Freeport Exemptions for Business Personal Property Tax Reductions

Freeport exemptions are among the most frequently overlooked business personal property tax savings strategies we find when performing desktop reviews for clients in manufacturing, retail, and other inventory-heavy industries. A general lack of understanding and variants between state tax laws can make the use of freeport exemptions a complex task without the assistance of a property tax professional. When done correctly, the end result of freeport exemptions is often significant tax savings and refunds. A freeport exemption is specifically referring to inventory held in-state for a finite window with the purpose of being transported out-of-state within a small timeframe. The nuances of what qualifies as exempt, paired with the various state timeframe allocations, often lead businesses to overlook the freeport exemptions available on goods shipped out-of-state. This is an especially cumbersome task for larger businesses with multi-state shipping operations.

Invoke Tax Partners has a nationwide network of business personal property tax consultants who are uniquely qualified to uncover missed freeport exemption opportunities and correctly identify nontaxable items across your portfolio. With extensive knowledge of inventory nuances in states which tax business personal property, Invoke has become the premier provider for outsourced business personal property tax support nationwide.

Freeport Exemption Details by State

Georgia Freeport Exemptions: An asset qualifies as exempt if held in Georgia for less than one year. The portion that qualifies for exemption is that which is shipped out of the state within the one-year window. Georgia’s business personal property return deadline is April 1st, and the appeal deadline is only 45 days from the date listed on assessment notices, which are typically issued between April and June. Due to the quick turnaround in Georgia and the additional inventory exemption opportunities, it is highly recommended that Georgia operations work with a business personal property tax provider to file their appeals.

Texas Freeport Exemptions: Inventories only qualify for a freeport exemption in Texas if they are held in state for less than 175 days, however, there is an exception for aircraft parts. Not all local taxing authorities grant freeport exemptions in Texas, so it is highly recommended to partner with an experienced business personal property tax provider. The Texas Business Personal Property Rendition deadline is April 15th, and the Freeport Exemption Application is due April 30th. The appeal deadline is only 30 days from the date on the assessment notice, typically issued between May and July.

Oklahoma Freeport Exemptions: Inventories held for less than nine (9) months are freeport eligible. Freeport Exemptions are calculated using both “Purchases for Oklahoma Inventory” and “Sales from Oklahoma Inventory”.

Arkansas Freeport Exemptions: Inventory is freeport eligible in Arkansas if it is maintained by manufacturers in the state and transferred to destinations outside of the state, or if the inventory has been notated as having only been stored in the state as part of its transit through for a temporary period of time. Arkansas is also unique because of its tax laws implemented by Act 269 which states, “Tangible personal property in transit for a destination within this State shall be assessed only in the taxing district of its destination. Tangible personal property in transit through this State and tangible personal property manufactured, processed or refined in this State and stored for shipment outside the State shall, for purposes of ad valorem taxation, acquire no situs in the State and shall not be assessed for taxation in this State.”

Kentucky Freeport Exemptions: Goods in Kentucky are eligible for freeport exemption when they are placed in a warehouse or distribution center for the purpose of shipment out-of-state. Furthermore, the owner of the in-state operations must be able to provide documentation that the assets will be shipped out-of-state and not held in Kentucky for more than six months to qualify for a freeport exemption.

Louisiana Freeport Exemptions: Goods both exported to other states and imported from other states are both exempt from taxation so long as they remain in their original containers. Louisiana’s freeport exemption laws allow both public and private storage of assets.

Mississippi Freeport Exemptions: Freeport exemption requests must be reported in Mississippi by March 31st to be considered by the local taxing authority. Mississippi allows exemption on all business personal property shipped out of state that is being held in a warehouse that is deemed eligable via freeport license.

Business Personal Property Tax Differentiators

Our team, made up of a national network of the industry’s top business personal property tax consultants, has developed in-depth operational practices that are key differentiators to provide immediate increases in business personal property tax savings for manufacturers and many other industries. A deep understanding of the nuances involved with state-by-state exemptions and tax laws allow us to set ourselves apart as a business personal property tax provider. This, along with our proactive approach to renditions, has given us the opportunity to save our clients millions of dollars each year. Contact us today to learn more about the business personal property tax savings you may be missing out on.