48.2(c)(3), which included inventory; the fact that the components required installation did not render the components "in the process of manufacture or production." Fayette Cty. Bd. of Tax Assess. v. WalMart Stores, Inc., 354 Ga. App. 584, 841 S.E.2d 104 (2020).
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).
Res judicata and collateral estoppel as to exemption.
- Following a final consent judgment, the factual and legal basis for freeport exemption for several previous years became res judicata as to what had been litigated, and collateral estoppel would apply on the exemption issue on future applications unless there was a substantial factual change. Fulton County Tax Comm'r v. GMC, 234 Ga. App. 459, 507 S.E.2d 772 (1998).
Doctrine of collateral estoppel applied to preclude the county board of tax assessors from relitigating a taxpayer's eligibility for the freeport exemption since there had been no change or development in the law. Gwinnett County Bd. of Tax Assessors v. GE Capital Computer Servs., 273 Ga. 175, 538 S.E.2d 746 (2000).
Role of superior court.
- It is initially the county board of tax assessors and, in the event of continued disagreement, the superior court, that must consider the taxpayer's showing and make an appropriate grant of freeport exemption if all conditions are satisfied. Fulton County Tax Comm'r v. GMC, 234 Ga. App. 459, 507 S.E.2d 772 (1998).
Motor vehicles and mobile homes.
- While motor vehicles and mobile homes are classified as separate classes of tangible property for ad valorem purposes, the General Assembly did not intend to exclude this class of tangible property from the ambit of O.C.G.A. § 48-5-48.2 for purposes of freeport exemption. Fulton County Tax Comm'r v. GMC, 234 Ga. App. 459, 507 S.E.2d 772 (1998).
Aircraft engines in the process of remanufacture.
- Process of "heavy maintenance," constituting the disassembly of the engine, the replacement of a number of expendable parts, the machine working of other parts to specification, its reassembly and testing over an approximate six to eight week period, is "substantial" for purposes of the exemption under O.C.G.A. § 48-5-48.2. Delta Air Lines, Inc. v. Clayton County Bd. of Tax Assessors, 246 Ga. App. 225, 539 S.E.2d 905 (2000).
Whether aircraft engines undergoing "light" maintenance were undergoing "substantial overhauling or rebuilding" for purpose of the exemption under O.C.G.A. § 48-5-48.2 is an issue meriting submission to a jury. Delta Air Lines, Inc. v. Clayton County Bd. of Tax Assessors, 246 Ga. App. 225, 539 S.E.2d 905 (2000).
Out of state retail sales via telephone or Internet.
- There was no merit to a taxpayer's argument that retail sales made via the telephone or Internet to out-of-state customers were not sales that occurred in Georgia. In determining whether a retail sale was made in Georgia, the court had to look to the location and conduct of the seller, rather than the location of the buyer, and here, all aspects of the retail sales made from the taxpayer's Georgia warehouse to Internet and telephone customers occurred in Georgia. Aircraft Spruce & Specialty Co. v. Fayette County Bd. of Tax Assessors, 294 Ga. App. 241, 669 S.E.2d 417 (2008).
Cited in GE Capital Computer Servs. v. Gwinnett County Bd. of Tax Assessors, 240 Ga. App. 629, 523 S.E.2d 651 (1999).
RESEARCH REFERENCES
ALR.
- Validity, construction, and application of sales, use, and utility taxes on retail transactions of internet sellers and internet access providers, 30 A.L.R.6th 341.