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Applications are still open for timber tax credits

Yanshu Li

Hurricane Michael had a devastating impact on the timber industry in south Georgia. Many forest landowners suffered catastrophic or severe timber losses due to the event. The Georgia General Assembly enacted HB 4EX in November of 2018 and an amendment (HB 446) in April of 2019. The new law provides a tax credit program to qualified Georgia taxpayers who sustained timber casualty losses caused by Hurricane Michael and need help to get back on their feet. The total amount of the timber tax credit for all qualified taxpayers is capped at $200 million.

Eligible taxpayers are allowed a state income tax credit equal to 100% of the timber casualty loss, with a maximum of $400 per acre. Eligible timber properties must be located in the disaster area (see figure below) established in Executive Order 11.06.18.01. The timber in question has to be grown for profit. Eligible taxpayers can be an individual, business entity, estate, or trust who owns or leases the affected timber. A lessee qualifies only if the lessee is eligible to claim the federal casualty loss deduction for the eligible timber property and the owner of the property does not claim the credit.

Map of affected areas

To receive the timber tax credit, eligible taxpayers have to submit an application for a pre-approval of the credit from Georgia Department of Revenue through the Georgia Tax Center (https://gtc.dor.ga.gov/) by December 31, 2019. After receiving the pre-approval and fulfilling the requirement of replanting or restoration, he can claim the credit.

The Georgia timber tax credit is refundable and transferable. If the amount of the credit is more than a taxpayer’s tax liability for current year, he can carry the credit for 10 years (or until it is used up) or receive the difference as a refund. He can also sell the credit to other Georgia taxpayers subject to certain restrictions.

Since $71 million has been accounted for in the first round of the preapproval application, there remains $129 million still available to eligible taxpayers until the end of this year. Some misunderstandings about the program might affect the participation of the program. A landowner does not need to finish replanting to get a preapproval. He can apply for the pre-approval now and do replanting or restoration later. This program is not just limited to Georgia taxpayers. Non-resident landowners are also eligible for the credit as long as other criteria are met. Additionally, the revised law relaxes the restoration requirement to make it more accessible to eligible landowners.

Please visit Georgia Department of Revenue (https://dor.georgia.gov/timber-tax-credit) for instructions on preapproval application, the Storm Damage Resources page of the Georgia Forestry Commission website (GaTrees.org) for replanting and restoration guidelines, and the UGA Warnell Outreach (https://www.warnell.uga.edu/outreach/publications) for a publication on some frequently asked questions on the program.

— Yanshu Li, Forest tax specialist

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