Draffin Tucker’s Tyler Rose recently wrote an article explaining this tax credit and how pecan growers can benefit.
In November 2018, the Georgia General Assembly passed House Bill 4EX during a special session. This law established the “Georgia Timber Tax Credit” in response to the devastation caused by Hurricane Michael. Because of the misleading title, many in the pecan industry believed that this credit was only applicable for timber producers. This assumption was justified, as the law itself does not include the word “pecan” anywhere in its body. However, pecans are covered under this credit program because they are classified as being grown primarily for the commercial production of food. In addition to timber, any grower of a tree type grown primarily for the commercial production of food is eligible to receive this credit. The credit provides aid to the Georgia agriculture community for the long-term economic losses sustained from the disaster. The State of Georgia still has approximately $134 million available for this program. It is available for property located in the Hurricane Michael declared disaster area. This includes the following 28 Georgia counties:
Baker, Bleckley, Brooks, Calhoun, Clay, Colquitt, Crisp, Decatur, Dodge, Dooly, Dougherty, Early, Grady, Laurens, Lee, Lowndes, Miller, Mitchell, Pulaski, Randolph, Seminole, Sumter, Terrell, Thomas, Tift, Turner, Wilcox, and Worth
How it Works
To receive the credit, you must submit an online application (Form IT-TIM-AP) to the Georgia Tax Center. The credit equals the decline in fair market value as determined under the federal casualty loss rules, but it is capped at $400 per acre. Additionally, the State parted from the federal calculation by removing the basis limitation. The credit can be used once the timber, pecan trees, or other eligible trees have been replanted and reported to the Georgia Department of Revenue online through the Georgia Tax Center. The same species of tree does not have to be replanted. Any eligible tree can be replanted to take the place of the previously damaged species. This replanting must occur in the same county; however, it does not have to be replanted on the same piece of property. The State designated $200 million for this credit program. If more than $200 million in credits are applied for, you may receive a pro-rated amount.
1stRound of Applications
To have received a credit preapproval during the 1stround of applications, an online application through the Georgia Tax Center was due by May 31, 2019. Because the full $200 million was not applied for, all taxpayers that received preapproval, received this approval at 100% of their application amount. We confirmed with the Georgia Department of Revenue that approximately $66 million was applied for during the 1stround of applications, leaving about $134 million for applicants in the 2ndround. Draffin Tucker was able to help our clients apply for and receive approximately $1.98 million in credit preapprovals during this first round of applications.
2ndRound of Application
Again, since $134 million is still remaining for this credit program, the State will have a second round of applications, awarding credit preapprovals in the same manner as described above. These applications are due no later than December 31, 2019. If more than the remaining funds set aside by the State are applied for, you may receive a pro-rated amount.
After you have completely replanted the damaged trees, you must report this through an online submission on the Georgia Tax Center website. Subsequently, after the State signs off on this replanting, you will be eligible to claim the credit on your applicable Georgia tax return. This is a refundable tax credit; therefore, even if you have no income tax liability in the year you claim the credit, you will be refunded the credit amount.
How to Proceed
If you would like to learn more about how the Georgia Timber Tax Credit could benefit you, please reach out to a Draffin Tucker professional. We would be happy to review your unique situation. Draffin Tucker is a full service, regional CPA firm that concentrates on providing quality tax, accounting, and consulting services. A CPA is the best professional to assist you in this application process because it requires knowledge of your previous tax filings, your legal organization, and the IRS’s casualty loss regulations. Our goal is to see Georgia’s agriculture community, which suffered devastation from Hurricane Michael, take advantage of this program to help them in their recovery. With our experience, we can walk you through each step of the application process, providing assistance every step of the way.