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Construction & Building

Jan. 24 – Rep. Stephen’s bill to tax construction rental equipment moves to 2nd Reading in the Georgia House

By Lou Phelps, Coastal Empire News

January 24, 2017 – Rep. Ron Stephens of Savannah has filed legislation that would tax rental equipment that is used primarily for construction for a period of five years.

HB 56 has been co-sponsored by Rep. Jay Powell of Camilla, and Rep. Brett Harrell of Snellville.

Rep. Powell is Chairman of the House Ways & Means Committee, and Harrell is a member. Stephens served on the committee last year, and was the chairman. 

The legislation defines 'rental equipment' as a piece of equipment or machinery, along with any attachments or ancillary tools, that is primarily designed and used for construction,  industrial, maritime, or mining uses and that is rented without a driver or operator by equipment rental company.

For the period beginning January 1, 2018, and ending December 31, 2022, there is levied and imposed a property tax recovery fee.

The bill is a quandary to many business leaders who have worked for years to get their local municipalities and counties to remove inventory taxes on businesses.  This would mandate a tax to the customer, in addition to sales taxes, it appears.

“Every person that enters a rental agreement in this state with an equipment rental company shall be liable for the property tax recovery fee and shall pay such fee to the equipment rental company. The property tax recovery fee shall be separately stated in each rental agreement. Property tax recovery fees collected by an equipment rental company shall be retained by such company in an escrow account until ad valorem tax is assessed upon such company's rental equipment,” with records kept available for inspection.

Every equipment rental company must submit their report before Feb. 15, starting in Feb. 2019, 2019, “that contains an accounting for the preceding calendar year of the total amount of property tax recovery fees collected and the total ad valorem tax assessed on such company's rental equipment in this state.” 

“If the total amount of property tax recovery fees collected by an equipment rental company under this Code section in any calendar year exceeds such company's assessed ad valorem tax liability for rental equipment for that calendar year, the equipment rental company shall remit such fees, along with any accrued interest in the escrow account, with its report to the department to be deposited into the general fund of the state treasury,” according to the proposed legislation.

By July 1, 2023, a report to the Governor, President of the Senate, and the Speaker of the House of Representatives must be submitted that summarizing an accounting for the preceding five years of the amount of ‘property tax recovery fees’ collected, and the total ad valorem tax assessed on rental equipment for each county in this state.

No change to the Ad Valorem tax rate is specified in the bill.

Farm tractors, combines, and all other farm equipment owned by and directly used in the production of agricultural products by family owned farms are exempt from all ad valorem property taxes in this state, enacted back in 2000.

The State’s major source of Ad Valorem taxes – an Ad Valorum title tax on motor vehicles – was eliminated in 2013.  Now, it is just paid once, when the vehicle is purchased, at 6.5% of the assessed value of the vehicle.

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