House Bill 1261 (AS PASSED HOUSE AND SENATE)
By: Representatives Huddleston of the 72nd, Dickey of the 134th, Williamson of the 112th,
Frye of the 122nd, Cannon of the 172nd, and others
A BILL TO BE ENTITLED
AN ACT
To amend Part 1 of Article 2 of Chapter 5 of Title 48 of the Official Code of Georgia
Annotated, relating to tax exemptions, so as to provide for level 1 freeport exemptions for
certain goods in inventory for electric utilities; to provide for application for such
exemptions; to provide for related matters; to repeal conflicting laws; and for other purposes.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
Part 1 of Article 2 of Chapter 5 of Title 48 of the Official Code of Georgia Annotated,
relating to tax exemptions, is amended by revising subsection (b) of Code Section 48-5-48.1,
relating to level 1 freeport exemption, application, filing, and renewal, as follows:
"(b) 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; <del>and
</del> (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.; <ins>and
(5) A summary, as prescribed by the department, of the inventory of finished goods and
parts held in the ordinary course of an electric utility taxpayer's operations which are
destined for incorporation into any electric generation, distribution, or transmission
infrastructure located in this state through construction, improvement, repair, or
maintenance."
</ins>
SECTION 2.
Said part is further amended by revising subsection (c) of Code Section 48-5-48.2, relating
to level 1 freeport exemption and referendum, as follows:
"(c) The governing authority of any county or municipality may, subject to the approval
of the electors of such political subdivision, exempt from ad valorem taxation, including
all such taxes levied for educational purposes and for state purposes, all or any combination
of the following types of tangible personal property:
(1) Inventory of goods in the process of manufacture or production which shall include
all partly finished goods and raw materials held by the taxpayer, the taxpayer's affiliate,
or the taxpayer's designated agent for direct use or consumption in the ordinary course
of the taxpayer's manufacturing or production business in this state. The exemption
provided for in this paragraph shall apply only to tangible personal property which is
substantially modified, altered, combined, or changed in the ordinary course of the
taxpayer's manufacturing, processing, or production operations in this state. For purposes
of this paragraph, the following activities shall constitute substantial modification in the
ordinary course of manufacturing, processing, or production operations:
(A) The cleaning, drying, pest control treatment, or segregation by grade of grain,
peanuts or other oil seeds, or cotton;
(B) The remanufacture of aircraft engines or aircraft engine parts or components,
meaning the substantial overhauling or rebuilding of aircraft engines or aircraft engine
parts or components;
(C) The blending of fertilizer bulk materials into a custom mixture, whether performed
at a commercial fertilizer blending plant, retail outlet, or any application site;
(D) The substantial assembly of finished parts; and
(E) The remanufacture, which includes repair or modification of goods manufactured,
processed, or produced by the taxpayer;
(2) Inventory of finished goods manufactured or produced within this state in the
ordinary course of the taxpayer's manufacturing or production business when held by the
original manufacturer or producer of such finished goods. The exemption provided for
in this paragraph shall be for a period not exceeding 12 months from the date such
property is produced or manufactured;
(3) 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 to a final
destination outside this state and inventory of finished goods which are shipped into this
state from outside this state and stored for transshipment to a final destination outside this
state, including foreign merchandise in transit. The exemption provided for in this
paragraph shall be for a period not exceeding 12 months from the date such property is
stored in this state. Such period shall be determined based on application of a first-in,
first-out method of accounting for the inventory. The official books and records of the
warehouse, dock, or wharf where such property is being stored shall contain a full, true,
and accurate inventory of all such property, including the date of the receipt of the
property, the date of the withdrawal of the property, the point of origin of the property,
and the point of final destination of the same, if known. The official books and records
of any such warehouse, dock, or wharf, whether public or private, pertaining to any such
property for which a freeport exemption has been claimed shall be at all times open to the
inspection of all taxing authorities of this state and of any political subdivision of this
state; <del>or
</del> (4) Stock in trade of a fulfillment center which, on January 1, is stored in a fulfillment
center and which is made available to remote purchasers who may make such purchases
by electronic, internet, telephonic, or other remote means, and where such stock in trade
of a fulfillment center will be shipped from the fulfillment center and delivered to the
purchaser at a location other than the location of the fulfillment center. The exemption
provided for in this paragraph shall be for a period not exceeding 12 months from the date
such property is stored in this state. Such period shall be determined based on application
of a first-in, first-out method of accounting for the inventory. The official books and
records of the fulfillment center where such property is being stored shall contain a full,
true, and accurate inventory of all such property, including the date of the receipt of the
property and the date of the withdrawal of the property. The official books and records
of any such fulfillment center pertaining to any such property for which a freeport
exemption has been claimed shall be at all times open to the inspection of all taxing
authorities of this state and of any political subdivision of this state.; <ins>or
(5) Inventory of electric utility equipment, including, but not limited to, motors, turbines,
boilers, regulators, steel, concrete, masonry, conductor, cable, poles, transformers,
capacitors, circuit breakers, fuses, insulators, switchgear, and any other capital equipment
and supplies that are held in inventory by an electric utility for use in the normal course
of business within this state. Electric utility equipment that has been incorporated into
operating electric generation, distribution, or transmission facilities shall not, however,
be exempt from ad valorem taxation pursuant to this Code section."
</ins> SECTION 3.
All laws and parts of laws in conflict with this Act are repealed.