Georgia Department of Revenue CAVEAT 2010 MAV For Personal Property Expanded Freeport / Inventory Elimination Of Ad Valorem Tax On Business Inventory Heavy

Georgia Department of Revenue

CAVEAT 2010MAV For Personal Property

Expanded Freeport / InventoryElimination Of Ad Valorem Tax On Business Inventory

Heavy Duty Equipment ExemptionMotor Vehicle Appeals

Exemption Of Watercraft Dealer’s InventoryGeneral Guidelines For Review And Verification Of Personal Property Returns


Personal Property• Mandatory Freeze On Assessment Increases• Expanded Freeport / Inventory Exemption• Elimination Of Ad Valorem Tax On Business

Inventory• Partial Heavy-Duty Equipment Exemption• Motor Vehicle Appeals• Marine Personal Property Dealer Inventory• General Guidelines For Review And Verification

Of Personal Property Returns


Mandatory Assessment Value

• In 2009 HB 233 Established A Moratorium On Assessment Increases Of Existing Property

• Increases Allowed For Physical Changes

• New Property Added To The Digest At Fair Market Value


MAV – Be Careful!!!!• Allowed

• Audit• Re-Group• New Avionics

• Not Allowed

• Increasing value on equipment that hasn’t changed.

• Increasing boat and aircraft values


Freeport / Inventory Exemption

• For 2010 HB 1082 Revises The Freeport / Inventory Exemption To Include Retail Inventory


Freeport / Inventory Exemption• Establishes Level 1 and Level 2

Exemptions• Creates New Code Sections 48-5-48.5 &

48.6• Level 1 Corresponds to Previously

Established Exemption• Level 2 Extends “Finished Goods” to

include “Stock-in-trade” of a retailer


Freeport / Inventory Exemption

• Level 2 Must Be Approved By Local Vote

• May Be Enacted By Governing Authority The Jurisdiction (County, City) at 20, 40, 60, 80, or 100% Of The Value Qualifying


House Bill 1082

• Revenue LOSS

• Reports

• Notify City and County

• Financial Impact is?


House Bill 1082

• Waiting on Governors' Signature.


Inventory Exemption• 48-5-41.2. (For effective date, see note.) Exemption from

taxation of personal property in inventory for business.

• All tangible personal property constituting the inventory of a business shall be exempt from state ad valorem taxation.

• (Code 1981, 48-5-41.2, enacted by Ga. L. 2009, p. 674, 1/HB 482.)

• Delayed effective date. - Ga. L. 2009, p. 674, 2, not codified by the General Assembly, provides that this Code section becomes effective on January 1, 2011, but only if approved in a state-wide referendum conducted on the date of the November, 2010, state-wide general election.


48-5-41.2 (Inventory Exemption)

• To be voted on this year (ballot).

• Effective January 1st, 2011 if voted in.


Inventory Definition• 1 a : an itemized list of current assets: as (1) : a

catalog of the property of an individual or estate (2) : a list of goods on hand b : a survey of natural resources c : a list of traits, preferences, attitudes, interests, or abilities used to evaluate personal characteristics or skills

• 2 : survey, summary• 3 : the quantity of goods or materials on hand :

stock• 4 : the act or process of taking an inventory


Inventory Definition

• 560-11-10-.08(.02)(1)(k) Inventory.

• “Inventory” means goods held for sale or lease or furnished under contracts for service; also, raw materials, work in process or materials used or consumed in a business.


Heavy Duty Equipment

• $100,000 Exemption Statewide

• Digest Code SY

• Construction, Mining, Maritime, and Industrial Use

• When in Doubt, Taxable

• Consult Your County Attorney


Motor Vehicle Appeals• Value established by motor vehicle

division• Consists of 50% retail and 50% wholesale

of base model for each vehicle• In 2010 some light trucks and suv’s

increased in value from 2009 due to increased cost of a new vehicle of the same model


Motor Vehicle Appeals

• Motor vehicles are subject to the moratorium on assessment increases



• All increases had to be corrected

• Caused other vehicles to be appealed



• Appeals are handled just as any other

• Taxpayer files in writing to the BOA

• BOA reviews appeal

• Makes any changes warranted or forwards to the BOE


Motor Vehicle Appeal• You may want to entertain the idea of a BOA

policy that addresses this appeal process.• For instance an owner under appeal driving

around with an expired tag while you are processing the appeal……you may want to require them pay for the tag prior to filing the appeal so that this doesn’t happen.


Review Appeal

• Information concerning vehicle is verified

• A pricing guide is consulted and adjustments as indicated are made

• REMEMBER! Value is based on 50% retail and 50% wholesale


Review Appeal

• You may also want to use shops, garages, repair facilities to gather independent estimates of repair that may be pertinent to the automobile under appeal in order to establish a more accurate value.


Motor Vehicle Appeals• Before forwarding appeal to board of

equalization it is crucial that the previous step has been performed

• Prepare presentation including all facts gathered


Exemption Of Inventory Of Watercraft Dealers

• First enacted in 2006 set to sunset in 2008

• Continued in 2008 through 2010

• Continued in 2011 through 2013


General Guidelines For Audits

• Audit can be defined as a formal examination of an organization's or individual's accounts or financial situation

• Or, more appropriate for the purposes of Ad Valorem taxation of personal property, a methodical examination and review


General Guidelines For Audits• Because of the self-reporting nature of personal

property, it is important that counties verify information to ensure that all property is properly returned for taxation.

• Past history shows that many reports filed by property owners may be incomplete and the review and verification of these reports results in the discovery of additional property that would otherwise have escaped taxation.

• It is important that any review procedure be directed at improving taxpayer education as well as the discovery of property not otherwise returned for taxation.


General Guidelines For Audits

• Authority to audit personal property returns is derived from O.C.G.A. § 48-5-299 and O.C.G.A. § 48-5-305

• Regulations concerning audit procedure found in 560-11-10-.08(4)


Audit Selection Criteria

• The County appraisal staff shall recommend to the BOA audit selection criteria and when adopted by the BOA shall follow such criteria.

• All personal property accounts should be reviewed or audited at least once every three years.


Review and Audit

• What is the difference between a review and an audit?

• APM and Regulation.


The Duck Test

• If it looks like a duck

• If it walks like a duck

• If it flies like a duck

• If it quacks like a duck

• THEN IT’S PROBABLY A DUCK


Forms and Returns

• Vendors out there to print, fold, and mail returns.• State approved returns. • Not sure how much longer the state will buy and

facilitate distribute forms.• Also Change of Assessment notices by vendor. • Upload function built into WinGAP for Vendors.


Questions ??


Documents

Georgia Department of Revenue CAVEAT 2010 MAV For Personal Property Expanded Freeport / Inventory Elimination Of Ad Valorem Tax On Business Inventory Heavy