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Subject 560-11-8 INTANGIBLE RECORDING TAX

Rule 560-11-8-.01 Purpose of Regulations

These regulations have been adopted by the Commissioner pursuant to O.C.G.A. Section 48-212 in order to promulgate specific policies and procedures of the Department applicable to the administration and collection of intangible recording tax pursuant to O.C.G.A. Section 48-6-60. These regulations are administrative regulations applicable to a class of instruments within the meaning of O.C.G.A. Section 48-6-71 and, as contemplated by such section, shall constitute a determination of the Commissioner with respect to each such class of instruments described herein and may be relied upon as such.

Rule 560-11-8-.02 Tax Payment and Rate

An intangible recording tax is due and payable on each instrument securing one or more long-term notes at the rate of $1.50 per each $500.00 or fraction thereof of the face amount of all notes secured thereby in accordance with O.C.G.A. Section 48-6-61 and these regulations. This tax is assessed on the security instrument securing one or more long-term notes secured by real property, to be paid upon the recording thereof, and must be paid within 90 days from the date of the instrument executed to secure the note or notes. The maximum tax on a single security instrument is $25,000.

Rule 560-11-8-.03 Definitions

(1) "Collecting officer" means the tax collector or tax commissioner of the county; provided, however, that in each county of this state having a population of 50,000 or more according to the United States Decennial Census of 1990 or any future such census, collecting officer means the Clerk of Superior Court of the county.
(2) "Instrument" or "security instrument" means any written document presented for recording for the purpose of conveying or creating a lien or encumbrance on real estate for the purpose of securing a long-term note secured by real estate.
(3) "Long-term note secured by real estate" shall mean any note representing credits secured by real estate by means of mortgages, deed to secure debt, purchase money deeds to secure debt, bonds for title, or any other form of security instrument, when any part of the principal of the note falls due more than three years from the date of the note or from the date of any instrument executed to secure the note and conveying or creating a lien or encumbrance on real estate for such purpose.
(4) "Short-term note secured by real estate" shall mean any note which would be a long-term note secured by real estate were it not for the fact that the whole of the principal of the note falls due within three years from the date of the note or from the date of any instrument executed to secure the note.
(a) A short-term note is reported as of January 1 of each year, as intangible personal property on Form PL-159 and taxed at the rate of 10 cents per thousand.
(b) A short-term note remains classified as short-term according to its terms, as long as it remains outstanding, although the indulgence of the creditor allows it to extend beyond a three year period.
(c) A renewal note in payment of an existing short-term note is to be classified according to its own terms as to whether it is short-term or long-term.
(d) A short-term note, with option to renew or extend by the borrower, where any part of the principal or interest of the note becomes due or may become due more than three years from execution is classified as long-term.
(e) A "bona fide demand note" is always a short-term note according to its terms; provided however, that a note denominated as a "demand" note where the maturity date as determined from the instrument extends or may extend beyond three years, is nevertheless a long-term note. For purposes of this regulation, a "bona fide demand note" is a note payable unconditionally on demand whose maturity date is not determined by any contingency other than the demand of the holder.
(f) A note which matures the same month and date as executed only three (3) years later, is a short-term note.

Rule 560-11-8-.04 Modification

Intangible recording tax is not required to be paid on any instrument that modifies by extension, transfer, assignment or renewal, or gives additional security for an existing note, when the intangible recording tax has been paid on the original instrument or the original note or holder of the original instrument was exempt.

Rule 560-11-8-.05 Refinancing

(1) Intangible recording tax is not required to be paid on that part of the face amount of a new instrument securing a long-term note secured by real estate which represents a refinancing by the original lender and original borrower of unpaid principal of an existing instrument securing a long-term note secured by real estate still owned by the original lender, if the intangible recording tax was paid on the original instrument or the original holder of the instrument was exempt.
(a) The new instrument must contain a statement of what part of the face amount represents a refinancing of unpaid principal. This information must be disclosed on the face of the instrument or in the alternative may be submitted in the form of an affidavit indicating which part of the face amount represents a refinancing of unpaid principal.
(2) Where two or more instruments securing long-term notes, secured by separate deeds to secure debt and held by the original borrower and the original lender, are consolidated, with no new money advanced, into a single instrument securing a long-term note with a single deed to secure debt, intangible recording tax is due, up to the statutory maximum, on that portion of the indebtedness secured by the new instrument, if any, that does not represent unpaid principal on the consolidated notes.
(3) Where instruments securing long-term and short-term notes, secured by separate deeds to secure debt and held by the original borrower and the original lender, are consolidated, with no new money advanced, into a single instrument securing a long-term note with a single deed to secure debt, intangible recording tax is due, up to the statutory maximum, on that portion of the indebtedness secured by the new instrument, if any, that does not represent unpaid principal on the long-term note or notes.

Rule 560-11-8-.06 Additional Advance

(1) In the case of a new note or a modification of a preexisting note, representing an additional extension of credit to be secured by a previously recorded instrument which otherwise requires no further recording, the intangible tax is determined according to the terms of the new note.
(2) In lieu of recording a new or amended security instrument, the holder of the note may elect alternatively to execute an affidavit setting forth the amount of the additional advance, in words and figures, and the correct date on which the additional advance falls due, and the page and book of the previously recorded instrument.
(3) The collecting officer of the county where the tax was first paid shall collect the intangible recording tax due and shall enter upon or attach to the affidavit the certificate that the intangible recording tax has been paid, the date, and the amount of the tax, and such affidavit shall be recorded and attached to the previously recorded instrument.

Rule 560-11-8-.07 Multi-State Property

(1) Resident holder: If the holder of an instrument conveying property located both within and without the State of Georgia to secure a long-term note, is a resident of Georgia, the amount of the tax required is that amount that would be due were the property located wholly within the State of Georgia. The maximum amount of Georgia intangible recording tax payable with respect to the instrument is $25,000.
(2) Nonresident holder: A nonresident, if a business entity, for the purposes of this regulation is defined as any business entity that is incorporated or organized under law other than the law of Georgia and maintains its principal place of business in a state other than Georgia.
(a) If the holder of an instrument conveying property located both within and without the State of Georgia is a nonresident of Georgia, the amount of tax due would be $1.50 per $500.00 or fraction thereof of the principal of the note, times (x) the ratio of the value of real property located in Georgia to the value of all real property, in-state and out-of-state, securing the note.
(b) All values must be certified under oath by the holder presenting the instrument for recording. The application of the $25,000 cap is made after the above referenced computation is completed. An example follows:

$100,000,000

=

Total Loan Amount

10%

=

% of FMV of Real Property located within Ga.

90%

=

% of FMV of Real Property located outside Ga.

$300,000

=

Tax on Loan Amount ($100,000,000 x .003)

30,000

=

Tax on 10% of Loan Amount (Ga. portion)

25,000

=

Tax (after application of the cap)

(3) Resident and nonresident holders: Where a single security instrument secures long-term notes held by both residents and nonresidents and the long-term notes held by the residents and the nonresidents are clearly identifiable from the security instrument, the nonresident holders will be allowed to apportion their tax paid based on the apportionment formula described in subsection (2)(b).
(a) Resident holders in the same transaction, however, will be required to pay the intangible recording tax as if the property were located wholly within the State of Georgia on that portion of indebtedness represented by the long-term notes they hold. The maximum amount of Georgia intangible recording tax payable with respect to the indebtedness is $25,000.
(b) If the notes held by residents and nonresidents cannot be distinguished from the face of the security instrument, no holder, resident or nonresident, win be allowed to apportion their tax paid based on the apportionment formula described in subsection (b).

Rule 560-11-8-.08 Multi-County Property

(1) With respect to any instrument given as security for a long-term note wherein the real property is located in more than one county, the intangible recording tax shall be paid to each county in which the instrument is recorded. The value of the real property located in each county must be certified under oath by the holder of the note presenting the instrument for recording.
(2) The collecting officer in each county shall certify that the proper intangible recording tax has been paid along with any penalties assessed on the instrument.
(3) If the holder desires to record the instrument simultaneously in more than one county, the holder should submit a counterpart of the instrument for recording in each individual county. The counterpart should contain the appropriate description of the property that is encumbered in the subject county along with an affidavit that sets forth the value of the real property encumbered in every county being secured by the instrument.

Rule 560-11-8-.09 Wrap-around Note

Intangible recording tax is due on the entire face amount of a security instrument securing a "wrap-around" note which is otherwise a long-term note secured by real estate. This type of transaction is not a modification by extension, transfer, assignment, or renewal as defined in Revenue Rule 560-11-8-.04 above and does not fall within the provisions of Revenue Rule 560-11-8-.04 since there is a new lender.

Rule 560-11-8-.10 Interest Included in Note-Add On

If a deed to secure debt reflects an amount secured, that is greater than the principal amount of the note, and the description of the note contained in the security instrument does not clearly indicate what part of the face amount of the note is principal and what part represents other charges, the holder may at the time of recording, present a sworn affidavit itemizing the principal amount of the note and the other charges. The collecting officer shall then use the principal amount from the sworn affidavit in determining the proper tax liability.

Rule 560-11-8-.11 Adjustable Rate Mortgages ("ARM")

Where an instrument secures a long-term note which contemplates the extension of credit based upon an adjustable interest rate, the intangible tax due is computed as follows:

(a) Where the instrument contemplates negative amortization, the intangible tax is based upon the total amount of the credit contemplated within the instrument, if determinable. In some cases, this win be reflected as a percentage of the initial principal balance and in some cases it win be a fixed dollar amount.
(b) If the instrument does not contain a ceiling, or negative amortization may occur based on some future rate index, then the total credit contemplated cannot be determined. The intangible recording tax is then due on the initial principal balance as shown on the face of the instrument, and if negative amortization occurs, the holder of the instrument must execute and submit an affidavit as provided for in Revenue Rule 560-11-8-.05 concerning the intangible recording tax computation on additional advances and pay the intangible recording tax on the additional credit extended.

Rule 560-11-8-.12 Instrument Securing Short-Term and Long-Term Notes

Where a single instrument secures both long-term and short-term notes, intangible recording tax is due on the sum of the amounts of both the long-term and short-term notes, up to the maximum tax allowed per instrument.

Rule 560-11-8-.13 Secured Lines of Credit

(1) Intangible recording tax is due and payable by the note holder, upon the recording of an instrument securing a long-term revolving line of credit secured by real estate, a long-term line of credit secured by real estate or long-term equity line of credit secured by real estate on the total amount of the line of credit, whether advanced or not.
(2) The determination of whether the revolving line of credit, secured line of credit, or equity line of credit is long-term is made at the time of recording from the face of the instrument. If the term of the revolving line of credit, secured line of credit, or the equity line of credit will extend beyond a three year period, notwithstanding when advances will be advanced or repaid, the revolving line of credit, the secured line of credit, or equity line of credit, will be deemed long-term.
(3) The $25,000 maximum intangible tax limit provided for in O.C.G.A. Section 48-6-61 shall apply with respect to the total amount of credit contemplated by the line of credit. No additional tax will be due on subsequent advances secured by the instrument as long as the principal outstanding at any one time does not exceed the maximum amount permitted to be outstanding as determined from the face of the instrument.

Rule 560-11-8-.14 Exemptions

Any mortgage, deed to secure debt, purchase money deed to secure debt, bond for title or any other form of security instrument is not subject to intangible recording tax where any of the following applies:

(a) Where any of the following is a party: The United States, the State of Georgia, any agency, board, commission, department or political subdivision of either the United States or this state, any public authority, any non-profit public corporation, or any other publicly held entity sponsored by the government of the United States or this state.
(b) Where any of the following is Grantee: a federal credit union, a state of Georgia chartered credit union, or a church.
(c) Where the instrument is given as additional security, to correct a previously recorded instrument, or to substitute real estate; provided the body of the new instrument identifies the existing instrument and specifically states the purpose of the new instrument.
(d) Where the instrument does not secure a note, (e.g., guaranty agreement; bail bond; performance agreement; bond issue; indemnity agreement; divorce decree; letter of credit).
(e) In the case of a transfer or assignment, where the original note or the holder of the original note was exempt.
(f) Where the instrument is recorded pursuant to a plan of reorganization confirmed under Chapter II of the U.S. Code and where the instrument is accompanied by documentation verifying confirmation of the plan of reorganization.

Rule 560-11-8-.15 Determination Letter Requests

Requests for determination letter rulings by the Commissioner should always include a copy of the deed to as notes and financial agreements may also be helpful in making a decision.

Rule 560-11-8-.16 Claim for Refund

(1) Any taxpayer who disputes the taxability of an instrument or the amount of tax assessed by the collecting officer may pay the tax under Protest. The Protest must be filed at the moment the instrument is recorded and tax is paid. It cannot be filed after the instrument has been recorded. The Protest must be filed in duplicate and signed by the collecting officer at the time of recording. One copy should be attached to the instrument being recorded with the second copy forwarded by the collecting officer to the Department of Revenue at the address indicated on the Protest form.
(2) The collecting officer who receives the protested payment shall deposit it into a special escrow account.
(3) A taxpayer who files a Protest must file a Claim for Refund in order to "perfect" the Protest. The Claim for Refund must be filed no later than thirty days from the date of the Protest. It may also be executed at the time the Protest is filed. The Claim for Refund shall be filed in triplicate with the Department of Revenue and sent to the address indicated on the Claim for Refund form. A fourth copy shall be filed with the collecting officer who recorded the instrument under Protest.
(4) Any taxpayer whose Protest and Claim for Refund is denied, in whole or in part, has the right to bring an action for refund of the amount so claimed and not approved against the collecting officer who received the payment and recorded the instrument. The action must be filed in the Superior Court of the county in which the instrument was recorded under Protest or in the Georgia Tax Tribunal.
(5) If the Claim for Refund is approved, in whole or in part, the collecting officer who collected the tax shall refund to the taxpayer the amount approved without interest.