The Freeport exemption is an inventory exemption for Georgia manufacturers, wholesalers and distributors. This valuable exemption encourages manufacturing and other grassroots industries to locate, invest, and / or remain in Georgia. Citizens of each county in Georgia vote on whether the exemption rate is 20, 40, 60, 80, or 100 percent of the inventory value. Georgia competes fiercely with states like Alabama and South Carolina that exempt ALL inventories. Make Georgia Earn Your Tax Money and Your Business!
Inventory Eligible for Freeport Exemption
- Georgia Manufacturers Raw Material Inventory and Work in Progress. Raw materials are components that change significantly during manufacturing or processing to create a new product. The raw materials can be grains, minerals and oil or items such as wheels, nuts, bolts or wheels.
- Georgia manufacturers’ finished goods inventory held for less than 12 months. Most manufacturers have some inventory on hand for more than 12 months from the date of manufacture. Possible exceptions include companies that build to order or use a just-in-time inventory system.
- Inventory of finished products stored for less than 12 months in a warehouse, dock or wharf, with a final destination outside of Georgia. Shippers, distributors, and wholesalers generally qualify for the exemption under this stipulation.
- Retail inventory does not qualify for this exemption (yet)! On April 17, 2012, Governor Nathan Deal signed HB 48-Freeport Expansion and Elimination of Local Inventory tax. This created a level 2 freeport exemption that applies to ALL commercial inventory that did not qualify for the level 1 exemption. In other words, retail inventory will soon be exempt in Georgia. However, local governments must first call a referendum to approve the Tier 2 Waiver and determine the waiver rates. Other ineligible items are fuel, packaging supplies, office supplies, spare parts, retailers’ stock, and unrecovered or untapped natural resources.
Freeport Waiver Process
The first step in qualifying for the exemption is to complete the Freeport Exemption Application (PT-50PF). Many Georgia businesses lose Freeport because they are unaware of the exemption or do not meet deadlines. Please note that the burden of obtaining, completing and submitting the Freeport application form rests entirely with the taxpayer.
An appraiser from the Bureau of Tax Assessors will generally schedule a site visit for first-time applicants to confirm business purpose and location. This necessary second step allows the county assessor to gather first-hand information about the business. The site visit can be an excellent opportunity to ask questions about the exemption, clarify any issues, or have your tax advisor meet with the appraiser.
Finally, the Bureau of Tax Assessors will notify you once the Board of Tax Assessors approves the Freeport application submitted. This approval does not mean that Freeport’s return will be accepted as filed. If there are errors, inconsistencies, or insufficient documentation on the form, the exemption may be reduced or eliminated.
As Georgia recovers from the economic downturn, business owners are looking for ways to reinvest in their businesses and minimize taxes. The Freeport exemption is an incentive that can complement your overall business tax strategy. Don’t leave money on the table!