Georgia Counties Move to Tax Fertilizer
Wednesday, March 6th, 2013
Two Georgia counties have made a move to tax fertilizer components, a decision that led fertilizer distributors to appeal to state legislators for protection.
Under Georgia law, counties can levy property taxes on businesses’ inventory, but more than half the state’s 159 counties exempt raw materials or products that are not yet ready for sale.
So, are unblended fertilizer components a finished product?
In the past, Georgia tax assessors have said no and exempted fertilizer dealers from paying taxes on the unsold piles of nutrient.
But in thin budget times, counties have hired auditors to look for missed tax opportunities. Two found fertilizer.
“Most farm dealerships right now take a freeport exemption for fertilizer products,” said Jessie Mercer, the chief financial officer for the feed, seed and fertilizer company RW Griffin. “Whereas in the past fertilizer inputs were exempt from taxes, a couple of auditors took the position last year that they were not exempt items.”
RW Griffin was not one of the companies that received a higher tax bill. But company leaders and others who work in agri-business are watching Georgia House Bill 304 closely. The bill, which has won favor in committee, would clarify that custom fertilizer isn’t a completed product until it is blended, whether at a plant, at a retail outlet or on the application site.
If the legislature doesn’t clarify in state law that fertilizer is exempt, other counties could quickly follow Ware and Miller counties and tax fertilizer distributors.
They can even levy back taxes up to three years.
The bill could be steep – hundreds of thousands of dollars for the larger distributors – and that expense will be passed on to farmers that buy fertilizer, experts say.
“Businesses have no other choice than to pass on an increased cost to customers or find some other way to economize,” Mercer said.