Georgia Governor Brian Kemp has signed into law House Bill 451, which provides temporary ad valorem tax relief to Georgia manufacturers to mitigate the economic and logistical disruptions caused by the COVID-19 pandemic.

Under HB 451, for property tax year 2021, manufacturers claiming Georgia’s Level 1 Freeport exemption pursuant to O.C.G.A. § 48-5-48.2(c)(2) may elect to claim the amount of finished goods inventory entitled to exemption based on the value of qualifying finished goods inventory as of either January 1, 2020 or January 1, 2021. As a result, Georgia manufacturers who have been forced to hold finished goods inventory for more than one (1) year may obtain relief from unintended property tax liabilities for tax year 2021.

Property tax returns, including Form PT-50PF (Application for Freeport Inventory Exemption) for property tax year 2021 were generally due by April 1, 2021, prior to the effective date of HB 451. Accordingly, Georgia manufacturers should evaluate potential methods to obtain the relief provided under the legislation for tax year 2021.

Example of relief under HB 451

A Georgia manufacturer had total finished goods inventory on January 1, 2020 of $11,000,000, of which $6,000,000 was held for less than 1 year and qualified for the exemption in property tax year 2020 within a conforming county or municipality. Assume that the same manufacturer had total finished goods inventory on January 1, 2021 of $11,000,000, of which $5,000,000 was held for less than 1 year and otherwise qualifies for the exemption.

Without HB 451, the manufacturer could claim a Level 1 Freeport exemption of $5,000,000 in 2021 (and be taxed on inventory valued at $6,000,000 for property tax year 2021).

With the application of HB 451, the manufacturer could choose to claim a Level 1 Freeport exemption of $6,000,000 in 2021 (and be taxed on inventory valued at $5,000,000 for 2021).

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