Update on the Georgia Agricultural Tax Exemption


Last year, the Georgia General Assembly enacted legislation granting authority to the state Department of Agriculture to issue agricultural sales tax exemption certificates to qualified agriculture producers. Since the first of this year, the new Georgia Agriculture Tax Exemption (GATE) Certificate has been available for qualified agriculture producers to preset sellers in order to make sales tax-exempt purchases of machinery, equipment, inputs and energy.

The GATE Certificate can be obtained online by qualified agriculture producers through the application process at http://www.agr.georgia.gov.Since the exemption went into effect, I have had numerous inquiries about which items can be purchased tax-free by qualified agriculture producers with the GATE Certificate. The Georgia Department of Revenue has provided the following list of common qualifying purchases:

Machinery and equipment, when used in a qualifying agricultural operation: Tractor and tractor attachments; machinery and equipment used to clean and maintain poultry houses and the surrounding premises; hand tools and chainsaws; employee safety equipment, even if typically considered a consumable supply; off-road equipment and related attachments; all non-motorized trailers used to transport agricultural products, including livestock trailers and trailers used on public roads to transport finished products; ATVs and UTVs.

Repair and replacement parts: Repair and replacement parts for tractors and other farm machinery and equipment, including tires, batteries, spark plugs, motor oils, oil filters, greases, lubes and hydraulic fluids.

Agricultural inputs, when used in a qualifying agricultural operation: Seed, seedlings, plans grown from seed, cuttings or liners; fertilizers, insecticides and fungicides; livestock and poultry feeds, drugs and instruments to administer the drugs; fencing materials; animal feed; cattle, hogs, sheep, equine, poultry or bees for breeding purposes; ice and other refrigerants used to process for market or to chill agricultural products in storage facilities or delivery trucks; materials, containers, labels, sacks and bags to be used to pack agricultural products.

Energy used in a qualifying agricultural operation: Dyed diesel used to power off-road machinery and equipment; electricity to power irrigation machinery.

It is just as important for producers to know which items do not qualify as tax-exempt purchases under the GATE program. Here is a list of common non-qualifying purchases:

Motor vehicles: Any motorized vehicle designed for on-road use; replacement parts for on-road motor vehicles.

Real property: Power lines and electrical wiring; real property and fixtures to real property; materials used by a contractor.

Machinery and equipment: Administrative machinery and equipment.

Consumable supplies: Readily disposable chemicals and detergents used for cleaning.

Animals and animal management: Tangible personal property and services used for the feeding, breeding or management of domestic pets (such as dog food); animals other than cattle, hogs, sheep, equine, poultry or bees (such as grass carp or herding dogs).

Energy: On-road motor fuels and aviation gasoline; energy used to power a personal residence.

These lists are intended to provide general guidance only. They are not all inclusive and do not guarantee the tax treatment of any particular transaction. For more information about the agricultural exemptions, visit https://etax.dor.ga.gov/inctax/new_regulations.aspx or call the Taxpayer Services Division at 1-877-423-6711.

As chairman of the Georgia Legislative Rural Caucus, I invited Gov. Nathan Deal, Agriculture Commissioner Gary Black and Revenue Commissioner Doug MacGinnitie to speak to caucus members on the GATE program. As a result of these discussions, the details on qualifying and non-qualifying purchases were made available.

I will be closely watching the ongoing implementation of the GATE program, which is still a work in progress, and will pass along to you any updates as they become available.

In legislative business last week, the House of Representatives voted to approve HB 105, the Amended Fiscal Year 2013 (AFY 2013) state budget. Each year, the amended budget takes into account the difference between the expected revenue used to create the fiscal year budget and a more accurate estimate obtained halfway through that fiscal year. Since the state did not reach the level of economic growth predicted last year, the AFY 2013 state budget reduces current state spending by $26.3 million. Despite this reduction, we are still able to make the budget meet the growing needs of the state by adjusting some of the state’s revenue sources and enacting budget cuts to most state agencies. These proactive measures allowed us to add $245 million for Medicaid and completely eliminate cuts to Georgia Youth Science and Technology Centers. We were also able to soften reductions to key education programs. HB 105 now goes to the Senate for its consideration, while in the House we will continue working on the annual budget for Fiscal Year 2014, which begins July 1.

The House and Senate went into a joint session Feb. 7 for the State of the Judiciary Address by Chief Justice Carol Hunstein of the Supreme Court of Georgia, who focused on the state’s ongoing criminal justice reforms. Last year, these efforts resulted in the enactment of a new law that diverts non-violent and low-level offenders away from costly prison beds and into more effective drug and mental health courts and treatment programs. According to Chief Justice Hunstein, expanding the number of state drug and mental health courts, as well as the number of substance abuse and mental health treatment centers, has put the state on track to save $264 million in prison expenses over the next five years.

The Chief Justice reported that the special council is now looking into ways to better handle youth who break the law. Nearly 2,000 children in Georgia currently live in a youth prison, youth jail or state residential program, such as a group home. More than half of these children were sent to these state facilities for committing non-violent offenses, and 25 percent are there for misdemeanor or status offenses that would not be a crime if committed by an adult. All too often, children are sent to these facilities because of a lack of community based programs. This leaves juvenile judges with no alternative but to send these children to locked detention centers.

Given that it costs the state $91,000 per year to house one child in a correctional facility and that 65 percent of the children in these facilities will commit another offense within three years of getting out, it seems clear that taxpayers are not getting their money’s worth. Legislation to implement needed reforms of our criminal justice system will be considered by the General Assembly later in the session.

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