Episode Transcript
[00:00:06] Speaker A: Welcome, everyone, to taxing poetic. I am your co host, Tim Howe.
[00:00:09] Speaker B: Along with your other co host, Jenny Carter.
[00:00:12] Speaker A: And we're here, as always, with Jamie.
[00:00:13] Speaker C: How's it going?
[00:00:14] Speaker A: Awesome. And today we're going to be covering an episode that we're calling the Jimmy, which is effectively going to be a legislative walkthrough with a great guest of ours. And we typically start off with, what, Jamie?
[00:00:26] Speaker C: A haiku from Jenny Butt? Not today.
[00:00:29] Speaker B: I've been fired today.
[00:00:30] Speaker A: You've been fired today because the haiku is going to be taken over by our guest, who's Jimmy Cotti. He is the executive director of the Georgia Manufacturer and Housing Association.
Jimmy, very nice to have you here.
[00:00:42] Speaker D: Great to be here.
[00:00:43] Speaker A: Awesome, man. So why don't you hit us up with a little bit of your taxing poetic? Let's hear your poetry skills.
[00:00:48] Speaker B: No pressure, no pressure.
[00:00:50] Speaker D: Okay. Yeah, I know it's customary to start with a haiku, so I have several here, and I think you guys will enjoy them.
[00:00:57] Speaker A: We're getting a three for one today.
[00:00:58] Speaker C: Wow.
[00:00:59] Speaker D: I could do more. I could do more.
[00:01:01] Speaker B: Here's what we're gonna do. We're gonna have a whole episode of just Haikus, Jimmy and I, back and forth with haikus.
[00:01:06] Speaker C: That one will be 90 seconds long.
[00:01:08] Speaker A: And FYI, I will not be present for that episode.
[00:01:12] Speaker B: It will be the taxing poetic poetry slam.
[00:01:14] Speaker A: I love that.
[00:01:15] Speaker B: So, yeah. So let's just a warm up.
[00:01:17] Speaker A: Okay. Okay, back to Jimmy. Here we go.
[00:01:19] Speaker C: Back to Jimmy.
[00:01:20] Speaker D: All right. Haiku number one, changing the tax code. Lobbyists and accountants worlds are colliding.
[00:01:28] Speaker B: Ooh, that's a Seinfeld reference. Yes, very solid, George. Yes, a good George reference.
[00:01:35] Speaker D: Absolutely. All right.
[00:01:37] Speaker B: Like that.
[00:01:37] Speaker D: Number two, Jenny and Jimmy will make tax podcasts. Magic. Tim. He's not needed.
[00:01:45] Speaker B: Oh, that's my favorite one so far.
[00:01:50] Speaker A: Oh, well played, Jimmy. This episode's gonna last about three more minutes. No, just kidding.
[00:01:56] Speaker B: I love it.
[00:01:56] Speaker D: Well, to redeem myself, Tim, I wrote one on behalf of Synexis here. So tell me what you think with this one.
[00:02:02] Speaker A: Awesome.
[00:02:02] Speaker D: Credits and exempts. They're real and spectacular. Get Synexis pros.
[00:02:10] Speaker B: Oh, my God.
[00:02:12] Speaker A: That is an absolutely awesome one. I love it.
[00:02:14] Speaker B: I need to up my haiku game.
[00:02:16] Speaker A: You know what?
[00:02:16] Speaker B: I know.
[00:02:17] Speaker A: Yeah.
[00:02:17] Speaker B: Do you contract out? Can I hire you for, you know, for copyright?
[00:02:22] Speaker D: Absolutely.
[00:02:23] Speaker A: Yeah, absolutely. Well, hey, and, you know, great plug in for synexis tax solutions. It obviously sponsors our podcast, so. Good stuff. Good stuff.
[00:02:30] Speaker B: Yeah, I like them. They're okay.
[00:02:32] Speaker A: Awesome. Well, give a little bit about Jimmy's background, y'all. He's not just a poet laureate. He's also been a lobbyist for Lord, I don't know how many years in the state of Georgia. So, looking at about, like 2020 years. Okay, so 20 years in the state of Georgia. He's actually been a lobbyist. I actually got to meet Jimmy a number of years ago. He had pushed through some legislation that was very important to a couple of my clients at the time in the concrete industry. He had actually argued and lobbied to have concrete mixing trucks treated as manufacturing equipment, which typically, Jimmy. They're not considered manufacturing equipment. Why?
[00:03:05] Speaker D: Because they have wheels.
[00:03:06] Speaker A: That's right. And they go over the road.
[00:03:08] Speaker D: And they go over the road. Yes.
[00:03:09] Speaker A: Yeah. So a big sticking point in the state here, especially in our manufactured exemption laws in the state of Georgia, is manufacturing has to occur at one location, and you can't move it around. Right.
Jimmy's going to talk about the DoR and that whole situation and how he massaged and got them to agree to some of these changes, which is really interesting. But that's how we were introduced to each other, and we've just become friends and kind of kept in touch over the years and kind of worked together. And he's working on a bill right now in the legislature, and I'll let him kind of talk about it, but he's just going to do a walkthrough of kind of the school of rock type thing of how something goes from being an idea all the way through to becoming law. Right. And so, Jimmy, I'm gonna turn it over to you. So why don't you talk to us about how this. This new law that you. Or this. Excuse me. This new proposed legislation that you came up with, how does it all start?
[00:04:00] Speaker D: So, you know, when you represent clients and as a lobbyist, I kind of look at myself as a problem solver. Right. And when I've worked in the concrete industry on behalf of those guys, and now we're for the manufactured housing industry, you know, a lot of. A lot of blue collar type folks that work in those industries, and they're kind of like, they want government kept out of their business and whatnot. And my job, what I tell them is, government's supposed to work for you, and theoretically, it is. They work for us. Right.
And if you know how to handle it correctly, you can put the government back to work for you. And that's kind of what I feel like an effective lobbyist does. And so because lobbyists typically get, like.
[00:04:45] Speaker A: A bad name right. You get, like, a bad rap.
[00:04:47] Speaker B: We have not been nice to lobbyists on this podcast.
[00:04:49] Speaker A: No.
[00:04:50] Speaker B: Previously.
[00:04:53] Speaker D: No, they. We typically get a bad rap. I think that changed a few years ago when a movie called thank you for smoking came out. Have you guys seen that movie?
[00:05:01] Speaker A: Absolutely.
[00:05:02] Speaker D: It's such a great. Such a great. Coming from a lobbyist, this is a great movie. So there you go. But in any event, now we, as an industry, it kind of gets a bad rap. But I'm there to be a voice of an industry, and if their voice is not being heard, the legislature is going to hear somebody else's voice in its place.
[00:05:23] Speaker A: Got it.
[00:05:23] Speaker D: Whether you're trying to expand sales tax or tort reform or social issues, business issues, whatever, there's a role for you to plug in and have your industry have a seat at the table, too.
So that's kind of what I do.
So, years ago, when I was working for the ready mix industry, we were coming out of recession. Guys were pinching pities. I came across, or I was reading about how we had a new manufacturing law. That was when integrated plant theory got passed back, and I think it was like, 2012.
[00:05:54] Speaker A: Yeah. And they started doing phased in components of it, like utilities and stuff like that. Yep.
[00:05:59] Speaker D: Yeah. So, like you were saying, the whole idea with our manufacturers exemptions in Georgia is they're pretty broad, and theoretically, just about anything that comes in the gate is sales tax exempt for a qualified manufacturer. And so. But in our case, the actual manufacturer happened in the back of the truck, and it happened in process as it was going down the road. And it wasn't because it was more efficient to do it that way.
It was because science required it to be done that way. That's the only way to do it.
[00:06:30] Speaker A: And when we're talking, like, these concrete trucks, by the way, it was so fascinating when we stepped through this and did plant tours and stuff, and Jimmy and I actually got to go out and I did a tour and explained it to my clients to see how we were going to file for this exemption. They were explaining it back to me like, yeah, should just obviously be exempted. It's great that Jimmy got this law passed.
[00:06:48] Speaker D: To me, it was abundantly clear that the trucks is where the manufacturer occurred. So I had this concept, and so how do I need it to become lawful? First thing I know, if I can get the legislature right and ask them for this, first thing I'm gonna say is, well, what does Dor have to say about this? You know, every.
[00:07:02] Speaker A: I don't know. What Dor is that is the Department of Revenue.
[00:07:05] Speaker C: That's what I was gonna guess, though.
[00:07:07] Speaker A: Yeah, exactly. There's like Darth Vader and the evil empire.
[00:07:10] Speaker C: Yeah.
[00:07:10] Speaker A: Just kidding.
[00:07:11] Speaker D: But there's a.
[00:07:12] Speaker A: Sorry, Frank.
[00:07:13] Speaker B: Just add them to the list, the apologies.
[00:07:17] Speaker D: There's a department for everything. Right. So regardless of what business you're in, there's some regulatory authority out there that you have to be responsive to. And so if you're in the tax world, that's obviously the department revenue. So I knew I was going to be asked, what does the department have to say about this? So I went to visit with the department and went to their sales and use tax folks, and I said, you know, we've got this, I've got this issue. Can we walk through this? And they had this language that said the commissioner can't be an expert on every manufacturing process.
And so the commissioner reserves the right to make judgments on a case by case basis. Right. That seems very logical.
[00:07:56] Speaker B: Yes.
[00:07:56] Speaker D: And then in the law there or in their, in their rules and regs, following that language, they had someone said, now here's a thing. Here are examples of things that generally, you know, generally being the broad word. The broad word here.
Here are things that generally will not be sales tax exempt. And the first thing that says tag motor vehicles use it over the road.
[00:08:15] Speaker A: That's right.
[00:08:15] Speaker D: And so, you know, I went to the department, I said, well, they said, well, you can't do that because it's, it's a tag motor vehicle. I said, no, no, no. This says generally they will not be. It doesn't say they cannot be, cannot.
[00:08:26] Speaker A: Be and will not be.
[00:08:28] Speaker D: And it says even before that, it says, you have language saying, well, we're not experts. You know, you make a good case, we can make a case by case determination. I said, so make your case by case of determination. And they, they wouldn't do it. They would not come off of.
[00:08:39] Speaker C: That is the word generally, usually in legal documents.
[00:08:42] Speaker A: So typically how Georgia does it. And let Jimmy kind of, this will be good for you to expand on. They draft these pieces of legislation, and specifically at DoR, they'll draft their rules and regs. So you have law, you have statute, right. That gets passed. And then the Dor typically comes down and does interpretations, which are typically their rules and regulations. Right. That how it, how this statute would typically apply on a case by case. Well, they want it to be as broad as possible. So they can either apply it where they want to apply it and not like, just like, oh, I want to do that. No, it's like in a certain situation, if it fits the fact pattern, they'll go ahead and apply it. If it doesn't apply it, they want it to be broad as well so that they can enforce a taxable type product in a situation that generally would not be, you know, taxable. Right.
[00:09:26] Speaker D: Generally.
[00:09:27] Speaker A: Generally.
[00:09:28] Speaker D: Generally. That's it.
[00:09:29] Speaker B: Because a tagged motor vehicle. Right. Is TPP.
[00:09:32] Speaker A: Well, actually it is TPP, but it falls into this licensed movable vehicle. And as a licensed movable vehicle, it's subject to title ad valorem tax in the state of Georgia. And as such, it wouldn't be a qualifying piece of manufacturing equipment. That's it.
[00:09:48] Speaker D: The department will act like they make their regulations, but their regulations are not infallible. Right. The last word is what's in the state code. Okay. Dor can interpret anything however they want, but they still have to follow state law.
And we checked all the boxes. Right. And I couldn't understand why Dor wouldn't come around, but they just would not come around on this. And so it led us to have to go to the legislature and ask for a fix. All tax bills, they start in what's called the House Ways and Means committee. That's the committee of origin. And so instead of just drafting a bill, you want to get the buy in. And the chairman, first of all, before you even start putting in all this work. So I'd invited the chairman at the time. His name was Jay Powell. Very, very brilliant man. And he was down in Camilla, Georgia, was where he's from, in way southwest Georgia. And he met me at a concrete plant in Moultrie, Georgia. We walked through the plant. We showed him everything that was happening from the stockpiles to the conveyor belts to the silos, and just showed how the, you know, the foot bone was connected to the knee bone to the hip bone and so on, so. And how everything depended on each other. But then at the end of all of that, we physically watched raw material being dumped into the drum of the truck. And once the water and the cement powder touched, that's effectively when the chemical reaction.
[00:11:04] Speaker A: Yes.
[00:11:05] Speaker B: And that's the key to getting a manufacturing exemption. Right. Is the transformation of raw materials to another product.
[00:11:12] Speaker A: Exactly.
[00:11:12] Speaker B: So even though it's on four wheels, that's still happening.
[00:11:15] Speaker A: It's still happening inside the back of the truck. Right. That truck is technically creating tPP as.
[00:11:21] Speaker B: It'S moving along the road.
[00:11:22] Speaker D: And to even take it one step further, we went to a plant, and I video, they pulled up a flatbed truck, and they dumped rock and sand and cement powder into it and then splashed some water over it. And the guy pulled his truck off the side and tipped the bed, and, you know, off fell the muck. You know, it wasn't concrete, right. And that was just to prove the point.
[00:11:45] Speaker A: Did you seriously do that?
[00:11:46] Speaker D: Yes. Seriously did it?
[00:11:48] Speaker A: Tell me you showed that video to somebody at the DoR.
[00:11:51] Speaker D: Show to Dor.
[00:11:52] Speaker A: That is a level head sauce.
[00:11:54] Speaker B: That's a level of pettiness I aspire to.
[00:11:56] Speaker A: That would be so great.
[00:11:58] Speaker D: But I could see Chairman Powell kind of thinking in his head and careful. Tell him we weren't trying to get out of pay in tavt. There's still going to be tavt on the chassis. We just needed to make sure that as you're dumping rock and sand and all this stuff into a truck, it's going to incur a lot of wear and tear, and we need to be able to maintain these trucks. That was the whole idea behind it. So he says, you know what?
I've got an idea. Why don't you talk to. And he gave me the name of a specific legislature. He goes, I think this would be a good bill for the two of you to work together on. So I called this guy up, and I didn't know him from Adam at the time, but we drafted a bill, or legislative council drafted the bill for us, the attorneys down the Capitol, and we start circulating it amongst members of the ways and Means committee.
Before the legislature went back in, we hosted more plant tours and got guys out to physically see what. Cause, you know, when they see it, the light bulb goes on and they can understand, oh, this makes a lot of sense. So as far as getting into the legislative process, you know, we're starting in the ways and Means committee. They have subcommittees. So the bill gets, you get a sponsor, the bill gets drafted, they get co sponsors to sign on, and then it gets dropped off with the clerk, and they introduce it, they read it on the House floor, and it gets signed a ways and means. And then the ways and means chairman gets it. He goes, you know what? Let's stick this in our sales tax subcommittee. They'll make you sit, go through two subcommittee hearings, then it goes to full ways and Means committee. At that point, if they voted out, then you go to the rules committee. The people that do well with it, basically, they have everything choreographed before it even starts in January. And so that's what we kind of felt like we had done here. We knew it was going to go into subcommittee.
We knew what kind of, what we needed to touch on. So a lot of times, what they look for when you're debating bills and the merits of it, they'll ask, what are the other states around us doing? So I need to know that what's the fiscal impact going to be?
[00:13:50] Speaker C: What they say about it on toxic. Poetic.
[00:13:52] Speaker A: That's exactly right. Boom. I love it.
[00:13:56] Speaker D: So it comes from goes subcommittee, full committee, and then if it passes out full committee, it still has what's called a rules committee. And the rules committee is who decides if it's going to go to the floor for a full vote. Right. So you come out of rules committee, then it goes to the House floor, and it passes. Then you got to go back over to the Senate. You got to do the. All. The whole thing all over again.
[00:14:17] Speaker B: All the committees and everything all over again.
[00:14:19] Speaker D: So, yes, it gets reintroduced.
[00:14:21] Speaker B: Wow.
[00:14:21] Speaker D: It gets read in the Senate. It gets assigned to a committee, the Senate finance Committee for tax bills.
[00:14:26] Speaker A: The bureaucracy of this completely frustrating you? I mean, and just be. Be honest.
No, no. I mean, is it cool to watch the machine work? Right. But I guess you're just so used to it.
[00:14:36] Speaker D: You know, for me, it's a challenge, and I enjoy it. And, you know, as long as you're handling your business well, people will hear you out down the Georgia legislature, and we'll talk more about that in a minute. I'll finish getting through the committee process. But you go back to the Senate, and it goes all over again. Right. You gotta go full committee, Senate Rules Committee, Senate floor vote, and if the Senate has not amended it, then it can go to the governor. Right. But to say if the senator changes so much as a punctuation mark, it's gotta go back over to the house, and they have to agree to the changes. After all that happens and the bills pass, then the governor has 40 days to decide if he's gonna sign or veto the bill. If he doesn't sign it, it just automatically goes into law. Right?
[00:15:19] Speaker B: Oh, I didn't know that.
[00:15:21] Speaker A: I didn't know that, either. Wow, look at that.
[00:15:22] Speaker C: You do nothing.
[00:15:23] Speaker B: Schoolhouse rock, right here.
[00:15:25] Speaker A: There you go.
[00:15:27] Speaker D: You have all these steps you got to go through, right? And all it takes is one person to get some kind of bug up their ass and throw a grenade in to blow the whole thing up.
[00:15:37] Speaker B: Amen.
[00:15:37] Speaker D: For no good reason sometimes.
[00:15:39] Speaker C: Are you lobbying, like, each individual, one.
[00:15:42] Speaker A: Of those groups he's having. He's having to lobby every time. Individual person.
[00:15:46] Speaker D: Yeah.
[00:15:46] Speaker C: Each time within groups.
[00:15:48] Speaker B: Yes.
[00:15:49] Speaker D: Individual.
[00:15:49] Speaker C: So much texting yeah.
[00:15:52] Speaker D: Individual reps and centers. No, we still do some old school stuff at the. At the Capitol. We still have pages down there.
[00:15:58] Speaker A: Oh, yeah.
[00:15:59] Speaker D: So you have a stand where you can go write on a little yellow slip of paper who you want to talk to, and they'll send a 13 year old in there to hand it to somebody, and that's amazing. Hopefully, that person will come out and talk to you. You're standing outside. There's like a rope line there, and we all just kind of stand on the ropes, and we're waiting for folks to come in and out. I'll go and stand in one place, and we'll stand in the same place for an hour or two.
[00:16:20] Speaker C: Yeah, right.
[00:16:21] Speaker D: And they're like, is this what you do all day? I'm like, welcome to lobbying.
[00:16:24] Speaker B: I love this so much. This sounds so fun.
[00:16:26] Speaker D: Yeah.
[00:16:27] Speaker A: I also like totally west wing.
[00:16:29] Speaker C: They call them lobbyists because he hangs.
[00:16:30] Speaker A: Out in the lobby.
[00:16:31] Speaker B: That's right. That makes. Yeah. So much sense.
[00:16:32] Speaker C: I thought you lobby people for stuff, but no.
[00:16:35] Speaker B: Right. You're waiting in the lobby.
[00:16:36] Speaker A: That's where you're hanging out.
[00:16:37] Speaker D: I mean, it's like. It's sales. Right. But you're not selling a. You're not selling a consumer good or anything. You're selling a concept or you're selling an idea.
[00:16:44] Speaker B: Well. And you're creating relationships like your whole job really is being the captain of a team. Maybe you're helping the guy write the bill. Right.
[00:16:55] Speaker D: Sometimes bills are as simple as just striking out a word or adding a word.
[00:17:01] Speaker A: And there's huge things like in the tax code. Right. So, like, the word or versus. And true. Or shall.
[00:17:07] Speaker D: Versus. May.
[00:17:08] Speaker A: Shall versus. May.
[00:17:09] Speaker D: That's a big one. So if a bill says it shall do something, you have to do it. There's no option. If it says you may, then it's open for interpretation. Yes, it's open for interpretation.
[00:17:18] Speaker C: If you say generally in front of anything, you're good.
[00:17:21] Speaker A: That's exactly it.
[00:17:22] Speaker C: Generally, it may do whatever it is, and it's just like, man, this isn't saying anything at all.
[00:17:25] Speaker A: JB, what? Would you like to have dinner tonight? Generally.
Generally, I would like food.
I may like food.
[00:17:31] Speaker D: Generally, I may like food.
[00:17:35] Speaker B: But then you're coordinating the tours. I mean, you're talking to every committee member. It just sounds like a lot of fun of relationship building and convincing people that you're right. Right. Which I love to do myself.
[00:17:46] Speaker C: It's a good policy. Do you get to pick what you lobby for?
[00:17:50] Speaker D: I bring stuff to my board. And I say, hey, you know, this other state did this. Or I tell folks, hey, you guys are the experts. I've never poured or made concrete in my life, or I've never built a manufactured home. You guys do that.
Where are your choke points? What's holding you up? So there's a number of different ways to skin a cat when it comes to making public policy, like the concrete tax bill. I had this toy concrete truck that I handed out. It was a model truck, and I.
[00:18:21] Speaker A: Would, I have one in my office.
[00:18:22] Speaker D: Yeah, I would pop the drum off, I'd spray paint them, I'd put a decal on them, and then I'd give them out as gifts. So when I had this chairman down in Moultrie, Georgia, I remember I was asking a lot of questions, and he wasn't giving me a whole lot. He was keeping his cards close to his chest, right?
I said, well, mister chairman, before you go, I got something for you. I went in the room, and I picked up this box and brought it out to him and said, here's a little gift for coming out. Thank you very much. He looked at this thing, and it was like he just opened his favorite Christmas present.
[00:18:52] Speaker B: Aw.
[00:18:52] Speaker D: And he goes, you know what? And then he just started talking, and he started telling me everything I needed to know, you know? And when he left, my memory goes, man, that sounded pretty good. I said, you know, when it all started, when I hand him that what truck?
[00:19:07] Speaker A: That's awesome.
[00:19:07] Speaker D: And he was like, yeah, you're absolutely right. You know, just little things like that. When I was doing this, when I was doing this mixer truck bill, the gentleman that was carrying the bill for me, he was a newish legislator. He had never passed a bill before. So I figured out after the fact, the chairman looked at my bill as something good for him to get his feet wet on to learn how to pass a bill the right way. And so I put together this whole folder for this particular representative, and I said, everywhere we go to talk to people about this bill, you carry this folder. And I said, when you carry it, make sure you hold the outside of it out so people can see the front of the folder. Because why I had done is he had a, he had a really goofy looking picture on the house website as his official folder. So I blew it up real big, and I stuffed it in, and I said it was like, it was like house bill, you know, 100.
A bill by representative, 50 so and so. And it had his picture with his, his, his big mug on it, and so everywhere. We went and he would just hold that out, and people just kind of laugh, and it would kind of catch him off guard and disarm them, and. But it made it, like, really easy and comfortable to talk to folks about it. And they would.
[00:20:21] Speaker A: From a boardroom to a living room, right? Yeah.
[00:20:23] Speaker D: And they made you comfortable. What's. What's in the folder? He said, well, you know, we. We did all this work, and we studied how this affects, you know, this, that, and how it works, and, you know, the dot requires this, and in other states do that and all that. So we just had a whole bunch.
[00:20:36] Speaker A: Of information in there, personal touch, and putting effort in.
[00:20:39] Speaker B: I have a couple of ideas. I mean, you can use them or not use them.
[00:20:43] Speaker A: Oh, God, here we go.
[00:20:44] Speaker B: That have worked out really well for me at the podcast. You can either wear a costume or break out into song. So maybe bring.
[00:20:52] Speaker A: I would highly suggest doing neither of those a CD player, albeit they're quite memorable. I don't know if that would put you at the high end of anybody's list.
[00:20:58] Speaker D: Well, it's funny you say about wearing.
[00:21:01] Speaker A: A costume, because, see, there you go.
[00:21:03] Speaker D: When I first started lobbying, nobody at the Georgia capital was wore bowtie. It's just things move so swift, and you meet so many people that you can't remember everybody's name all the time. They'll at least remember I was the guy that worked.
[00:21:14] Speaker A: You're the bowtie guy.
[00:21:15] Speaker B: You should have gotten a spinning one. That would have really set you apart.
[00:21:19] Speaker D: I did not have one of those. Okay, well, none of mine were pre tied. I had to tie myself, and so.
[00:21:26] Speaker A: Man, that's awesome.
[00:21:27] Speaker C: It's called peacocking.
[00:21:28] Speaker B: Yes. You have lots of ideas. You could wear the t shirt that looks like a tuxedo.
[00:21:33] Speaker A: Okay, let me go ahead and cut her off from her ideas. Moving right along.
[00:21:37] Speaker C: She's not wrong. They're memorable. But this isn't a guy that I'm gonna be like, I should pass my bill. Based on what? The tuxedo guy with the spit? Exactly.
[00:21:45] Speaker A: And the guy who has the Danny McBride Kentucky waterfall haircut.
Congratulations.
[00:21:52] Speaker B: I said use them or not use them. That's fine. Well, can you tell us about. So you work with manufactured housing now? We haven't heard. Or you lobby on behalf of manufactured housing. And, you know, I didn't even think about this until you were going to be on the show of manufactured housing. Is it real property? Is it. How does. I mean, TPB.
[00:22:11] Speaker A: That's absolutely great. Why don't we let Jimmy describe it because he and I have had a number of conversations about this, but I.
[00:22:17] Speaker B: Want to hear more about it so that.
[00:22:18] Speaker A: Yeah, yeah.
[00:22:18] Speaker D: Okay. So manufactured housing.
It's the nice house built in factory, right?
[00:22:23] Speaker A: That's right.
[00:22:24] Speaker D: So it is.
To answer your question, it is TPP really, when it comes out of the factory.
[00:22:30] Speaker B: Okay.
[00:22:31] Speaker D: There is a legal process you can go through when you, if you own the land that the home is gonna sit on, you can go through a legal process called detitling. Each home comes out and it has a almost like a vehicle title. So you can file a form, a department of revenue t 234 form in Georgia.
Don't ask me how I know that, but you can geek out.
[00:22:55] Speaker B: It's fine. That's what we do around here.
[00:22:56] Speaker A: We're nerds.
[00:22:57] Speaker B: Yeah, we're nerds.
[00:22:58] Speaker D: The state takes the title back from you and now it's considered real property. So when you sell, you can't sell the home without selling the land with it.
[00:23:06] Speaker B: Got it.
[00:23:06] Speaker D: So it's just like your stick. Built site. Built home. The guy I did the concrete tax thing with, he was from an area of state that had some manufactured housing factories in it. And he said, you know, I've been trying to pass this tax bill for manufactured housing. Maybe you can help me do that.
[00:23:23] Speaker B: So talk to me like I'm a fifth grader, which probably not too difficult, but. So it comes off.
[00:23:29] Speaker A: Give yourself a little more credit. 7th grade.
[00:23:31] Speaker B: 7Th grade.
[00:23:31] Speaker A: Come on.
[00:23:32] Speaker B: Thank you. I appreciate that.
[00:23:33] Speaker A: No problem.
[00:23:34] Speaker B: So it comes out of the manufacturer and it's TPP. So you're paying vehicle or you basically.
[00:23:41] Speaker A: Pay an ad valorem tax on it. Yeah. Cause it's a trailer.
[00:23:45] Speaker D: No, you're paying.
[00:23:46] Speaker A: Well in sales tax.
[00:23:47] Speaker D: Yeah, you're paying sales.
[00:23:48] Speaker A: You're paying sales tax.
[00:23:50] Speaker B: Sales tax. Like an automobile? Like a vehicle.
[00:23:52] Speaker A: Right. And there's law that Jimmy and I actually been talking about that for inventory of trailers and things like that, they're actually exempt from the avalorum tax. But you're paying the sales tax on the transfer of the tangible personal property.
[00:24:02] Speaker B: And all the stuff on the price of the home, the manufactured home.
[00:24:05] Speaker A: Yes.
[00:24:05] Speaker B: Right. And so then when you go to detitle it, you're getting an exemption for how much? So if you've already paid the sales tax, are you getting a credit back?
[00:24:15] Speaker D: Well, if you're handling it all at closing, the closing attorney will take care of everything and you're.
And the finance company will pay what they're told to pay.
[00:24:27] Speaker A: Right. You're basically reducing the sales tax owed it's all it is at closing. So, like, you'd be sitting at the closing table, they'd hand you the finance paperwork. You'd see, oh, here's the original amount of sales tax. Now I'm getting a 50% cut, and boom, there's a final.
[00:24:41] Speaker B: When it's attached to the land, though.
[00:24:42] Speaker A: Is what you're saying. No, I mean, well, at closing. So, like, when you're actually taking possession and you're gonna go attach it to the land.
[00:24:47] Speaker C: Right.
[00:24:48] Speaker A: Yeah.
[00:24:48] Speaker B: Got it.
[00:24:49] Speaker D: Okay. If you're gonna retire to the title.
[00:24:51] Speaker A: If you're gonna. Yeah, that's exactly.
[00:24:53] Speaker C: If I buy one of those, like, Amazon houses. I don't know if you've seen them. You buy them on Amazon, they're like $15,000, and they just, like, they come in a box and they spread apart and now it's a house. Is that. That's manufactured housing, right?
[00:25:03] Speaker D: No, not technically.
[00:25:04] Speaker C: So what's the difference between, like.
[00:25:06] Speaker A: Yeah.
[00:25:06] Speaker C: Cause I've seen these becoming more popular. Like, I've seen Home Depot has, like a $$43,000, like, house that you can buy, and it's like, you just, like, buy it and you assemble it. And here's a house.
[00:25:16] Speaker D: Well, it goes to how the home is built. Right. So when you, like, all of us live in a stick built home, I presume those homes in Georgia are built to what's called an I code standard, right. Well, in the manufacturer housing world, we don't. We have a building code, but it's administered by the United States Department of Housing and Urban Development. It's called so HUD. Now, the things with tiny houses and these houses in a box and whatnot, you know, they're kind of somewhat of the wild west because you don't really know who's building them and how into what standard. You know, this. You know, the IRC and the. And the HuD coach stuff is all about safety and performance. Right.
[00:25:57] Speaker B: Right. To withstand hurricanes, earthquakes, or, you know, they have rebar in them or whatever.
[00:26:02] Speaker D: Yeah. Or to wire it properly so your house doesn't catch on fire and things like that, you know? And so when the tiny. You know, people love the tiny homes because they're cute, what the. What the construction codes do is they. They serve to give you consistency and quality and safety in the performance of your home. So.
[00:26:18] Speaker B: So are they taxed, to JB's question, are they taxed just regular sales tax.
[00:26:22] Speaker A: Then the stuff from Amazon and stuff like that? Oh, yeah, 100%. Yeah. It's just TPP. Yeah. And it wouldn't qualify for this because he has specific stipulations in his law regarding, you know, Hud and.
[00:26:32] Speaker D: Yep.
[00:26:33] Speaker A: And the building code and stuff like that.
[00:26:35] Speaker B: So you couldn't title one of these homes and put it on your land and sell it with your land?
[00:26:40] Speaker A: Cause it's not even titled. It's just a structure. It'd be like buying a Morgan building or something from Home Depot, and you just towed it out there and dropped it on the land. I mean, you have to disclose that there's a Morgan building that's there. But, hey, guess what? There's no title transfer or anything like that to it. Cause you already just bought it as a piece of TPP.
[00:26:56] Speaker B: Okay.
[00:26:56] Speaker A: Yep.
[00:26:57] Speaker B: All right. So, Jimmy, what are you working on now with the manufactured housing lobbying? Like, what's your current work project?
[00:27:04] Speaker D: Okay. So we've been sitting here talking about taxes and how they're applied to manufactured homes, and so we're trying to get that changed.
I had mentioned earlier a bill specific that we had passed where if you are retiring the title, you get a partial exemption on your sales tax. Right. The state portion of your sales tax. We actually want to repeal that, and we've got a formula that we want to put in place that says the sales tax, the seven or 8% you pay on a manufactured home is based on the materials portion of the home. Right. And so the way that the kind of industry standard number for that is whatever the dealer invoice number is, about 60% of that is, represents the building materials package for that home. So if you're selling a home, you know, for $80,000, instead of charging seven or 8% on $80,000, it would be, and say the dealer paid 50,000 on his invoice, you know, you're going to pay 78% on the $35,000 instead of 80. So a lot of our market is folks, first time homebuyers and fixed income seniors. The idea is by lowering the sales tax, it helps them stay qualified and build a nest egg for themselves.
[00:28:14] Speaker B: Absolutely. I think it's commendable, especially in this market. They talk about how, you know, homeownership is becoming so much more unreachable for a greater percentage of our population.
[00:28:24] Speaker D: So the average option, the average price of a home in Georgia, I think they say, is around $360,000 right now. And the average price of a manufactured home is about 130,000. The build is fantastic. They're more energy efficient than anything that's out there. That's site built. There's just a lot of advantages to it. And plus, there's just people that they don't want a big mortgage obligation.
[00:28:47] Speaker B: Well, we're glad you're putting the work in, and thank you so much for your lobbying efforts.
[00:28:52] Speaker A: Absolutely, man. And thanks for taking the time to come in and walk us through the legislative process. It's so awesome. We got to learn a ton of new stuff. JB finally figured out what the word lobbyist actually meant, which is great.
[00:29:02] Speaker C: Love that.
[00:29:03] Speaker A: And, yeah, just generally. Thank you, man.
[00:29:05] Speaker B: Yeah, generally is important.
[00:29:06] Speaker A: That's right. Nailed it. Generally.
[00:29:08] Speaker B: We generally. Thank you.
[00:29:10] Speaker D: Hey, Jimmy. Jimmy appreciates coming on the show.
[00:29:12] Speaker A: That's right.
[00:29:13] Speaker B: Thank you for referencing one of my favorite Seinfeld episodes.
[00:29:16] Speaker A: There you go.
[00:29:17] Speaker B: Jimmy did a great job, and, in fact, your haiku game is strong. We will reschedule another podcast with just haikus.
[00:29:24] Speaker A: I will be happy to be absent that day, but I will wish you guys all the luck in the world.
[00:29:28] Speaker D: Well, hey, just remember, we're making tax podcast magic, and you're not needed.
[00:29:32] Speaker A: That's exactly right. There you go. I'm definitely not needed that day. Love it.
[00:29:36] Speaker B: Well, Jimmy, again, thank you so much for being on taxing poetic today. And just a reminder to our listeners, you don't have to listen to these episodes in order. You can listen to them however you like. If you have any haikus, if you think you can write them up to Jimmy's abilities, send them in. We have an email address, textingpoetic senexistax.com. So send us your haikus or your comments. Any complaints about Tim, send them in, and you can listen to us anywhere where you enjoy your podcast. Thanks so much for being with us today.
[00:30:05] Speaker A: Thanks, y'all. Hemethy approves.
Good job. Bye.
