Georgia Governor Brian Kemp signed House Bill 451, which provides Georgia manufacturers with a temporary tax break to help ease the economic and logistical disruptions caused by the COVID-19 pandemic.
Pursuant to HB 451, manufacturers who apply for exemption from Georgia’s Level 1 Freeport under OCGA Section 48-5-48.2 (c) (2) for the property tax year 2021 can apply for the amount of exempted finished goods inventory based on the value of Qualified Finished Goods Inventory As of January 1, 2020 or January 1, 2021. As a result, Georgia manufacturers who were forced to hold finished goods inventory for more than one (1) year may receive an exemption from unintended property tax liability in the year 2021.
Property tax returns, including Form PT-50PF (Free Port Exemption Application) for the property tax year 2021, were generally due by April 1, 2021 prior to the effective date of HB 451. Accordingly, Georgian manufacturers should evaluate possible methods of obtaining the relief under the law for the 2021 tax year.
Example of a relief under HB 451
A Georgia manufacturer had a total of $ 11,000,000 in inventories of manufactured goods as of Jan. 1, 2020, of which $ 6,000,000 was held for less than a year and for property tax exemption in 2020 in a compliant county or equivalent were qualified. Assume that the same manufacturer had a total inventory of manufactured goods of $ 11,000,000 on Jan. 1, 2021, of which $ 5,000,000 was held for less than 1 year and otherwise eligible for exemption.
Without HB 451, the manufacturer could apply for a Level 1 Freeport exemption of $ 5,000,000 in 2021 (and be taxed on inventory worth $ 6,000,000 for the 2021 property tax year).
With the application of HB 451, the manufacturer was able to apply for a Level 1 Freeport exemption of $ 6,000,000 in 2021 (and be taxed on inventory worth $ 5,000,000 for 2021).