The Coweta County Board of Tax Assessors granted freeport ad valorem tax exemption for 1993, 1994, and 1995, to The William L. Bonnell Co., Inc, a manufacturer of aluminum extrusion. The Board subsequently reassessed the value of inventory and finished products held for sale returned in the Application for Inventory/Freeport Exemption of Bonnell by changing the method of accounting for inventory valuation from Last In First Out LIFO used by Bonnell to First In First Out FIFO when the Application failed to disclose the accounting method used. The use of such latter assumption forced up artificially the value of the raw materials, inventory, and partially finished goods above the Freeport Application. The Board refused to allow Bonnell to amend the Freeport Application in proportion to the resulting increase in value of the inventory. Bonnell appealed the reassessment to the Superior Court of Coweta County. On cross-motions for summary judgment based upon a joint stipulation of facts, the issues were submitted to the trial court, which denied Bonnell’s motion and granted the Board’s. We reverse, because the freeport exemption requires no particular accounting method to be utilized as to partly finished goods, finished goods, and raw material, but does mandate that manufactured finished goods stored in Georgia for shipment outside the state by someone other than a Georgia manufacturer use FIFO. See OCGA § 48-5-48.2 b 3.
1. a A Freeport Exemption for raw materials, partially finished goods, and inventory of finished goods held by the original manufacturer or producer does not mandate any particular accounting method to be used for valuation. OCGA § 48-5-48.2 b 1 and 2. So long as the method employed by the taxpayer is consistent with their other accounting method and fairly and accurately reflects values, the taxpayer is free to select either the LIFO or FIFO assumption or any other method of inventory evaluation. However, as to finished goods stored in Georgia for shipment out of state to someone other than the Georgia manufacturer, the Act mandates that the exemption “shall be determined based on application of a first-in, first-out method of accounting for inventory.” OCGA § 48-5-48.2 b 3.
