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Subject 560-7-8 RETURNS AND COLLECTIONS

Rule 560-7-8-.01 Requirements for Filing

(1) The following filing requirements pertain to all taxable years beginning on or after January 1, 1971:
(a) Every resident individual who is required to file a Federal return for any year is required to file a Georgia return for such year on Form 500.
(b) Every non-resident individual who is required to file a Federal return for any year, which return includes income from sources within Georgia, shall file a Georgia return for such year on Form 500.
1. Personal service. The gross income of a non-resident (who is not engaged in the conduct of a business, trade, profession or occupation on his own account, but receives compensation for his services in the status of employee or independent contractor) includes compensation for personal services only to the extent that the services were rendered in this State. Compensation for personal services rendered by a non-resident wholly outside this State and in no way connected with the management or conduct of a business in this State is excluded from gross income regardless of the fact that payment is made from a point within this State or that the employer is a resident individual, partnership or corporation. Compensation for personal services rendered by a non-resident wholly within this State is to be included in gross income although payment is received at a point outside this State or from a non-resident individual, partnership or corporation.
(i) Where compensation is received for personal services rendered partly within and partly without this State, that part of the income allocable to this State is included in gross income. In such cases the test of physical presence is used to determine the situs of the rendition of the services, except where the peculiar nature of such services causes the objective of the employment to be accomplished or to take effect within this State as; for example, where a non-resident is a fiduciary of a Georgia estate or trust. The gross income from commissions earned by a non-resident traveling salesman, agent, or other employee for services performed or sales made, whose compensation is in the form of a specified commission on each sale made, or services rendered, includes the specific commissions earned on sales made, or services rendered, in this State; and allowable deductions must be computed on the same basis.
(ii) Examples: If non-resident employees are employed in this State at intervals throughout the year, as would be the case if employed in operating trains, boats, planes, motor buses, trucks, etc., between this State and other states and foreign countries, and are paid on a daily, weekly or monthly basis, the gross income from sources within this State includes that portion of the total compensation for personal services which the total number of actual working days employed within the State bears to the total number of working days both within and without the State. If the employees are paid on a mileage basis the gross income from sources within this State includes that portion of the total compensation for personal services which the number of miles traversed in Georgia bears to the total number of miles traversed within and without the State. If the employees are paid on some other basis, the total compensation for personal services must be apportioned between this State and other states and foreign countries in such a manner as to allocate to Georgia that portion of the total compensation which is reasonably attributable to personal services performed in this State.
(iii) The gross income of all other non-resident employees, including corporate officers, includes that portion of the total compensation for services which the total number of actual working days employed within this State bears to the total number of actual working days employed both within and without this State during the taxable period. In the case of corporate officers and executives who spend only a portion of their time within this State, but whose compensation paid by a corporation operating in Georgia is exclusively for managerial services rendered by such officers and executives while within this State, the entire amount of compensation so earned is taxable without apportionment.
2. Income from intangible personal property. Intangible personal property, including money or credits, of a non-resident has a situs for taxation in this State when used in the conduct of the taxpayer's business, trade or profession in this State. Income from the use of such property, including dividends, interest and other income from money or credits, constitutes a part of the income from a business, trade or profession carried on in this State when such property is acquired or used in the course of such business, trade or profession as a capital or current asset, and is held in that capacity at the time the income arises.
(i) Examples: If a non-resident pledges stocks, bonds or other intangible personal property in Georgia as security for the payment of indebtedness, taxes, etc., incurred in connection with a business in this State, the property has a business situs here. Again, if a non-resident maintains a branch office here and a bank account on which the agent in charge of the branch office may draw for the payment of expenses in connection with the activities in this State, the bank account has a business situs here. If intangible personal property of a non-resident has acquired a business situs here, the entire income from the property, including gains from the sale thereof, regardless of where the sale is consummated, is income from sources within this State, taxable to the non-resident.
3. Business. The gross income of a non-resident (other than one who is employed by another, as distinguished from doing business on his own account) from a business, trade, profession or occupation is determined in the same manner as is the gross income of a resident from a similar activity, but includes only income from the business, trade, profession or occupation carried on in this State.
4. Sale of Property. The gain or profit from any sale, exchange or other disposition by a non-resident of real or tangible personal property located in this State is taxable, even though it is not connected with a business carried on in this State; and the loss from such a transaction is deductible if a business loss, or is a gain from a transaction entered into for profit, The gain or loss from the sale, exchange or other disposition by a non-resident of real property or tangible personal property located in this State is determined in the same manner, and is recognized to the same extent, as the gain or loss from a similar transaction by a resident.
5. Intangibles. The gain or profit of a non-resident from the sale, exchange or other disposition of intangible personal property, including stocks, bonds and other securities, ordinarily is not taxable and should not be included in gross income, except to the extent that such intangible personal property has acquired a business situs in this State. Likewise, losses sustained from the sale, exchange or other disposition of such property are not deductible, except to the extent that they are losses incurred in a business carried on within this State by the non-resident taxpayer.
6. Rents. The gross income of a non-resident from rents includes all rents received from property, whether real or personal, located within this State.
(c) Every resident estate or trust which is required to file a Federal return for any year shall file a Georgia return for such year on Form 501.
(d) Every non-resident estate or trust which is required to file a Federal return for any year, which return includes income from sources within Georgia, shall file a Georgia return for such year on Form 501.
(e) Every resident individual not required to file a Federal return who has income exempt from Federal income tax but subject to State income tax shall file a Georgia return on Form 500, computing his Georgia taxable net income as though such income were not excluded from Federal tax, and furnish therewith schedules in support of all computations.
(f) Every resident estate or trust not required to file a Federal return which has income exempt from Federal income tax but subject to State income tax shall file a Georgia return on Form 501, computing its Georgia taxable net income as though such income were not excluded from Federal tax, and furnish therewith schedules in support of all computations.
(2) All taxpayers are required to file with their Georgia income tax return a copy of all or any part of their Federal income tax return for the corresponding period. The State Revenue Commissioner shall promulgate instructions specifying taxpayers not required to file a copy of their Federal returns, and permitting some taxpayers to submit specified excerpts from Federal returns in lieu of submitting copies of the entire Federal return. A return filed without the required whole or part of the Federal return shall be deemed incomplete.
(a) A complete copy of the Federal partnership return must be filed with the Georgia partnership return for the corresponding period.

Rule 560-7-8-.02 Repealed

Rule 560-7-8-.03 Alternate Method of Determining Income

(1) Purpose. The purpose of this regulation is to provide guidance concerning the administration of O.C.G.A. § 48-7-35.
(2) Application for Permission to use Another Method.
(a) O.C.G.A. § 48-7-35 provides that if any corporation or nonresident shows by any method of allocation other than the processes or formulas prescribed by Chapter 7 of Title 48 that another method reflects more clearly the income attributable to the trade or business within Georgia, application for permission to base its return upon the other method shall be considered by the Commissioner.
(b) The application shall be accompanied by a statement setting forth in detail with full explanations the method the corporation or nonresident believes will more clearly reflect its income from trade or business within Georgia. If the commissioner concludes that the method submitted by the corporation or nonresident is in fact inapplicable and inequitable, he or she shall reject the application and shall so notify the corporation or nonresident. Failure to receive the commissioner's notice shall not operate to relieve the corporation or nonresident from liability for not filing the return on its due date utilizing the method prescribed by Chapter 7 of Title 48.
(c) Corporations or nonresidents that wish to request such permission from the Commissioner shall file an application, petition, or request with the Commissioner at least ninety (90) days prior to the due date of the Georgia return (including extensions) or at least ninety (90) days prior to the filing of the return, whichever occurs first, for the tax year for which such application is requested. Failure to request permission by such time will result in the filing of an income tax return subject to the regular method for the applicable tax year.
(d) The Commissioner will find that the method is in fact inapplicable and inequitable unless:
1. Unusual fact patterns occur that are unique and which will produce incongruous results based upon standard allocation and apportionment provisions; and
2. The corporation or nonresident establishes by clear and convincing evidence that the corporation's or nonresident's proposed method would more clearly reflect the income from trade or business within Georgia.

Rule 560-7-8-.04 Corporation Returns

Every corporation not expressly exempt from taxation must make a return of income regardless of the amount of its income. Ordinary corporations make their return on Form No. 600. Electing small business corporations under Subchapter S of the Internal Revenue Code, although exempt from Georgia income tax, make their return on Form No. 600-S. Copies of corporate returns will, so far as possible, be furnished taxpayers. The corporation, however, will not be excused from making a return because no return form has been furnished to it. Each corporation should carefully prepare its return so as to fully and dearly set forth the data called for therein. Imperfect or incorrect returns will not be accepted as meeting the requirements of the law. A corporation in existence during any portion of a taxable year is required to make a return. A corporation which has received a charter, but which has never perfected its organization, has transacted no business and has had no income from any source may, upon presentation of these facts to the Commissioner, be relieved from the necessity of making an income tax return so long as it remains in an unorganized condition. In the absence of a proper showing to the Commissioner, such a corporation will be required to make a return.

Rule 560-7-8-.05 Repealed

Rule 560-7-8-.06 Repealed

Rule 560-7-8-.07 Shifting of Income

(1) This section of the Act was enacted for the purpose of preventing diversion of profits in an arbitrary manner between corporations and their stockholders or between affiliated corporations. There has been a tendency on the part of some corporations operating both within and without the State to form separate corporations to engage in the several activities, all of which form a part of the overall operation. If, for example, a manufacturing company operates in Georgia it may sell its products to an affiliated selling company outside Georgia at prices which may or may not result in a proper profit for manufacturing the products. Or if a sales company operates within Georgia it may buy products from a manufacturing affiliate outside Georgia at prices which may or may not result in proper profit from selling activities. Some common forms of diversion of income are:
(a) Sales at more or less than fair value.
(b) Purchases at more or less than fair value.
(c) Fixing profits in advance by contract, such as a parent corporation, guaranteeing costs and expenses of a subsidiary, plus a fixed fee, or percentage.
(d) Payment of unreasonable officers' salaries, rents, royalties, interest, and other charges against income.
(e) Billing a product to an affiliate at factory cost. There are other methods by which affiliates not dealing at arms length may distort or divert profits.
(2) When any method which distorts net income among and between affiliates is used, the Commissioner will require the consolidation of income of all such affiliates and then proceed to compute the entire net income in accordance with the provisions in Section 92-3113, which relates to apportionment of income within and without the State. The tax imposed by this law shall apply to the correct apportioned income of all affiliates as consolidated.
(3) The Commissioner will have due regard for fair profits, and for prices which products would ordinarily sell for between non-affiliates, and if it is found that affiliates are in fact dealing at arms length, operating, buying and selling, and otherwise dealing with each other as if they were not affiliated, consolidation will not apply.

Rule 560-7-8-.08 Time and Place of Filing Returns

(1) The automatic extension for filing a return accepted by the Internal Revenue Service is honored by the State of Georgia for the same number of months from the statutory due date of the Georgia return. A regular extension of time for filing for an individual and an additional extension of time for filing for a corporation granted by the Internal Revenue Service is accepted by the State of Georgia to the same due date of the Federal return. The taxpayer may petition for additional time, however Georgia Law prohibits the granting of an extension of over 6 months in the aggregate from the statutory due date of the return.

Rule 560-7-8-.09 Addition to Tax in Case of Nonpayment

(1) If the amount of tax shown on a return as being due (after consideration of allowable credits) or any part thereof, is not paid by the date prescribed for such payment, a penalty, as hereinafter provided, shall be added to and collected as part of such tax, unless the taxpayer proves to the satisfaction of the Commissioner that there is reasonable cause for such delinquency. An extension of time for payment of tax is not provided for in O.C.G.A. § 48-7-86. An extension of time to file a return does not extend the time for payment of tax. The taxpayer who has an approved Federal extension of time to file must pay the Georgia tax due on or before the statutory date prescribed for payment.
(2) If the amount of tax specified in a notice and demand for any tax required to be shown on a return which is not so shown is not paid within 10 days from the date thereof, a penalty, as hereinafter provided, shall be added to and collected as a part of such tax, unless the taxpayer proves to the satisfaction of the Commissioner that there is reasonable cause for such delinquency.
(3) The penalty cited in paragraphs (1) and (2) above shall be ½ of 1% for each month or fractional part thereof of delinquency. For purposes of this section, the term "month" shall be the period from the date of the month on which the return is due to the same day in the next succeeding month and thereafter to the corresponding date of each succeeding month.
(4) The maximum late payment penalty and late filing penalty imposed by O.C.G.A. § 48-7-57 shall not exceed 25% of the tax not paid by the due date (excluding extensions).
(5) Penalty for Negligence. If all or any part of a deficiency in tax is determined by the Commissioner to be attributable to either negligence or to an intentional disregard of the Georgia Law and the Rules and Regulations thereunder, a penalty of 5% of such deficiency shall be assessed and collected as a part of such tax.
(6) Penalty for Fraud. If all or any part of a deficiency in tax is determined by the Commissioner to be attributable to fraud, a penalty of 50% of such deficiency shall be assessed and collected as a part of such tax. If a penalty for fraud is asserted with respect to any tax, no further penalty shall be assessed on such tax.

Rule 560-7-8-.10 Penalties for Late Filing.Amended

(1) If an income tax return is not filed on or before the due date therefor, a penalty as hereinafter provided shall be added to and collected as a part of the tax due thereon, unless the taxpayer proves to the satisfaction of the Commissioner that there is reasonable cause for such delinquency, or unless the taxpayer furnishes with his return a copy of an extension of time granted by the Internal Revenue Service and files such return within such extended time.
(2) The penalty, cited above, shall be 5% for each month or fractional part thereof of delinquency. For purposes of this section, the term "month" shall mean the period from the date of the month on which the return is due to the same date in the next succeeding month, and thereafter to the corresponding date of each succeeding month. A penalty assertable under this section shall be computed on the tax required to be shown on the return less any allowable credits or payments made on or before the statutory date prescribed for payment of tax.
(3) In the event both the late filing penalty and the late payment penalty imposed by O.C.G.A. § 48-7-86 are imposed in the same month, the amount of the late filing penalty shall be reduced by the amount of the late payment penalty that is imposed in such month.
(4) The maximum late filing penalty and late payment penalty imposed by O.C.G.A. § 48-7-86 shall not exceed 25% of the tax not paid by the due date (excluding extensions).

Rule 560-7-8-.11 Commissioner to Prepare Delinquent Returns

If it is necessary for the Commissioner to prepare a return under this section, and he does so prepare it, or if he makes additional assessment hereunder, the taxpayer is not necessarily relieved of prosecution. The Commissioner may call upon the solicitor general of any Superior Court Circuit in this State, or the Attorney General of Georgia to prosecute a violator of this law.

Rule 560-7-8-.12 Examination of Records of Taxpayers

The Statute of Limitations provided in O.C.G.A. § 48-2-49 and O.C.G.A. § 48-7-82 does not apply to an examination of the records of any taxpayer under this law, by the Commissioner or his agent.

Rule 560-7-8-.13 Repealed

Rule 560-7-8-.14 Headquarters Job Tax Credit

(1) Program Description. The headquarters job tax credit program authorized by Section 48-7-40.17 provides a credit for taxes for a taxpayer establishing its headquarters in this state or relocating its headquarters into this state.
(2) Definitions.
(a) Average Wage. The term "average wage" means the average wage of the county in which a full-time job is located as reported in the most recent annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor that is available as of the last day of the tax year in which the jobs were created. For purposes of this definition, wages means the total dollars paid during the year to an employee, including but not limited to bonuses, incentive pay, and deductions from gross pay. Wages does not mean contributions made by employers on behalf of employees to health insurance, retirement, or other benefit programs.
(b) Full-time Job. The term "full-time job" means employment for an individual in a permanent, full-time position located in this state which:
1. Is located at a headquarters and is engaged in performing headquarters related functions and services as a headquarters staff employee;
2. Has a regular workweek of 30 hours or more;
3. Pays at or above:
(i) In tier 1 counties, the average wage of the county in which it is located;
(ii) In tier 2 counties, 105 percent of the average wage of the county in which it is located;
(iii) In tier 3 counties, 110 percent of the average wage of the county in which it is located; and
(iv) In tier 4 counties, 115 percent of the average wage of the county in which it is located; and
4. Has no predetermined end date.
(c) Headquarters. The term "headquarters" means the principal central administrative office of a taxpayer, where headquarters staff employees are located and employed, and where the primary headquarters related functions and services are performed.
(d) Tier. The term "tier" means a tier as designated pursuant to Code Section 48-7-40, as amended.
(e) Headquarters Related Functions and Services. The term "headquarters related functions and services" means those functions involving financial, personnel, administrative, legal, planning, or similar business functions performed by headquarters staff employees.
(f) Headquarters Staff Employees. The term "headquarters staff employee" means executive, administrative, or professional workers performing headquarters related functions and services.
1. An executive employee is a full-time job employee who is primarily engaged in the management of all or part of the enterprise.
2. An administrative employee is a full-time job employee who is not primarily involved in manual work and whose work is directly related to management policies or general headquarters operations.
3. A professional employee is an employee whose primary duty is work requiring knowledge of an advanced type in a field of science or learning. This knowledge is characterized by a prolonged course of specialized study.
(g) New Full-Time Jobs. The term "new full-time jobs" refers to full-time jobs that are new to the state of Georgia. Jobs that are transferred from other Georgia locations of the taxpayer or from other Georgia locations of an affiliate of the taxpayer would not be jobs that are new to the state of Georgia. However, an employee in a new full-time job may be employed at a temporary location in this state pending completion of construction or renovation work at the headquarters.
(3) Establishing Eligibility for the Credit.
(a) A taxpayer must either establish its headquarters in this state, or it must relocate its headquarters into this state. Such establishment or relocation must occur on or after January 1, 2001.
(b) The first date on which the taxpayer withholds wages for employees at such headquarters (pursuant to the provisions of Code Section 48-7-101) is a critical date with respect to the following eligibility requirements:
1. Prior to one year from such date the taxpayer must incur within the state a minimum of $1 million in construction, renovation, leasing, or other costs related to such establishment or relocation; and
2. Within one year of such date the taxpayer must employ at least 50 persons in new full-time jobs at such headquarters, as provided in paragraph (3)(c).
(c) Once the taxpayer has employed at least 50 persons in new full-time jobs at its headquarters, the average number of new full-time jobs at such headquarters must be at least 50 for a taxable year.
(d) New full-time jobs at such headquarters are determined for a taxable year by computing the average number of new full-time jobs subject to Georgia income tax withholding for the taxable year. This average shall be determined by the following method:
1. For each month of the taxable year, count the total number of new full-time jobs that are subject to Georgia income tax withholding as of the last payroll period of the month or as of the payroll period during each month used for the purpose of reports to the Georgia Department of Labor;
2. Add the monthly totals of new full-time jobs; and
3. Divide the results by the number of months in the taxable year.
(e) The taxpayer must elect not to receive the tax credits provided for by Code Sections 48-7-40, 48-7-40.1, 48-7-40.2, 48-7-40.3, 48-7-40.4, 48-7-40.7, 48-7-40.8, and 48-7-40.9 for such jobs or for such project. This election is deemed to have been made when the taxpayer claims the headquarters job tax credit on its state income tax return. Under this election, taxpayers may not claim or carry forward the headquarters job tax credit for any given project for which a job tax credit is claimed under O.C.G.A. Sections 48-7-40 or 48-7-40.1, an investment tax credit is claimed under O.C.G.A. Sections 48-7-40.2, 48-7-40.3 or 48-7-40.4, or an optional investment tax credit is claimed under O.C.G.A. Sections 48-7-40.7, 48-7-40.8 or 48-7-40.9. Neither may taxpayers alternately elect to claim the job tax credit, the investment tax credit, or the optional investment tax credit in one year, and the headquarters job tax credit in the next year for a given project. These credits are not interchangeable. Taxpayers may elect to take only one of the tax credits for a given project.
(4) Calculation of Credit. A taxpayer that has established eligibility for the headquarters job tax credit shall be allowed a credit for taxes imposed under this article as follows:
(a) An amount equal to $2,500.00 annually per new full-time job; or
(b) An amount equal to $5,000.00 annually per new full-time job if the average wage of the new full-time jobs created is 200 percent or more of the average wage of the county in which such jobs are located.
(5) Claiming the Credit.
(a) The headquarters job tax credit may be taken on an income tax return for the first taxable year in which the taxpayer first becomes eligible for such credit. The credit may also be claimed for each of the four immediately succeeding taxable years, provided the number of new full-time jobs as required in (3)(c) of this regulation and as calculated in (3)(d) of this regulation are maintained in each year. Thereafter, the taxpayer shall be ineligible to claim the headquarters job tax credit on an income tax return, except to the extent that the taxpayer qualifies for a carry forward of the credit in accordance with paragraph (d) below.
(b) The credit may be used to offset 100 percent of the taxpayer's Georgia state income tax liability in the taxable year.
(c) Where the amount of such credit exceeds the taxpayer's income tax liability in a taxable year, the excess may be taken as a credit against such taxpayer's quarterly or monthly withholding tax payment under Code Section 48-7-103. The amounts claimed under this paragraph may not exceed in any one taxable year $2,500.00 annually per new full-time job, or $5,000.00 if the average wage of the new full-time jobs created is 200 percent or more of the average wage of the county in which such jobs are located.
(d) Any credit claimed under this code section but not used in any taxable year may be carried forward for ten years from the close of the taxable year in which the qualified jobs were established as eligible new full-time jobs for purposes of computing the credit.
(6) Documentation. At the time the credit is claimed on an income tax return, the taxpayer shall submit to the commissioner a listing of headquarters staff employees in new full-time jobs. Such listing shall include the name of the employee, social security number, wages, amount of credit claimed for such employee (whether $2,500.00 or $5,000.00), and any other information that the commissioner may request.
(7) Notification and Process to Claim and Receive Withholding Tax Credit.
(a) Notification of Intention to Claim Withholding Tax Credit. A taxpayer establishing its headquarters in this state or relocating its headquarters into this state must notify the commissioner each year of its election to take all or part of the credit against the quarterly or monthly withholding tax payment for such taxpayer. This notification must be made at least thirty (30) days prior to the date on which the income tax return for the taxpayer is filed with the department. Taxpayers should use Form IT-JOBW for this purpose.
(b) Process for Receiving Withholding Tax Credit Benefits. Within ninety (90) days of the date the income tax return is filed in accordance with instructions provided by the department, the commissioner will confirm to the taxpayer the approved amount of headquarters job tax credit and the date when the taxpayer may begin retaining withholding tax payments otherwise due to the department.
(8) Pass-Through of Credit.
(a) "S" Corporations. Taxpayers that are "S" corporations will apply the headquarters job tax credit to corporate income tax liability at the entity level if one exists. Any remaining credit will then be apportioned to shareholders based on their percentage share of ownership of the corporation in the same manner as other pass-through items. Taxpayers that are "S" corporations that otherwise qualify to take all or a part of the headquarters job tax credit against withholding tax otherwise due the department must make an irrevocable election to do so as a part of their notification to the commissioner required under paragraph 7(a) of this regulation. When this election is made no headquarters job tax credit will be apportioned to shareholders.
(b) Partnership. Where the taxpayer is a partnership, the headquarters job tax credit will be apportioned to partners according to the partnership agreement for sharing income or loss, or if there is no partnership agreement for sharing income or loss, according to the partner's interest in the partnership. Taxpayers that are partnerships that otherwise qualify to take all or a part of the headquarters job tax credit against withholding tax otherwise due the department must make an irrevocable election to do so as a part of their notification to the commissioner required under paragraph 7(a) of this regulation. When this election is made no headquarters job tax credit will be apportioned to partners.
(c) Limited Liability Companies. Taxpayers that are limited liability companies will apportion the headquarters job tax credit to members based on their percentage ownership of the limited liability company. Taxpayers that are limited liability companies that otherwise qualify to take all or a part of the headquarters job tax credit against withholding tax otherwise due the department must make an irrevocable election to do so as a part of their notification to the commissioner required under paragraph 7(a) of this regulation. When this election is made no headquarters job tax credit will be apportioned to members.

Rule 560-7-8-.15 Interest on Deficiencies

(1) Interest at the rate provided in O.C.G.A. § 48-2-40 and referred to in O.C.G.A. §§ 48-7-81 and 48-7-126 shall be computed on all deficiencies or unpaid tax from the date such payment of tax was due until paid.
(2) For purposes of this rule the date such payment of tax was due shall refer to the due date of the return on which such tax is payable, and shall ignore any extension of time granted for filing such return, or any assessment of tax prior to such due date.
(3) If there is a deficiency or unpaid tax on any return which is subsequently decreased by a carry-back of a net operating loss, interest and penalty shall be computed on such deficiency or unpaid tax, without consideration of such carry-back loss, from the date such payment of tax was due to the last day of the taxable year in which such net operating loss occurs. Thereafter, interest and penalty shall be computed on the tax after adjustment for deduction of the net operating loss carry-back.

Example:An individual filed the 2001 return reflecting taxable income, and did not pay the $400 tax shown on the return. The taxpayer then filed the 2003 return reflecting a net operating loss of $2000, and then filed a timely claim for refund carrying the loss to 2001. The unpaid tax balance after deduction of the operating loss carry-back is $280.00. Interest and penalty would be computed as follows, presuming the date of payment of the liability to be August 15, 2004:

Interest and penalty on $400 Additional Tax from

April 15, 2002 to December 31, 2003 126

Additional Tax Due After Net Operating

Loss Carry-back Deduction 280

Interest and penalty on $280 from

January 1, 2004 to August 15, 2004 29

---------

Net Deficiency at August 15, 2004 $435

Note: This regulation applies to all taxpayers. An individual taxpayer was used for illustration purposes only.

(4) The interest and penalty provided by this regulation shall be assessed and collected as if it were an integral part of the tax upon which it is computed.

Rule 560-7-8-.16 Repealed

Rule 560-7-8-.17 Period of Limitation Upon Assessment and Collection

In the event an amended return is filed by the taxpayer which shows a change in the return, the statute of limitations under O.C.G.A. § 48-2-49 and O.C.G.A. § 48-7-82 runs from the date the amended return was filed only to the extent of such specific changes.

Rule 560-7-8-.18 Statement of Changes

A detailed statement of changes made by the Commissioner of Internal Revenue must be submitted under separate cover. Do not mail with current year's return. This must be mailed to the address indicated in the current instruction booklet for the type of entity (i.e., corporation, s-corporation, partnership, fiduciary, or individual.)

Rule 560-7-8-.19 Repealed

Rule 560-7-8-.20 Rural Physician Credit

(1) Purpose. This regulation provides guidance concerning the implementation and administration of the rural physician credit under O.C.G.A. § 48-7-29.
(2) Definitions. As used in this regulation:
(a) Rural County. The term "Rural county" means a county in this state that has 65 persons per square mile or fewer according to the United States decennial census of 1990 or any future such census. For taxable years beginning before January 1, 2002, the United States decennial census of 1990 shall be used. For taxable years beginning on or after January 1, 2002 and before January 1, 2012, the United States decennial census of 2000 shall be used. For taxable years beginning on or after January 1, 2012, the United States decennial census of 2010 shall be used.
(b) Rural Physician. The term "rural physician" means a physician licensed to practice medicine in this state, who practices in a rural county and resides in a rural county or a county contiguous to the rural county in which such physician practices and primarily admits patients to a rural hospital and practices in the fields of family practice, obstetrics and gynecology, pediatrics, internal medicine, or general surgery. A physician may practice and reside in different rural counties.
(c) Rural Hospital. The term "rural hospital" means an acute-care hospital located in a rural county that contains fewer than 100 beds.
(d) Resides. The term "resides" means the taxpayer's principal domicile and not a secondary residence of the taxpayer.
(e) Practices. The term "practices" means work performed in a field listed in subparagraph (2)(b) of this regulation in a rural county for an average of at least 40 hours per week for the period the physician resides in a rural county or a county contiguous to the rural county in which such physician practices.
(3) Amount of the Credit.
(a) A person qualifying as a rural physician shall be allowed a credit against the tax imposed by Code Section 48-7-20 in an amount not to exceed $5,000.00. The tax credit may be claimed for not more than five years, provided that the physician continues to qualify as a rural physician. The five year period is a continuous period, which starts in the first year the rural physician qualifies for the credit.
(b) For taxable years beginning on or after January 1, 2012, a physician who was practicing in a rural county and residing in a rural county or a county contiguous to the rural county in which such physician practices, as determined under the decennial census of 2000, in a taxable year beginning before January 1, 2012, will be considered to continue to qualify even if the rural county, or either rural county if they were practicing and residing in different rural counties, is not included in the decennial census of 2010, provided they otherwise qualify.
(c) A physician who, on December 31, 2011, is currently practicing and or residing in a county which was not considered a rural county according to the decennial census of 2000 but is now considered a rural county according to the decennial census of 2010, shall not be considered to be practicing and or residing in a rural county.
(d) A physician who would have first qualified, based on the decennial census of 2000, from January 1, 2012 until the effective date of this regulation will be considered to continue to qualify provided such physician meets the requirements based on the decennial census of 2000.
(e) In the case where a physician qualifies for the rural physician credit but later the rural hospital increases its number of beds so that the hospital is not considered a rural hospital as provided by subparagraph (2)(c) of this regulation, the physician will be considered to continue to qualify provided they otherwise qualify.
(f) No physician who, on July 1, 1995, is currently practicing in a rural county shall be eligible to receive the credit provided for in paragraph (3) of this regulation. No credit shall be allowed for a physician who has previously practiced in a rural county unless, after July 1, 1995, that physician returns to practice in a rural county after having practiced in a nonrural county for at least three years.
(g) A physician who qualifies for the credit for part of the year is not required to prorate the credit computed under paragraph (3) of this regulation.
(h) In no event shall the amount of the tax credit exceed the taxpayer's income tax liability, and any unused tax credit shall not be allowed to be carried forward to apply to the taxpayer's succeeding years' tax liability. No such tax credit shall be allowed the taxpayer against prior years' tax liability.

Rule 560-7-8-.21 Repealed

Rule 560-7-8-.22 Repealed

Rule 560-7-8-.23 Repealed

Rule 560-7-8-.24 Repealed

Rule 560-7-8-.25 Repealed

Rule 560-7-8-.26 Claim for Refund of Taxes and Fees Imposed by Chapter 7 of Title 48

(1) A claim for refund of taxes and fees, that have been erroneously or illegally assessed and collected, shall be made pursuant to Chapter 7 of Title 48 of the O.C.G.A. and O.C.G.A. § 48-2-35.
(2) Upon such claim for refund, the Commissioner may redetermine the entire tax liability of the taxpayer for the year or period for which the claim is filed, and even though no new assessments can be made on account of the expiration of the period of limitation, the taxpayer is nevertheless not entitled to a refund unless the taxpayer has actually overpaid his tax for such taxable period.
(3) Claims must be filed on the form prescribed by the Commissioner, and if the prescribed form is not timely filed the claim may be disallowed. If the taxpayer requests a refund in other than the prescribed manner within the period allowed by O.C.G.A. § 48-2-35 the taxpayer must, in order for the claim to be considered, show by satisfactory evidence that:
(a) The taxpayer did not have access to the internet; and
(b) The taxpayer requested the prescribed forms from the Department of Revenue, the Department failed or refused to supply them, and the taxpayer's request for forms was made in sufficient time for the Department to mail and for the taxpayer to complete and submit the forms within the time prescribed by law.
(4) Unless otherwise specified by the Department, in the event a claim for refund is paid for an amount that is less than the amount claimed (including the applicable interest), the amount that is not paid shall be deemed denied.

Rule 560-7-8-.27 State Revenue Commissioner to have Right to Prorate Tax

When a taxpayer is not liable for Georgia income taxes for an entire year because of moving into this State or moving from this State, he shall include in his return only his income received while a resident of this State. Deductions of a personal nature such as contributions to charitable organizations, alimony, medical expenses, or the optional standard deduction and personal exemption and credits for dependents shall be allowed in the ratio that the adjusted gross income of the taxpayer while residing in Georgia bears to the total adjusted gross income of the taxpayer for the entire year. As used herein, gross income means total income less business expenses incurred in the production of such income.

Rule 560-7-8-.28 Repealed

Rule 560-7-8-.29 Defrauding State

Whenever the Commissioner finds that a taxpayer has failed to file a return, maintain records, supply any information, or comply with other provisions of the income tax laws, payment of the tax, penalty and interest imposed by this law will not relieve the taxpayer from prosecution, nor will such prosecution relieve him of the tax, penalty and interest imposed by this law.

Rule 560-7-8-.30 Repealed

Rule 560-7-8-.31 Forms, Schedules and Instructions.Amended

(1) Purpose. The purpose of this Rule is to prescribe income tax forms and returns necessary for the administration and enforcement of Chapter 7 of Title 48 as required under O.C.G.A. § 48-2-12.
(2) Individual/Fiduciary Taxpayer Form Numbers and Purpose.
(a) Form 500, Individual Income Tax Return.
(b) Form 500-ES, Estimated Tax for Individuals and Fiduciaries.
(c) Form 500-EZ, Short Individual Income Tax Return.
(d) Form 500-NOL, Application for Net Operating Loss Adjustment (other than corporations).
(e) Form 500 UET, Underpayment of Estimated Tax by Individuals/ Fiduciary.
(f) Form 500X, Amended Individual Income Tax Return.
(g) Form 501, Fiduciary Income Tax Return.
(h) Form 501X, Amended Fiduciary Income Tax Return.
(i) Form 525-TV, Payment Voucher.
(j) Form CD LO-14B, Statement of Financial Condition for Individuals.
(k) Form GA-5347, Statement of Person Claiming Refund on Behalf of a Deceased Taxpayer.
(l) Form GA-8453, Individual Income Tax Declaration for Electronic Filing or 2D Barcode Direct Deposit.
(m) Form GA-9465, Georgia Individual Income Tax Installment Agreement Request.
(n) Form IND-CR, State of Georgia Individual Credit Form.
(o) Form IT-511, Individual Income Tax Instruction Booklet.
(p) Form IT-560, Individual/Fiduciary Extension Payment.
(q) Form RET-001, Taxpayer Return Request Form.
(3) C-Corporation Taxpayer Forms and Purpose.
(a) Form 600, Corporation Tax Return.
(b) Form 600-T, Exempt Organization Unrelated Business Income Tax Return.
(c) Form 602 ES, Corporate Estimated Tax.
(d) Form 900, Financial Institutions' Business Occupation Tax Return.
(e) Form 3605, Application for Recognition of Exemption with Instructions.
(f) Form IT-552, Corporation Application for Tentative Carry-Back Adjustment.
(g) Form IT 611, Corporation Income Tax Booklet.
(h) Form IT-CONSOL, Application for permission to file Consolidated Georgia Income Tax Return.
(i) IT-CONSOL Instr., Instructions to File Consolidated Returns
(4) Partnership Forms and Purpose.
(a) Form 700, Partnership Income Tax Return.
(b) Form IT-711, Partnership Income Tax Return and Instructions.
(5) S-Corporation Taxpayer Forms and Purpose.
(a) Form 600S, S Corporation Tax Return.
(b) Form 600S-CA, S Corporation Consent Agreement of Non-resident Stockholders.
(c) Form IT 611S, S Corporation Income Tax Booklet.
(6) Withholding Tax Forms and Purpose.
(a) Form IT-AFF1, Affidavit of Seller's Residence.
(b) Form IT-AFF2, Affidavit of Seller's Gain.
(c) Form IT-AFF3, Seller's Certificate of Exemption.
(d) Form GA-V, Fill-in Withholding Tax Payment Voucher.
(e) Form G-2-A, Withholding on Distributions to Non-Resident Members/Shareholders.
(f) Form G-2LP, Withholding on Sales or Assignment of Lottery Payments.
(g) Form G-2RP, Withholding on Sales or Transfers of Real Property and Associated Tangible Personal Property by Nonresidents.
(h) Form G-4, Employee's Withholding Allowance Certificate.
(i) Form G-4P, Withholding Certificate for Pension or Annuity Payments.
(j) Form G-5B, Withholding Account Change Form.
(k) Form G-7, Withholding Quarterly Return (For Monthly Payer).
(l) Form G-7, Withholding Quarterly Return (For Quarterly Payer).
(m) Form G-7, Schedule B Withholding Quarterly Return (For Semi-Weekly Payer).
(n) Form G-1003, Income Statement Transmittal Form.
(7) Other Income Tax Forms and Purpose.
(a) Form 600 UET, Underpayment of Estimated Tax by Corporations.
(b) Form 4562 Georgia, Depreciation and Amortization.
(c) Form CR-AFF, Affidavit By Non-Resident.
(d) Form IT-303, Application for Extension of Time for Filing State Income Tax Returns.
(e) Form IT-550, Claim for Refund of Georgia Income Tax Erroneously or Illegally Collected.
(f) Form IT 560 C, Payment of Income Tax and/or Net Worth Tax.
(g) Form IT-Addback, Related Member Intangible Expenses and Costs and Interest Expenses and Costs.
(h) Form IT-CR, Georgia Non-Resident Composite Tax Return.
(i) Form IT-CR UET, Underpayment of Estimated Tax by Composite Filers.
(j) Form IT-REIT, Captive Real Estate Investment Trust (REIT) Expenses and Costs.
(k) Form PV CORP, Corporate Payment Voucher.
(l) Form RD-1061, Power of Attorney.
(m) Form RD-1062, Disclosure Authorization Form.
(n) Form TSD-10 Application for Tax Clearance Certificate.

Rule 560-7-8-.32 Repealed

Rule 560-7-8-.33 Payment and Reporting of Withholding Tax

(1) Purpose. The purpose of this regulation is to provide guidance concerning the payment and reporting of withholding tax required under O.C.G.A. §§ 48-2-32, 48-7-101, 48-7-103, 48-7-105, and 48-7-106, and the withholding penalties imposed by subsection (c) of O.C.G.A. § 48-7-126.
(2) Definitions.
(a) "Annual payer" means an employer who withholds or is required to withhold $800.00 or less in the aggregate for the lookback period.
(b) "Business day" means every day except Saturday, Sunday, or any holiday observed by the Federal Reserve Bank or the State of Georgia.
(c) "EFT" means the payment by electronic funds transfer as provided and required by Rule 560-3-2-.26.
(d) "Lookback period" means the twelve month period ending June 30th of the preceding calendar year. For example, the lookback period for calendar year 2016 is the period from July 1, 2014 through June 30, 2015.
(e) "Monthly payer" means an employer who withholds or is required to withhold $50,000 or less in the aggregate for the lookback period and who is not an annual payer or a quarterly payer.
(f) "Payday" means the date on the employee's check or the first day the employee is able to tender the check for cash or other consideration, whichever is earlier.
(g) "Quarterly payer" means an employer who withholds or is required to withhold $200.00 or less per month during the lookback period and who is not an annual payer.
(h) "Semi-weekly payer" means an employer who withholds or is required to withhold more than $50,000 in the aggregate during the lookback period.
(i) "Withholding tax" means the tax withheld or required to be withheld from an employee's wages pursuant to O.C.G.A. § 48-7-101.
(3) Payment of Withholding Tax.
(a) Determination of Taxpayer Status. An employer will be deemed a semi-weekly, monthly, quarterly, or annual payer based upon an annual calculation of the employer's aggregate amount of withholding tax reported for the lookback period.
1. In determining the withholding tax amount for the lookback period, the Department shall determine the total amount of withholding tax liabilities reported or required to be reported per the taxpayer's withholding tax quarterly returns (Forms G-7) for the four quarters constituting the lookback period.
2. Because an employer may have multiple Georgia withholding tax identification numbers, an employer must include all withholding tax liabilities incurred under the same federal employer identification number (FEIN) when calculating its aggregate amount of withholding tax liabilities. For example, a business may have five locations and each location remits and reports withholding tax under a different state withholding tax number yet all locations operate under the same FEIN. The calculation of the withholding tax for the lookback period must include the withholding tax of all five business locations.
3. An employer who does not possess a withholding tax history in Georgia will be required to file on a monthly basis until the employer has established a withholding tax history.
4. In determining the total amount of withholding tax for each quarter in the lookback period, the Department will not include adjustments made on a corrected Form G-7 quarterly return filed after the return's due date. However, adjustments made on line 2 of Form G-7 filed by the return's due date will be taken into consideration.
(b) Semi-weekly payer
1. Unless a payer falls under subparagraph (3)(g) of this regulation, a semi-weekly payer for a calendar year must remit withholding tax via EFT on either the Wednesday or Friday following the payday as discussed below.
(i) For paydays occurring on a Wednesday, Thursday, or Friday the withholding tax is required to be remitted via EFT on or before the following Wednesday. If the following Wednesday is not a business day, the tax must be remitted on or before the next business day thereafter.
(ii) For paydays occurring on a Saturday, Sunday, Monday, or Tuesday the withholding tax is required to be remitted via EFT on or before the following Friday. If the following Friday is not a business day, the tax must be remitted on or before the next business day thereafter.
2. All semi-weekly payers must remit withholding tax via EFT. See O.C.G.A. § 48-2-32 and Rule 560-3-2-.26 for additional information and requirements.
3. Payroll checks issued between scheduled paydays will be deemed to have been issued for the next scheduled payday. For example, a company normally pays its employees on the 15th and last day of the month. However, an employee is issued a supplemental check on the 6th of the month due to a miscalculation of his earnings. For withholding tax purposes, the supplemental check is deemed to have been issued on the 15th. The related withholding tax from the supplemental check shall be sent via EFT along with the withholding tax related to the payday scheduled for the 15th of the month.
4. Employers with two or more payroll periods
(i) An employer with two or more payroll periods in which the paydays fall on different dates shall remit the related withholding tax for each payday on the respective payment due dates pursuant to subparagraph (3)(b)1. of this regulation.
(ii) Example. An employer pays its hourly employees every Friday and its salaried employees on the 15th and last day of the month.
(I) April 15th falls on a Friday; therefore, the withholding tax for the salaried employees will be remitted the following Wednesday, April 20th along with the withholding tax related to the hourly employees. In this case, the employer has a single remittance obligation for both paydays.
(II) April 15th falls on a Tuesday; therefore, the withholding tax for the salaried employees will be remitted the following Friday, April 18th. The withholding tax related to the hourly employees' Friday, April 11th payday will be remitted the following Wednesday, April 16th. In this case, the employer has two remittance obligations for two separate paydays.
(c) Monthly payer. An employer that is determined to be a monthly payer must remit withholding tax with respect to payments made during a calendar month on or before the 15th day of the following month.
(d) Quarterly payer. An employer that is determined to be a quarterly payer must remit withholding tax with respect to payments made during the calendar quarter on or before the last day of the month following the end of the calendar quarter.
(e) Annual payer. An employer that is determined to be an annual payer must remit withholding tax with respect to payments made during the calendar year on or before the last day of January of the following year in which the tax was required to be withheld.
(f) Monthly, quarterly, and annual payers shall submit their payments via EFT if required to do so by regulation 560-7-3-.26.
(g) One-Day Rule
1. Notwithstanding subparagraphs (b) through (f) of this paragraph, withholding tax totaling more than $100,000 for the payday must be remitted via EFT by the next business day after the payday. For example, an employer is required to withhold $120,000 in tax related to the payroll checks dated Monday, May 15th. Therefore, the employer must remit the withheld tax to the Department via EFT on Tuesday, May 16th.
(4) Reporting of Withholding Tax.
(a) Semi-weekly Payer
1. Every employer who qualifies as a semi-weekly payer shall file a "G-7/SchB Quarterly Return for Semi-Weekly Payer" on or before the last day of the month following the end of the calendar quarter in which the withholding tax was required.
2. The return shall reflect the withholding tax liability for the calendar quarter less credit for any withholding tax payments made pursuant to subparagraph (3)(b) of this regulation during the calendar quarter. Any outstanding withholding tax reflected on the return shall be remitted via EFT on or before the due date of the return. Such amount shall be subject to the penalties provided in paragraph (6) as well as interest.
(b) Monthly Payers
1. Every employer who qualifies as a monthly payer shall file a "G-7 Quarterly Return for Monthly Payer" on or before the last day of the month following the end of the calendar quarter in which the withholding tax was required.
2. The return shall be accompanied by payment of the amount of any tax due for such calendar quarter less credit for any withholding tax payments required under subparagraph (3)(c) of this regulation during the calendar quarter. Such amount shall be subject to the penalties provided in paragraph (6) as well as interest.
(c) Quarterly Payers
1. Every employer who qualifies as a quarterly payer shall file a "G-7 Quarterly Return for Quarterly Payer" on or before the last day of the month following the end of the calendar quarter in which the withholding tax was required.
2. The return shall be accompanied by payment of the amount of tax due for such calendar quarter less credit for any withholding tax payments made under subparagraph (3)(d) of this regulation during the calendar quarter.
(d) Annual Payers
1. Every employer who qualifies as an annual payer shall file the fourth quarter "G-7 Quarterly Return for Quarterly Payer" on or before January 31st of the following year in which the withholding was required.
2. The return shall be accompanied by payment of the amount of tax due for the year less credit for any withholding tax payments made under subparagraph (3)(e) of this regulation during the calendar year.
(e) Withholding Tax Statements
1. For calendar years beginning on or before December 18, 2015, on or before February 28th of each calendar year, an employer or other withholding taxpayer must file with the Department copies of the previous year's withholding tax statements.
2. The February 28th filing date stated within subparagraph (4)(e)1. shall continue to apply for calendar years beginning after December 18, 2015, with respect to Forms 1099 where Georgia withholding occurred and where such forms are required to be filed for any reason other than to report nonemployee compensation.
3. For calendar years beginning after December 18, 2015, on or before January 31 of each year for the preceding calendar year, an employer or other withholding taxpayer must file with the Department copies of the previous year's Form W-2 withholding tax statements.
4. For calendar years beginning after December 18, 2015, the January 31 filing date stated within subparagraph (4)(e)3. shall also apply with respect to Forms 1099 where Georgia withholding occurred and where such forms are required to be filed to report nonemployee compensation.
5. The Form G-1003 return must accompany the withholding tax statements. The Department may require a different G-1003 return for different types of withholding tax statements.
6. In most cases, the Department will only grant a 30 day extension to file Form G-1003 and all associated withholding tax statements if the Internal Revenue Service issues an extension.
7. Every employer required by the United States Social Security Administration or the Internal Revenue Service to submit withholding tax statements electronically shall similarly submit the Form G-1003 return and all associated withholding tax statements electronically to the Department. Additionally, taxpayers that remit withholding tax payments by electronic funds transfer, whether on a mandatory or voluntary basis, must file the Form G-1003 return and all associated withholding tax statements electronically.
8. Withholding tax statements include Forms 1099, W-2, G2-A, etc. Forms 1099 are only required to be submitted if Georgia income tax is withheld (except 1099-K).
(f) Termination of business or change in business status.
1. An employer must report, only by using the Department's Georgia Tax Center, the termination of the business or change in business status relating to ownership, address, entity structure, or any other significant change relating to withholding tax responsibilities.
2. An employer is required to file its final withholding tax form and pay all withholding tax due by the earlier of the due date or 30 days after the close of the business or change in business entity or ownership.
3. Copies of the withholding tax statements must be filed along with the Form G-1003 return within 30 days after the close of the business or change in business entity or ownership.
(g) Withholding tax statement penalties.
(i) If a withholding tax statement is not furnished to a person by the required date, the person required to furnish such statement shall be assessed a late penalty in the amount of:
(I) Ten dollars per statement furnished up to 30 calendar days after the date such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $50,000.00;
(II) Twenty dollars per statement furnished at least 31 calendar days, but not more than 210 calendar days after the date such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $100,000.00; or
(III) Fifty dollars per statement furnished 211 calendar days or more after such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $200,000.00.
(ii) If a withholding tax statement is not filed with the Department by the required date, the person required to file such statement shall be assessed a late penalty in the amount of:
(I) Ten dollars per statement filed up to 30 calendar days after the date such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $50,000.00;
(II) Twenty dollars per statement filed at least 31 calendar days, but not more than 210 calendar days after the date such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $100,000.00; or
(III) Fifty dollars per statement filed 211 calendar days or more after such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $200,000.00.
(iii) A person may be subject to more than one category of the penalties imposed by subparagraphs (4)(g)(i) and (4)(g)(ii).
(5) Certification of Software Vendors. At such time that the Department starts its certification program, the electronic filing of withholding returns and withholding tax statements must be completed by utilizing a software vendor that is approved by the Department.
(6) Withholding Penalties. The withholding penalties imposed by subsection (c) of O.C.G.A. § 48-7-126 shall be applied as follows (see subparagraph (6)(e) for examples):
(a) The addition of the $25 late penalty assessed on a withholding period may only occur once per quarter. Such $25 penalty shall be added to the first instance of either the late filing penalty or the late payment penalty.
(b) Five (5) percent late filing penalty will be assessed starting on the first business day after the due date of the return, and then five (5) percent will be assessed on the first day of each month thereafter. Any payments or credits as well as amounts on the adjustment lines on the Forms G-7 will for purposes of the late filing penalty calculation be ignored; this will be calculated using the tax withheld before application of any payments or credits and any adjustments listed on the Forms G-7.
(c) For all but quarterly and annual payers, late payment penalty will be assessed based on five (5) percent of the separate months the tax is due for the period of time prior to the return due date. Thereafter, it will be assessed at five (5) percent of the aggregate of the unpaid balance on the 16th of the month. For quarterly and annual payers it will be assessed at five (5) percent of the unpaid balance on the 1st of each month after the return due date.
(d) If at any time the amount of the late filing penalty plus the late payment penalty charged would exceed $25 plus twenty-five (25) percent of the total tax due for the period, the amount necessary to reach this threshold will be assessed and no further late payment penalty or late filing penalty will be assessed. Any payments or credits as well as amounts on the adjustment lines on the Forms G-7 will for purposes of this threshold be ignored; this will be calculated using the tax withheld before application of any payments or credits and any adjustments listed on the Forms G-7.
(e) Examples:
1. Example 1:

Monthly Payer Owes:

     

$5,000

January

$6,000

February

$7,000

March

Filing Due:

4/30/2009

Actual Filing:

5/10/2009

Pays in Full:

5/10/2009

Late Payment Penalties:

April 16th, 2009:

$25 + ($5,000 * 15%)=$775

($6,000 * 10%)=$600

($7,000 * 5%)=$350

Late Filing Penalty:

May 1st, 2009:

($18,000 * 5%)=$900

Total Penalty: $2,625

2. Example 2.

Monthly Payer Owes:

     

$50,000

January

$75,000

February

$75,000

March

Pays in full on time.

     

Filing Due:

4/30/2009

Actual Filing:

6/15/2009

Late Payment Penalties:

None.

Late Filing Penalty:

May 1st, 2009

$25 + ($200,000 * 5%)=$10,025

June 1st, 2009

($200,000 * 5%)=$10,000

Total Penalty: $20,025

3. Example 3.

Monthly Payer Owes:

     

$50,000

January

$75,000

February

$75,000

March

Pays

     

$100,000

February 20th

$50,000

March 20th

Filing Due:

4/30/2009

Actual Filing:

7/15/2009

Late Payment Penalties prior to Filing Due Date:

Feb 16th, 2009:

$25 + 5% of $50,000 from January=$2,525

Feb 20th payment of $100,000 pays the $50,000 January amount due and $50,000 of February amount due which leaves $25,000 owed from February.

Mar 16th, 2009:

5% of $25,000 from February=$1,250

Mar 20th payment of $50,000 pays for remainder of the $25,000 owed from February and pays $25,000 of the amount due from March which leaves $50,000 owed from March.

Apr 16th, 2009:

5% of $50,000 from March=$2,500

Total Late Payment Penalty before Filing Due Date=$6,275

Penalty after Filing Due Date:

Tax Balance Unpaid=$50,000

Maximum Penalty Threshold=$25 + 25% of $200,000=$50,025

Late Filing Penalty

May 1st, 2009

($200,000 * 5%)=$10,000

Late Payment Penalty

May 16th, 2009

($50,000 * 5%)=$2,500

Late Filing Penalty

June 1st, 2009

($200,000 * 5%)=$10,000

Late Payment Penalty

June 16th, 2009

($50,000 * 5%)=$2,500

Late Filing Penalty

July 1st, 2009

($200,000 * 5%)=$10,000

Filed July 15th, Stop Late Filing Penalty

Late Payment Penalty

July 16th, 2009

($50,000 * 5%)=$2,500

Late Payment Penalty

Aug 16th, 2009

($50,000 * 5%)=$2,500

Late Payment Penalty

Sep 16th, 2009

($50,000 * 5%)=$2,500

Late Payment Penalty

Oct 16th, 2009

($50,000 * 5%)=$2,500, however reduced to $1,250 due to threshold

Threshold Met, Stop All Additional Late Penalty

Total Penalty=$50,025

Rule 560-7-8-.34 Withholding on Nonresident Members of Partnerships, S Corporations, and Limited Liability Companies; Composite Return Alternative

(1) Definitions. As used in this regulation, the following terms are defined as follows:
(a) Taxable income sourced to this state. The term "taxable income sourced to this state" means the entity's income allocated or apportioned to Georgia pursuant to Code Section 48-7-31 or as otherwise provided by law. The entity's income shall include the sum of the following items:
1. The nonresident member's share of the Georgia separately stated income, guaranteed payments, loss, deduction or expense of the entity; and
2. The nonresident member's share of the Georgia nonseparately stated income, loss, deduction or expense of the entity;
(b) Entity. The term "entity" shall mean a Subchapter 'S' corporation, a partnership, or a limited liability company which is treated as a partnership or Subchapter 'S' corporation for Federal income tax purposes and which is required to file a partnership or Subchapter 'S' corporation return. However, the term "entity" does not include a Subchapter 'S' corporation that is treated as a 'C' corporation for Georgia purposes.
(c) Nonresident. The term "nonresident" shall mean an individual or fiduciary member who resides outside this state and all other members whose headquarters or principal place of business is located outside this state. Such nonresident determination shall be made on the last day of the tax year of the entity.
(d) Individual. The term "individual" shall mean a natural person.
(2) Withholding.
(a) Withholding Requirements. Withholding is required at the rate of 4 percent with respect to the nonresident member's share of taxable income sourced to this state, unless exempted by this regulation or O.C.G.A. § 48-7-129. The filing of estimated tax payments by the member does not relieve the entity from the responsibility of the withholding requirement.
(b) Certain Retirement Accounts. A member which is an individual retirement account as defined by Internal Revenue Code §§ 408(a) and 408(b), a Roth IRA as defined by Internal Revenue Code § 408A, or a qualified employer plan as defined by Internal Revenue Code § 409A(d)(2) is not subject to withholding. On a one time basis, the administrator of such retirement account or plan must certify to the entity in writing using Form NRW-Exemption, that this exception applies. Such certification must be attached to the entity's income tax return each year.
(c) Annual Income Less than $1,000.00. An entity is not required to withhold tax for a nonresident member if the aggregate annual nonresident member's share of taxable income sourced to this state is less than $1,000.00.
(d) Withholding Under other Provisions of Law, Ordering, etc. The nonresident member's share of taxable income sourced to this state is not subject to withholding under O.C.G.A. § 48-7-129 if such income is subject to withholding under other provisions of Georgia law. The nonresident member's share of taxable income sourced to this state shall not include payments to a member in a capacity other than as a member (e.g., salaries from Subchapter 'S' corporations, rents, or royalties).
(e) Exempt Organizations. The nonresident member's share of taxable income sourced to this state of an exempt organization which results in unrelated business taxable income, as defined by Internal Revenue Code § 512, will be subject to withholding. The nonresident member's share of taxable income sourced to this state of an exempt organization that does not result in unrelated business taxable income is not subject to withholding. In such latter case, the exempt organization shall annually certify in writing to the entity using Form NRW-Exemption, that the nonresident member's share of taxable income sourced to this state does not result in unrelated business taxable income. Such certification must be attached to the entity's income tax return each year.
(f) Insurance Companies. An insurance company which actually pays a tax to Georgia on its premium income is not subject to Georgia income tax and the withholding requirements under O.C.G.A. § 48-7-129. In this case, the insurance company shall annually certify in writing to the entity using Form NRW-Exemption, that this applies. Such certification must be attached to the entity's income tax return each year.
(g) C-Corporation, Individual, or Fiduciary Members.
1. Withholding is not required for the nonresident member's share of taxable income sourced to this state for a C-Corporation, an individual, or a fiduciary member which meets the conditions listed below. On a one time basis and on or before the due date (without extension) for filing the entity's income tax return for the taxable year for which the withholding is required, such member must certify to the entity in writing that this exception applies. Such certification must be attached to the entity's income tax return each year. Such member must:
(i) Agree to be subject to personal jurisdiction in this State for all income tax purposes, file returns, and pay all Georgia tax liabilities due, for the current year and future years in which it is a member and the entity owns property in Georgia, does business in Georgia, or otherwise derives income from Georgia sources; and
(ii) Will make estimated income tax payments if required.
2. In the event such member certifies to such entity and such member fails to satisfy the requirements of subparagraph (g)1. of this paragraph, then withholding will be due as originally required as if such certification had not been made for the year or years of such failure.
3. Entities except Subchapter 'S' corporations shall provide the certification required by subparagraph (g)1. of this paragraph on Form NRW-Exemption. Subchapter 'S' corporations shall use Form 600S-CA. A Subchapter 'S' corporation that has already obtained the Form 600S-CA for purposes of the Georgia Subchapter 'S' corporation election shall not be required to obtain the form a second time.
(h) Partnerships and Limited Liability Companies. See paragraph (4) relating to "Tiered Situations" and paragraph (5) relating to "Exception in Tiered Situations" for additional rules applicable to partnerships and limited liability companies (treated as partnerships for Federal income tax purposes) that are members of entities subject to this regulation.
(3) Composite Returns.
(a) Alternative to Withholding. In lieu of withholding, the entity may elect to file a composite income tax return for one or all of its nonresident members using Form IT-CR. The filing of the composite return shall constitute the election. Such election shall be irrevocable and must be made by the due date of the composite return (including extensions, if approved). Once the due date has expired, the composite return shall not be amended to include or exclude members. However the return must be amended to exclude members who, pursuant to subparagraph (d) of this paragraph, were not eligible to be included on the composite return (i.e. members having income within Georgia from sources other than the entity). The computation of tax is done by creating a schedule as described in subparagraph (b) of this paragraph. Individuals, corporations, partnerships, limited liability companies, estates, trusts, Qualified Subchapter S Trusts, and Electing Small Business Trusts may be included on the composite return. However, a corporation is still required to file a separate net worth tax return to pay the net worth tax that is due to Georgia. Nonresident members whose aggregate annual share of taxable income sourced to this state is less than $1,000.00 may also be included on the composite return.
(b) Creating a Schedule. The entity will create its own schedule following the examples on Form IT-CR showing the name, address, and identification number, and amount of income as provided in subparagraph (c) of this paragraph for each member included in the computation. The schedule must also include the name, address, identification number, and amount of the nonresident member's share of taxable income sourced to this state of any nonresident member not included in the computation of the composite return.
(c) Computing the Tax. Using the schedule created pursuant to subparagraph (b) of this paragraph, the members shall compute the tax as indicated in subparagraphs 1. and 2. of this subparagraph. The election of options may be changed annually; however, such election shall not be changed after the filing of the return. The member's income from the entity's business done in Georgia shall be the nonresident member's share of taxable income sourced to this state adjusted as provided in this subparagraph. Deductions will not be allowed on the composite return for items of loss, deduction or expense which are subject to other limitations imposed on computing either Federal taxable income, Federal adjusted gross income, or Georgia taxable income, or are otherwise limited by the Internal Revenue Code or the O.C.G.A., such as charitable contributions, investment interest expense, I.R.C. § 179 expense, casualty losses, capital losses, etc. Also, deductions based on self-employment, self-employed health insurance, Keogh or SEP or other deductions normally allowed in computing Adjusted Gross Income are not allowed on a composite return.
1. The following three options shall be available for individual members. Option 1 and Option 2 are only available for nonresident individual members not having income within Georgia from sources other than the entity:
(i) Option 1 - Filing Status. The entity may elect to compute the tax by multiplying the member's income from the entity's business done in Georgia by the applicable tax rate. The "applicable tax rate" shall be that rate provided in O.C.G.A. § 48-7-20 which applies to each individual member based on the individual member's filing status.
(ii) Option 2 - Standard Deduction and Dependents. The entity may elect to compute the tax by reducing the member's income from the entity's business done in Georgia by the personal exemption and credit for dependents as provided below and then multiplying such income by the applicable tax rate. The "applicable tax rate" shall be that rate provided in O.C.G.A. § 48-7-20 which applies to each individual member based on the individual member's filing status. Under this option, the member is allowed to take a standard deduction and a personal exemption and credit for dependents; however, the member should apportion these adjustments so that adjustments are allowed only to the extent that they apply to Georgia income.
(iii) Option 3 - Highest Marginal Tax Rate. If the above option 1 and option 2 are not available for use by the entity in computing the tax due for an individual member who has income within Georgia from sources other than the entity or if the entity otherwise elects for such individual, a composite return may be filed using this third option. In such case the individual member shall be allowed to be included on the composite return provided the highest marginal tax rate provided in O.C.G.A. § 48-7-20 is applied to the member's income from the entity's business done in Georgia to determine the amount of the tax. Should such individual member be required to otherwise file a Georgia return, then the income that was included using option 3 shall be excluded from the individual member's return.
(iv) For each individual member for whom the entity uses either Option 1 or Option 2 in computing the tax liability, the entity must obtain a signed statement each year from the respective individual member, using Form CR-AFF, verifying that the member does not have income from sources within Georgia other than the entity and verifying the individual member's Georgia filing status.
2. All non-individual members shall apply the tax rate provided in subsection (a) of O.C.G.A. § 48-7-21 to the member's income from the entity's business done in Georgia to determine the amount of tax.
(d) Members Excluded from the Composite Return. Any nonresident member excluded from the composite return is subject to the withholding provisions and is required to file a Georgia income tax return, unless otherwise exempted by this regulation or O.C.G.A. § 48-7-129. Likewise, any nonresident member included in the computation of a composite return is not subject to the withholding provisions and is not required to file a Georgia income tax return to report the entity's income. Except as provided in subparagraph (c)(1)(iii) of this paragraph, nonresident members having income within Georgia from sources other than the entity may not be included in the entity's composite return and shall be subject to the withholding tax imposed by O.C.G.A. § 48-7-129, unless otherwise exempted by this regulation or O.C.G.A. § 48-7-129.
(e) Composite Return Due Date. The due date of the composite return of a calendar year entity is the same as for a calendar year individual. Extension dates are the same as for individuals. A fiscal year entity should file its return on a fiscal year basis and should file its return by the 15th day of the fourth month after the fiscal year end. Estimated tax payment dates are the same as for individuals. A fiscal year entity shall adjust its estimated payment dates and extension dates as if it is an individual filing a fiscal year return. Form IT-303 (application for extension) should be used if an extension of time to file is needed. Form IT-303 only extends the time to file. Accordingly, any tax that is due should be remitted by the original due date of the composite return on Form IT560C. Tax remitted at the time the IT-CR is due should be remitted along with the payment voucher (Form CR-PV).
(f) Amended Composite Returns. Except as prohibited by subparagraph (a) of this paragraph, amended composite returns may be filed during the same periods as individual returns, and may be filed by using the Form IT-CR and checking the amended box.
(g) Consent Agreements. When filing a composite return for shareholders, it is not necessary to include copies of the consent agreements required by O.C.G.A. § 48-7-27(d)(2). However, consent agreements must be attached to the S Corporation return as provided in such code section.
(h) Composite Return Net Operating Losses. The following shall apply with regard to net operating losses:
1. A net operating loss computed on a composite return may be carried forward to another composite return year for each member. A net operating loss computed on a composite return may not be carried back. For an individual member, the income for the year or years that the loss is being carried to, must be recomputed using the option (as specified in subparagraph (3)(c)1.) that was used for the loss year before the loss is carried to that year.
2. A net operating loss cannot be carried from a year whereby the member was excluded on the composite return to a year whereby the member is included on the composite return.
3. A net operating loss must be carried forward from a year where the member was included on the composite return to a year the member files the member's own tax return.
4. Any limitations included in the Internal Revenue Code of 1986 on the amount of net operating loss that can be used in a taxable year shall be applied for each member; provided, however, that such limitations, including, but not limited to, the 80 percent limitation, shall be applied to the income computed pursuant to this paragraph.
(4) Tiered Situations. Except as provided in paragraph (5), in situations whereby the nonresident member is an entity, or where such nonresident member is owned by subsequent entities, the following shall apply:
(a) Withholding is only required by an entity that:
1. Does business in Georgia on its own and not as a result of being a member; or
2. Owns property in Georgia on its own and not as a result of being a member;
(b) Any withholding that occurs may be passed through each tier by attaching the G-2-A, of the entity in the tiered situation that was required to withhold pursuant to subparagraph (4)(a), and providing a schedule which allocates such withholding tax between the members at each tier based upon the profit/loss percentage. Failure to include this documentation will result in the disallowance of the withholding credit. A composite return may be completed at any level. However, if the composite return is not filed by the entity meeting either condition 1. or 2. of subparagraph (a) of this paragraph, withholding is still required by such entity, unless otherwise exempted by this regulation or O.C.G.A. § 48-7-129. Tax withheld at one level can be claimed on a composite return at another level.
(c) A member which is an entity or a corporation must include its pro rata share of the entity's gross receipts in its own single factor apportionment formula in determining how much of its income is Georgia income. In determining its income, the member includes its share of the entity's income before the entity apportions and allocates its income.
(d) In determining whether withholding is required, only the members that directly own an interest in the entity subject to withholding shall be considered.

For example:

1. An entity that is subject to the nonresident withholding requirements has several members. One nonresident member is also a member in several other entities that are subject to the withholding requirements. Each of the entities must withhold on that nonresident member whether or not the total income/loss from all the entities would result in a net loss for that member. A loss from one entity cannot be used to offset the income in another entity for that member.
2. Company A is subject to the nonresident withholding requirements and is in a tiered situation. Company B is a nonresident member of Company A. Company B has nonresident members, of which one is an exempt organization called Company C. Company A is required to withhold on all of Company B's share of taxable income sourced to this state.
(5) Exception in Tiered Situations.
(a) Nonresident withholding shall not be required for a member which is also an entity provided such entity on an annual basis in writing:
1. Elects to withhold at the rate of 4 percent with respect to its nonresident members' shares of taxable income sourced to this state in the same manner and subject to the same requirements, exceptions (including the exception provided in this paragraph but excluding the exception provided in subparagraph (2)(c)), etc. as if such entity itself was subject to O.C.G.A. § 48-7-129 and this regulation;
2. Agrees to be subject to personal jurisdiction in this State for all income tax purposes including the withholding required by O.C.G.A. § 48-7-129, together with related interest and penalties; and
3. Provides such election and such agreement in writing to the entity in which it is a member, using Form NRW-Exemption, on or before the due date (without extension) for filing the entity's income tax return for the taxable year for which the withholding is required. Form NRW-Exemption must be attached to the entity's income tax return each year.
(b) In the event such entity makes the election as provided in subparagraph (a)1. of this paragraph and such entity does not withhold at the rate of 4% if required to do so, then such exception shall not apply and withholding will be due as originally required as if such election had not been made.
(c) Each entity in subsequent tiers shall be entitled to make such election and such agreement provided the entity in which it is a member makes such election. However, failure by any entity in any tier to withhold at the rate of 4% if required to do so shall cause withholding to be due as originally required and as if such elections were not made by any entity in any tier.
(6) Withholding Procedures.
(a) Registration. All entities required to withhold taxes under O.C.G.A. § 48-7-129 must register with the Georgia Department of Revenue by completing Registration Application CRF-002. Registration for withholding requirements is to be separate and apart from the registration required for the payment of payroll taxes.
(b) Payment of Taxes.
1. With respect to the nonresident member's share of taxable income sourced to this state, payment of taxes withheld shall be due on or before the due date for filing the income tax return for the partnership, Subchapter 'S' corporation, or limited liability company as prescribed in subsection (a) of O.C.G.A. § 48-7-56 without regard to any extension of time for filing such income tax return. Payment should be remitted with the required Form G-7-NRW.
(c) Withholding Statement. A Form G-2-A (Withholding on Nonresident Members Share of Taxable Income Sourced to Georgia) showing the amount of the nonresident member's share of taxable income sourced to this state, the nonresident member's name, address, tax identification number, the amount of the Georgia tax withheld, and any other information the Commissioner requires must be furnished to the nonresident member and filed in duplicate with the Commissioner on or before the earlier of the date the income tax return is filed or the due date for filing the income tax return of such partnership, Subchapter 'S' corporation, or limited liability company as prescribed in subsection (a) of O.C.G.A. § 48-7-56 without regard to any extension of time for filing such income tax return. The duplicate Form G-2-A must be submitted to the Department of Revenue along with Form G-1003 (transmittal form) for such taxable year.
(d) Credit for Withholding; Tax Year for Which Credit can be Claimed. Nonresident members are required to submit a copy of Form G-2-A with their Georgia Income Tax Return in order to receive credit for any Georgia income taxes withheld. Tax withheld from an on resident member's share of taxable income sourced to this state must be claimed as a credit for the member's tax year in which the withholding tax year of the entity ends.

For example:

1. Calendar Year Taxpayers. A calendar year S Corporation withholds for the 2012 calendar year. An individual shareholder may claim a credit on the shareholder's 2012 individual income tax return (generally filed on or before April 15, 2013) for the 2012 taxes withheld by the S Corporation on the shareholder's behalf.
2. Other than Calendar Year Member. A calendar year partnership remits with holding taxes for 2012 during 2013 and has a corporate partner with a March 31 year end. The corporate partner may claim a credit in its entirety on its corporate income tax return for the year ended March 31, 2013 (generally filed on or before June 15, 2013) for the 2012 taxes withheld by the partnership on its behalf.
3. Other than Calendar Year Entity. An S Corporation with a January 31, 2012 year end remits withholding taxes on behalf of its nonresident shareholders. A calendar year end shareholder may claim a credit on the shareholder's 2012 individual income tax return (generally filed on or before April 15, 2013) for the taxes withheld by the S Corporation on the shareholder's behalf.
(7) Undue Hardship.
(a) Establishing Undue Hardship. To qualify for undue hardship, the entity must be experiencing a significant hardship. The entity must establish undue hardship and each determination will be considered on a case-by-case basis. A written petition must be filed with the Commissioner or his/her delegate requesting an exemption from withholding for an entity based on undue hardship. The petition shall be made at least sixty (60) days prior to the day on which the withholding tax is due and shall be accompanied by a full and complete explanation of the hardship incurred. This sixty (60) day period may be modified or waived by the Commissioner for reasonable cause. The Commissioner or his/her delegate will carefully consider the basis of the hardship and notify the entity in writing whether the petition is accepted or rejected. An accepted petition is valid for one year only, and petitions for undue hardship must be requested annually. Failure to receive the Commissioner's notice shall not relieve the entity from withholding in the manner prescribed by O.C.G.A. § 48-7-129.
(b) Circumstances Which do not Qualify. The following circumstances will not be considered to constitute undue hardship:
1. Inability to pay;
2. Additional cost of record keeping;
3. Paperwork too cumbersome;
4. Missing K-1 data, such as social security number, address, etc.;
5. Unfamiliarity of the filing requirements; or
6. Inadequate records.
(8) Anti-avoidance Clause. If the Commissioner reasonably determines that a transaction or payment has been entered into for the purpose of avoiding the provisions of this regulation and O.C.G.A. § 48-7-129, he or she may characterize any payment, or portion thereof, made by the entity to its member so as to reflect the true substance of the transaction.
(9) Effective Date. The provisions set forth in this regulation will apply to taxable years beginning on or after January 1, 2012. Taxable years beginning before January 1, 2012 will be governed by the regulations of Chapter 560-7 as they exist before January 1, 2012 in the same manner as if the amendments thereto set forth in this regulation had not been promulgated.

Rule 560-7-8-.35 Withholding on Sales or Transfers of Real Property and Associated Tangible Property by Nonresidents of Georgia

(1) Nonresidents of Georgia. The term "Nonresident of Georgia" shall include individuals, trusts, partnerships, corporations, and unincorporated organizations. For purposes of O.C.G.A. Section 48-7-128, the following persons are Nonresidents of Georgia and are therefore subject to the withholding tax requirements:
(a) Individual - Any individual having his or her principal residence outside Georgia at the time of closing, unless he or she otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of this Revenue Rule to be deemed a resident.
(b) Corporation - Any corporation whose principal place of business is located outside Georgia, unless it otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of this Revenue Rule to be deemed a resident.
(c) Partnership - Any partnership whose principal place of business is located outside Georgia, unless it otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of this Revenue Rule to be deemed a resident.
(d) Trust - Any trust that is being administered by a nonresident fiduciary if the gain from the sale will be taxed to the trust or that has nonresident beneficiaries if the gain from the sale will be taxed to the beneficiaries, unless it otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of this Revenue Rule to be deemed a resident.
(e) Limited Liability Company - Any limited liability company whose principal place of business is located outside Georgia, unless it otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of the Revenue Rule to be deemed a resident.
(f) Limited Liability Partnership - Any limited liability partnership whose principal place of business is located outside Georgia, unless it otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of this Revenue Rule to be deemed a resident.
(2) Co-owners. If two or more persons sell real property which they own as joint tenants with right of survivorship or as tenants in common, their respective status as to residence will be determined separately. Withholding is required only on the amount realized or gain recognized by the nonresident co-owner(s).
(3) Calculation of tax.
(a) Withholding requirement and tax rate. Nonresidents who sell or transfer Georgia real property are subject to a 3% withholding tax. The withholding tax is to be computed by applying the 3% rate to the purchase price. As an alternative, if the seller provides the buyer with a completed affidavit of gain (Form IT-AFF2 or equivalent) swearing to the amount of the gain, the withholding may be computed by applying the 3% rate to the amount of recognized gain.
(b) Threshold. Withholding will not be required on transactions where the purchase price is less than $20,000. If the purchase price exceeds $20,000 and the tax liability is less than $600, the seller may provide the buyer with a completed affidavit of gain (Form ITAFF2 or equivalent), swearing to the amount of the gain, and the buyer will not be required to withhold.
(c) Installment transactions. Every buyer or transferee of real property which is sold on the installment basis and who is required to deduct and withhold the withholding tax imposed by subsection (b) of O.C.G.A. Section 48-7-128 shall file the required return and remit payment of the tax to the Department in the following manner.
1. Initial return and initial payment. The initial required return and the initial tax payment shall be remitted on or before the last day of the calendar month following the calendar month within which the sale or transfer giving rise to the withholding tax occurred. The initial payment is calculated by taking 3 percent of the purchase price less the installment note. Or if the seller elects to base the withholding on the gain, 3 percent of the gain that would be recognized as a result of the proceeds received at the time of the closing.
2. Subsequent return and subsequent payments. For each subsequent return and subsequent payment, the amount of with- holding is calculated by taking 3 percent of the principal amount included in each payment. Or if the seller elects to base the withholding on the gain, 3 percent of the amount of each principal payment which represents the gain. The buyer shall file the required return and remit the payment to the Department on or before the last day of the calendar month following the calendar month within which the cumulative amount withheld for the year, less any payments already made to the Department for the year, exceeds $300. If the cumulative amount withheld for the year, less any payments already made to the Department for the year, does not exceed $300 for the calendar year, the buyer shall file the required return and remit the payment to the Department on or before the last day of the month following the end of the calendar year within which the tax was withheld.
3. Threshold. The threshold as described in subparagraph (3)(b) is completed based on the total purchase price or total gain as if the property were not sold on the installment basis, not on each separate principal payment or the amount of the principal payment which represents gain.
(4) Forms.
(a) Return. Unless otherwise exempted, every buyer or transferee of real property and associated tangible property from a nonresident seller or transferor must file a return and remit payment to the Department. Form G-2RP may be used as a return and remittance form; however, if the buyer has or creates a form that provides the sales date, buyer's and seller's names, addresses, identification numbers, total amount of the sales price or the gain recognized and the amount of withholding to be remitted, such form may be used instead. The buyer or transferee is required to provide the seller with a copy of the G-2RP or other form for the seller to file with the seller's income tax return.
(b) Other document as substitute for return. The buyer, in substitution for the G-2RP, may use the closing statement, transfer tax statement or other document showing all the information in (4)(a) above. The information should be contained in one page, and that page should be clearly designated at the top "Georgia Withholding Tax Return for Real Estate Transfer". The designation may be handwritten or typed, so long as it is clear and legible.
(c) Statement of withholding. If the transaction is subject to withholding, the buyer shall provide to the seller a copy of the Form G-2RP (or the document used in lieu of that form) as a statement of tax withheld. A copy of the statement shall be filed with the seller's Georgia Income Tax Return in order that the seller may receive credit for the tax withheld on the transaction.
(d) Affidavit of sellers' residence. O.C.G.A. Section 48-7-128(a)provides conditions under which a seller may be deemed a resident of Georgia for purposes of the withholding requirements. In order to be deemed a resident, the seller must provide the buyer with an affidavit swearing that the conditions in the statute and this rule are met. Form IT-AFF1 has been prepared by the Commissioner as an example of the information which must be provided in the seller's affidavit in order to document that the seller is a resident or a deemed resident and that, therefore, the buyer is not required to withhold. Please note that IT-AFF1 is only required by law where a seller is a nonresident but meets the conditions under which the seller may be deemed a resident; however, it may also be used by the buyer to document the seller's representation of Georgia residence if the parties so desire. Copies of Form IT-AFF1 may be obtained from any Department of Revenue office.
(e) Affidavit of seller's gain. O.C.G.A. Section 48-7-128(c)allows a seller to provide a buyer with an affidavit swearing to the gain required to be recognized on a transaction so that withholding may be based on the gain rather than the purchase price. Form IT-AFF2 has been prepared by the Commissioner as an example of an affidavit swearing to the gain on a transaction. The seller may use this affidavit or may execute an alternate affidavit that contains substantially the same information. This affidavit should be sent to the Department of Revenue at the same time as the Form G-2RP if the balance is due. Documentation of the cost basis, depreciation, and selling expenses should be retained by the seller and only be provided to the Department when requested. Copies of Form IT-AFF2 may be obtained at any Department of Revenue office.
(5) Exemptions. Although there are no filing requirements under law in exempt transactions, the Commissioner has prepared a Certificate of Exemption (Form IT-AFF3) as an example of a form which may be executed and provided to the parties for record keeping purposes. This form, or a similar document executed by the seller and provided to the buyer, may be used to document the buyer's reliance on the seller's representation that the sale transaction is exempt. Copies of the Certificate of Exemption form may be obtained from any Department of Revenue office.

Rule 560-7-8-.36 Job Tax Credit, Description and Definitions

(1) Program Description. The Job Tax Credit program provides tax credits under Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated for certain business enterprises that create and retain new full-time employee jobs in Georgia. The Georgia Department of Community Affairs ("DCA") and the Georgia Department of Revenue have been designated as the responsible agencies within Georgia to administer the program.
(2) Coordination of Regulations. Any reference to Community Affairs regulations in this regulation refers to the most recent regulations relating to the Job Tax Credit program which have been adopted by the Georgia Department of Community Affairs.
(3) Definitions.
(a) Terms Defined in Community Affairs Regulation. The terms "business enterprise," "less developed area," "less developed census tract area," "new job," "average wage," "wages," "transferred job," and "replacement job," as used in this regulation are defined in Community Affairs Regulation 110-9-1-.01.
(b) Taxes Imposed Under Article 2 and Article 5. The term "taxes imposed under Article 2 and Article 5" means the corporate income tax, withholding tax, and the individual income tax described at Article 2 and Article 5 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated.
(c) Project. The meaning of the term "project" as used in this regulation is identical to the meaning of "project" in Department of Revenue Regulation 560-7-8-.37.
(d) Year One. The term "year one" means the tax year or calendar year in which sufficient new jobs are created that, meeting the requirements in O.C.G.A. Sections 48-7-40 or 48-7-40.1 and Community Affairs Regulations 110-9-1-.01, 110-9-1-.02, and 110-9-1-.03 and this regulation, entitle a business enterprise to job tax credits.
(e) Years Two through Five. For business enterprises that create a new year one under DCA regulations for any taxable year beginning on or after January 1, 2009, the term "years two through five" means the consecutive four-year period following year one in which job tax credits may be allowed for new jobs created in year one and in which additional new jobs may be created that may also qualify for job tax credits.
(f) Years Two through Six. For business enterprises that initially claimed the credit for any taxable year beginning before January 1, 2009, the term "years two through six" means the consecutive five-year period following year one in which job tax credits may be allowed for new jobs created in year one and in which additional new jobs may be created that may also qualify for job tax credits.
(g) Competitive Project. The term "competitive project" as used in this regulation is defined in O.C.G.A. Section 48-7-40.
(4) Designation/Redesignation of Less Developed Counties and Less Developed Census Tract Areas. Counties will be designated tier 1, tier 2, tier 3 or tier 4 less developed counties subject to the factors set out in Community Affairs Regulation 110-9-1-.02. Census tracts will be designated less developed census tract areas subject to the factors set out in Community Affairs Regulation 110-9-1-.02. Less developed counties and less developed census tract areas may be redesignated according to the factors set out in Community Affairs Regulation 110-9-1-.02.
(5) Amount of Credit.
(a) Business Enterprises that Create a New Year One Under DCA Regulations for Any Taxable Year Beginning On or After January 1, 2009. Business enterprises in counties designated as tier 1, tier 2, tier 3 or tier 4 less developed areas, or in a less developed census tract area will receive an annual credit for taxes imposed under Article 2 for each new full-time employee job created. Replacement jobs and transferred jobs will not generate a credit. The amount of the credit will be $3,500 for business enterprises located in less developed census tract areas or tier 1 counties, $2,500 for business enterprises located in tier 2 counties, $1,250 for business enterprises located in tier 3 counties and $750 for business enterprises located in tier 4 counties. A business enterprise located within the jurisdiction of a joint development authority as described in O.C.G.A. Section 36-62-5.1(e)will qualify for an additional $500 credit for each new full-time job created, subject to the conditions and limitations set forth in these regulations. An existing business enterprise as defined in O.C.G.A. Section 48-7-40(a)(4) will qualify for an additional $500 credit for each new full-time job for the first year in which the new full-time job is created, subject to the conditions and limitations set forth in O.C.G.A. Section 48-7-40 and this regulation.
(b) Business Enterprises that Initially Claimed the Credit for Any Taxable Year Beginning Before January 1, 2009. Business enterprises in counties designated as tier 1, tier 2, tier 3 or tier 4 less developed areas, or in a less developed census tract area will receive an annual credit for taxes imposed under Article 2 for each new full-time employee job created for five years, beginning with years two through six after the creation of the jobs. Replacement jobs and transferred jobs will not generate a credit. The amount of the credit will be $3,500 for business enterprises located in less developed census tract areas or tier 1 counties, $2,500 for business enterprises located in tier 2 counties, $1,250 for business enterprises located in tier 3 counties and $750 for business enterprises located in tier 4 counties. A business enterprise located within the jurisdiction of a joint development authority as described in O.C.G.A. Section 36-62-5.1(e)will qualify for an additional $500 credit for each new full-time job created, subject to the conditions and limitations set forth in these regulations. An existing business enterprise as defined in O.C.G.A. Section 48-7-40(a)(4) will qualify for an additional $500 credit for each new full-time job for one year after the creation of such job, subject to the conditions and limitations set forth in O.C.G.A. Section 48-7-40 and this regulation.
(6) Maximum Amount of Credit.
(a) Business Enterprises that Create a New Year One Under DCA Regulations for Any Taxable Year Beginning On or After January 1, 2009. In tier 3 counties and tier 4 counties the job tax credit may be used, in any taxable year, to offset 50 percent of the taxpayer's Georgia income tax liability derived from operations within this state. Further, where a business enterprise is engaged in a competitive project located in a tier 3 county or a tier 4 county and where the amount of the credit exceeds 50 percent of the business enterprise's income tax liability for the taxable year, such business enterprise may elect to take the excess credit as a credit against such business enterprise's quarterly or monthly withholding payments under O.C.G.A. Section 48-7-103. In tier 1 counties, tier 2 counties and in less developed census tract areas the job tax credit may be used to offset 100 percent of the taxpayer's Georgia income tax liability derived from operations within this state. Further, in tier 1 counties and less developed census tract areas, the taxpayer may elect, in cases where the amount of such credit exceeds the business enterprise's liability for income taxes in a taxable year, to take the excess as a credit against such business enterprise's quarterly or monthly withholding payments under O.C.G.A. Section 48-7-103. Where a business enterprise is engaged in a competitive project located in a tier 2 county, such business enterprise may elect to take the excess credit as a credit against such business enterprise's quarterly or monthly withholding payments under O.C.G.A. Section 48-7-103.
(b) Business Enterprises that Initially Claimed the Credit for Any Taxable Year Beginning Before January 1, 2009. In tier 3 counties and tier 4 counties the job tax credit may be used, in any taxable year, to offset 50 percent of the taxpayer's Georgia income tax liability derived from operations within this state. In tier 1 counties, tier 2 counties, and in less developed census tract areas, the job tax credit may be used to offset 100 percent of the taxpayer's Georgia income tax liability derived from operations within this state. Further, in tier 1 counties and less developed census tract areas, the taxpayer may elect, in cases where the amount of such credit exceeds the business enterprise's liability for income taxes in a taxable year, to take the excess as a credit against such business enterprise's quarterly or monthly withholding payments under O.C.G.A. Section 48-7-103.
(7) Certification of Competitive Project. Prior to making the election to use the withholding benefit, a business enterprise engaged in a competitive project located in a tier 2, tier 3 or tier 4 county must be certified by the Commissioner of the Department of Economic Development. The certification must state that but for some or all of the tax incentive provided under O.C.G.A. Section 48-7-40, the business enterprise would have located or expanded outside of Georgia.
(8) Eligibility for Credit.
(a) Net Employment Increase. Except as otherwise provided in this paragraph, in less developed census tract areas, only those business enterprises that increase employment by 5 or more new full-time jobs for the taxable year will be eligible for the credit. For a business enterprise that initially claimed the credit for any taxable year beginning before January 1, 2012, in tier 1 counties, the business enterprise must increase employment by 5 or more new full-time jobs for the taxable year in order to be eligible for the credit. Within areas of pervasive poverty as designated under O.C.G.A. Section 48-7-40.1, business enterprises shall only have to increase employment by two or more jobs in order to be eligible for the credit, subject to the conditions and limitations set forth in O.C.G.A. Section 48-7-40.1. For a business enterprise that creates a new year one under DCA regulations for any taxable year beginning on or after January 1, 2012, in tier 1 counties, the business enterprise must increase employment by two or more new full-time jobs for the taxable year in order to be eligible for the credit. In tier 2 counties, only those business enterprises that increase employment by 10 or more new full-time jobs for the taxable year will be eligible for the credit. In tier 3 counties, only those business enterprises that increase employment by 15 or more new full-time jobs for the taxable year will be eligible for the credit. In tier 4 counties, only those business enterprises that increase employment by 25 or more new full-time jobs for the taxable year will be eligible for the credit. A credit is not generated during a year if the net employment increase in that year falls below the number of new full-time jobs required in that tier or census tract area.
(b) Business Enterprises that Create a New Year One Under DCA Regulations for Any Taxable Year Beginning On or After January 1, 2009.
1. Jobs Created in Year One. A business enterprise located in a less developed county or census tract area will receive job tax credits in year one. Such business enterprise will also receive job tax credits in years two through five for each new full-time job created in year one, so long as the net employment increase required for jobs created in that particular county tier or census tract area is maintained during years two through five.
2. Additional New Jobs Created in Years Two Through Five. For each additional new job created in years two through five, a business enterprise will receive a job tax credit, so long as the additional new jobs are maintained. Additional new jobs means those new jobs created in years two through five that increase the monthly full-time employment average for that year above the monthly full-time employment average for year one. The average full-time monthly employment for a year will be determined by the procedure set out in Community Affairs Regulation 110-9-1-.03.
(i) The credits for additional new jobs may only be taken if the business enterprise already qualifies for the job tax credit in year one.
(ii) Job tax credits for additional new jobs will be based on the tier status of the county or less developed census tract area during the year in which the additional new jobs are created.
(c) Business Enterprises that Initially Claimed the Credit for Any Taxable Year Beginning Before January 1, 2009.
1. Jobs Created in Year One. A business enterprise located in a less developed county or census tract area will receive job tax credits in years two through six for each new full-time job created in year one, so long as the net employment increase required for jobs created in that particular county tier or census tract area is maintained during years two through six.
2. Additional New Jobs Created in Years Two Through Six. For each additional new job created in years two through six, a business enterprise will receive a job tax credit for a five-year period, so long as the additional new jobs are maintained. Additional new jobs means those new jobs created in years two through six that increase the monthly full-time employment average for that year above the monthly full-time employment average for year one. The average full-time monthly employment for a year will be determined by the procedure set out in Community Affairs Regulation 110-9-1-.03.
(i) The credits for additional new jobs may only be taken if the business enterprise already qualifies for the job tax credit in year one.
(ii) Job tax credits for additional new jobs will be based on the tier status of the county or less developed census tract area during the year in which the additional new jobs are created.
(d) Sale, Merger, Acquisition, Reorganization, or Bankruptcy of a Business Enterprise. The sale, merger, acquisition, or transfer or liquidation or bankruptcy of a business enterprise will not create new eligibility in any succeeding taxpayer, but any unused credits may be transferred and continued by any transferee of the business enterprise. When a business enterprise merely changes its name, recapitalizes, or liquidates unrelated subsidiaries; however, no new eligibility need be established.
(9) Claiming the Credit. For a business enterprise to claim the job tax credit, the business enterprise must submit Form IT-CA with its Georgia income tax return for each year in which the credit is claimed. For any business enterprise that creates a new year one under DCA regulations for any taxable year beginning on or after January 1, 2009, the job tax credit must be claimed within one year of the earlier of the date the original return was filed or the date such return was due, including extensions.
(a) Withholding Tax. A business enterprise creating new jobs sufficient to qualify for the job tax credit authorized for jobs created in counties designated as tier 1 counties or in less developed census tract areas must notify the Commissioner each year of their irrevocable election to take all or a part of the credit against the quarterly or monthly withholding tax payment for such business enterprise. A business enterprise, which creates a new year one under DCA regulations for any taxable year beginning on or after January 1, 2009, engaged in a competitive project located in a tier 2 county, must notify the Commissioner each year of their election to take all or a part of the credit against the quarterly or monthly withholding tax payment for such business enterprise. A business enterprise, which creates a new year one under DCA regulations for any taxable year beginning on or after January 1, 2009, engaged in a competitive project located in a tier 3 county or a tier 4 county whose credit amount exceeds 50 percent of the business enterprise's income tax liability for the taxable year, must notify the Commissioner each year of their election to take all or a part of the credit against the quarterly or monthly withholding tax payment for such business enterprise. The withholding tax benefit may only be applied against the withholding tax account used by the business enterprise for payroll purposes. In the event the business enterprise is a single member limited liability company that is disregarded for income tax purposes, the withholding tax benefit may only be applied against the withholding tax liability that is attributable to wages paid by the single member limited liability company. When this election is made, the excess tax credit will not pass through to the shareholders, partners, or members of the business enterprise if the business enterprise is a pass-through entity. The amount per job that is eligible to be taken against the quarterly or monthly withholding tax payment for such business enterprise shall not exceed the following amounts:
1. $3,500 for a business enterprise located in a tier 1 county or in a less developed census tract area;
2. $2,500 for a business enterprise engaged in competitive project located in a tier 2 county;
3. $1,250 for a business enterprise engaged in a competitive project located in a tier 3 county; or
4. $750 for a business enterprise engaged in competitive project located in a tier 4 county.
(b) Notice of Intent. To claim any excess tax credit not used on the income tax return against the business enterprise's withholding tax liability, the business enterprise must file Revenue Form IT-WH Notice of Intent through the Georgia Tax Center within thirty (30) days after the due date of the Georgia income tax return (including extensions) or within thirty (30) days after the filing of a timely filed Georgia income tax return, whichever occurs first. A business enterprise engaged in a competitive project in a tier 2, tier 3 or tier 4 county must attach certification from the Department of Economic Development to Revenue Form IT-WH. Failure to file this form and certification from the Department of Economic Development (if engaged in a competitive project) as provided in this subparagraph will result in disallowance of the withholding tax benefit. However, in the case of a credit which is earned in more than one taxable year, the election to claim the withholding credit will be available for the credit earned in such subsequent year.
(c) Review Period. The Department of Revenue has one hundred twenty (120) days from the date the applicable Form IT-WH under subparagraph (9)(b) of this regulation is received to review the credit and make a determination of the amount eligible to be used against withholding tax.
(d) Letter of Eligibility. Once the review is completed, a letter will be sent to the business enterprise stating the tax credit amount which may be applied against withholding and when the taxpayer may begin to claim the tax credit against withholding tax. The Department of Revenue shall treat this amount as a credit against future withholding tax payments and will not refund any previous withholding payments.
(10) Carry forward. Any job tax credit which is claimed but not used in a taxable year may be carried forward for 10 years from the close of the taxable year in which the qualifying new jobs were created. For example, job tax credits created by an employment increase in year one, but not used in year one, may be carried forward to years two through eleven.
(11) Coordination with Investment Tax Credit, Optional Investment Tax Credit, the Headquarters Jobs Tax Credit, and the Quality Jobs Tax Credit.
(a) Taxpayers may not claim or carry forward the job tax credit for any given project for which either an investment tax credit is claimed under O.C.G.A. Sections 48-7-40.2, 48-7-40.3, or 48-7-40.4, or an optional investment tax credit is claimed under O.C.G.A. Sections 48-7-40.7, 48-7-40.8, or 48-7-40.9. Neither may taxpayers alternately elect to claim the investment tax credit or optional investment tax credit in one year and the job tax credit in the next year for a given project. These credits are not interchangeable. Taxpayers may elect to take only one of the investment, optional investment, or quality jobs tax credit for a given project.
(b) Taxpayers may not claim or carry forward the job tax credit for any jobs for which the headquarters job tax credit or the quality jobs tax credit is claimed under O.C.G.A. Section 48-7-40.17. Neither may taxpayers alternatively claim the jobs credit provided by O.C.G.A. Sections 48-7-40 and 48-7-40.1 and the headquarters job tax credit or the quality jobs tax credit with respect to such jobs. These credits are not interchangeable.
(12) Pass-Through Entities. When the business enterprise is a pass-through entity, and has no income tax liability of its own, the tax credits will pass to its members, shareholders, or partners based on the year ending profit/loss percentage and the limitations of this regulation. The credit forms will initially be filed with the tax return of the business enterprise to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The shareholders, members, or partners may not claim any excess tax credits against their withholding tax liabilities. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2018. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2018 tax year.
(13) Special Provisions.
(a) Effective Date. The provisions set forth in this regulation will apply to taxable years beginning on or after January 1, 2017. Taxable years beginning before January 1, 2017 will be governed by the regulations of Chapter 560-7 as they exist before January 1, 2017 in the same manner as if the amendments set forth in this regulation had not been promulgated.
(b) Overlap. Where the boundaries of a less developed census tract area and a less developed county overlap, Community Affairs Regulations 110-9-1-.02 and 110-9-1-.03 shall apply.

Rule 560-7-8-.37 Manufacturer's and Telecommunications Investment Tax Credit

(1) Definitions. As used in this regulation:
(a) Manufacturing. The term "manufacturing" means those establishments classified by the North American Industry Classification System (NAICS) Codes, published by the United States Office of Management and Budget, 2017 edition, that belong to Sectors 31-33.
(b) Manufacturing Facility. The term "manufacturing facility" means a single facility, including contiguous parcels of land, improvements to such land, buildings, building improvements, and any machinery or equipment used in manufacturing described by NAICS Sectors 31-33.
(c) Telecommunications. The term "telecommunications" means those establishments primarily engaged in providing telecommunications services described by NAICS Codes, 2017 edition, as:
1. NAICS Code 517312 for establishments primarily engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular phone services, paging services, wireless Internet access, and wireless video services;
2. NAICS Code 517311 for establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services; wired (cable) audio and video programming distribution; and wired broadband Internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry;
3. NAICS Code 517911 for establishments primarily engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. Mobile virtual network operators (MVNOs) are included in this industry; and
4. NAICS Code 517410 for establishments primarily engaged in providing telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications.
5. NAICS Code 517919 for establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing Internet services or voice over Internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry.
(d) Telecommunications Facility. The term "telecommunications facility" means a single facility, including contiguous parcels of land, improvements to such land, buildings, building improvements, and any machinery or equipment used in providing the telecommunications services described by NAICS Codes 517312, 517311, 517911, 517410, and 517919.
(e) Support Facility. The term "support facility" refers to any establishment involved in the performance of activities designed primarily to support a manufacturing facility or a telecommunications facility, such as corporate offices, sales offices, computer operations facilities, warehouses, distribution centers, storage facilities, research and development facilities, laboratories, repair and maintenance facilities, telecommunications centers, regional or district administrative offices, and other related manufacturing or telecommunications support activities.
(f) Qualified Investment Property. The term "qualified investment property" means all property described in O.C.G.A. Sections 48-7-40.2(a)(2), 48-7-40.3(a)(2), and 48-7-40.4(a)(2) which is reasonably related or necessary to the manufacturing process or to providing telecommunications services. Qualified investment property also includes recycling machinery or equipment, recycling manufacturing facility, pollution control or prevention machinery or equipment, pollution control or prevention facility, and conversion from defense to domestic production. The Commissioner reserves the right to review each purchase or acquisition of property by a taxpayer for which the taxpayer intends to claim a credit.
(g) Expansion of an Existing Manufacturing or Telecommunications Facility. The term "expansion of an existing manufacturing or telecommunications facility" means the capitalized purchase or acquisition of qualified investment property by a taxpayer for use in a manufacturing or telecommunications facility already existing in this state when the purchase or acquisition of such qualified investment property expands the taxpayer's asset base and is directly related to the taxpayer's manufacturing process or to providing telecommunications services. It does not mean the purchase or acquisition of qualified investment property for the purpose of repairing existing property.
(h) Project. The term "project" means a planned undertaking involving the capitalized purchase or acquisition of qualified investment property for the construction of an additional manufacturing or telecommunications facility or the expansion of an existing manufacturing or telecommunications facility. A project which is a planned expansion of an existing manufacturing or telecommunications facility must result in an expansion of the taxpayer's asset base and be directly related to the taxpayer's manufacturing process or to providing telecommunications services. For purposes of qualifying for this credit in conjunction with either the job tax credit, the headquarters job tax credit, the quality jobs tax credit, or the optional investment tax credit, a taxpayer may not undertake more than one project at the same time within a single facility, and each project must be confined to a single facility. Generally it is the same project if it is in the same building, provided that there can be separate projects in the same building if the employees that will be using the equipment that is the subject of the investment tax credit will not be or have not been claimed or included in any calculations for the jobs tax credit; the headquarters jobs tax credit, or the quality jobs tax credit.
(i) Pollution Control or Prevention Machinery or Equipment. The term "pollution control or prevention machinery or equipment" means all tangible personal property, used in whole or in part, to reduce or eliminate air and water pollution by removing, altering, disposing, or storing pollutants, contaminants, waste or heat.
(j) Pollution Control or Prevention Facility. The term "pollution control or prevention facility" means any facility, including land, improvements to land, buildings, building improvements, and any pollution control or prevention machinery or equipment whose primary purpose is to reduce air and water pollution, provided that such facility is in furtherance of applicable federal, state, or local standards for the abatement and control of air and water pollution and contamination.
(k) Conversion from Defense to Domestic Production. The term "conversion from defense to domestic production" means the conversion of a manufacturing or telecommunications facility's production capabilities from those which are substantially dependent upon Department of Defense expenditures to those which have a commercial application in the private sector.
(l) Cost of Qualified Investment Property. The term "cost of qualified investment property" means the taxpayer's basis in the property in the taxable year in which the credit is created.
(m) Rural county. The term "rural county" means a county that has a population of less than 50,000 with 10 percent or more of such population living in poverty based upon the most recent, reliable, and applicable data published by the United States Bureau of the Census. On or before December 31 of each year, the Commissioner of the Department of Community Affairs shall publish a list of such counties.
(2) Calculation of Credit.
(a) Basic Rate of Credit. The basic rate of credit allowed against the taxes imposed under Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia varies according to whether the facility for which the qualified investment property is purchased or acquired is located in a county designated as a tier 1, tier 2, or tier 3 or 4 less developed area under O.C.G.A. Section 48-7-40:
1. Tier 1 County. If the manufacturing or telecommunications facility is located in a county designated as tier 1, then the amount of the credit is equal to 5 percent of the cost of all qualified investment property purchased or acquired by the taxpayer for that facility in that taxable year.
2. Tier 2 County. If the manufacturing or telecommunications facility is located in a county designated as tier 2, then the amount of the credit is equal to 3 percent of the cost of all qualified investment property purchased or acquired by the taxpayer for that facility in that taxable year.
3. Tier 3 or 4 County. If the manufacturing or telecommunications facility is located in a county designated as tier 3 or 4, then the amount of the credit is equal to 1 percent of the cost of all qualified investment property purchased or acquired by the taxpayer for that facility in that taxable year.
(b) Higher Rate of Credit. In the event that the qualified investment property purchased or acquired by taxpayers consists of recycling machinery or equipment, a recycling manufacturing facility, pollution control or prevention machinery and equipment, a pollution control or prevention facility, or is used in the conversion from defense to domestic production, then the qualified investment property will be subject to a higher rate of credit. The amount of the higher rate of credit varies according to whether the qualified investment property is purchased or acquired for a facility located in a county designated as a tier 1, tier 2, or tier 3 or 4 less developed area under O.C.G.A. Section 48-7-40:
1. Tier 1 County. If the qualified investment property subject to the higher rate of credit is purchased or acquired for a facility located in a county designated as tier 1, then the amount of the credit is equal to 8 percent of the cost of such property purchased or acquired by the taxpayer in that taxable year.
2. Tier 2 County. If the qualified investment property subject to the higher rate of credit is purchased or acquired for a facility located in a county designated as tier 2, then the amount of the credit is equal to 5 percent of the cost of such property purchased or acquired by the taxpayer in that taxable year.
3. Tier 3 or 4 County. If the qualified investment property subject to the higher rate of credit is purchased or acquired for a facility located in a county designated as tier 3 or 4, then the amount of the credit is equal to 3 percent of the cost of such property purchased or acquired by the taxpayer in that taxable year.
(c) Office Space Cap in Recycling Manufacturing Facility. Where the office space used to house support staff in a building that is part of a recycling manufacturing facility exceeds 10 percent of the building's total space, then the building will not be considered a component of the recycling manufacturing facility. The building and any improvements to the building will be subject to the basic rate of credit for qualified investment property. Only recycling machinery or equipment located in the building will be subject to the higher rate of credit for qualified investment property.
(3) Establishing Eligibility for the Credit.
(a) Three-Year Threshold. Taxpayers must have operated an existing manufacturing or telecommunications facility or related support facility in this state for three years (thirty-six months) and must have previously filed any required state tax returns in order to become eligible for the tax credit. Only qualified investment property which is purchased or acquired by taxpayers after the thirty-six month eligibility requirement is met may be used to compute the tax credit. Qualified investment property purchased or acquired by taxpayers in taxable years prior to establishing the thirty-six month eligibility may not be claimed for those years by filing an amended tax return.
(b) Eligible Taxpayer. For the purpose of establishing eligibility, the "taxpayer" referenced is the entity that is required by law to file a return or pay tax. A partnership or business joint venture must have operated within the state for the immediately preceding thirty-six months to qualify for the credit. For example, the previous activity in Georgia of a parent, in the case of a corporation, a partner, in the case of a partnership or a business joint venture will not create eligibility for a new entity for the purposes of the thirty-six month threshold.
(c) Approval of Project Plan.
1. Eligibility and Application Procedure; General Rule. To be eligible for the credit provided for in O.C.G.A. Sections 48-7-40.2, 48-7-40.3, and 48-7-40.4, a taxpayer must purchase or acquire qualified investment property pursuant to a project plan. The taxpayer must submit Form IT-APP, which is a written application requesting approval of the project plan within thirty (30) days of the completion of the project. Form IT-APP must include a written narrative describing the project and a listing of the type, quantity, and cost of all qualified investment property purchased or acquired pursuant to the project plan and for which tax credits will be claimed.
2. Procedure for Claiming Credit Before Completion of Project. In the event a taxpayer elects to claim the credit before the completion of the project, but after the purchase or acquisition of qualified investment property in excess of the minimum threshold amount, the taxpayer may submit Form IT-APP for approval of the project plan along with the tax return on which the credit will be claimed. This preliminary Form IT-APP must be amended within thirty (30) days of the completion of the project.
3. Amendment of Application for Approval of Project Plan. If necessary, a taxpayer may amend any Form IT-APP for approval of the project plan by submitting additional project information.
4. Permission to File Late Application. In the event a taxpayer is unable to submit Form IT-APP for approval of the project plan within thirty (30) days of the completion of a project, the taxpayer shall submit the Form IT-APP as soon as practical thereafter.
5. Duration of Project. The duration of a project shall not exceed three years unless expressly approved in writing by the Commissioner.
6. Electronic Submission Required for Form IT-APP. Form IT-APP must be submitted electronically through the Georgia Tax Center. The Department will not approve any Form IT-APP that is submitted or filed in any other manner.
6. Minimum Threshold Amount.
(i) For Projects Beginning On or After January 1, 1995 and Beginning in a Taxable Year Beginning Before January 1, 2020. Before the credit may be claimed, the cost of all qualified investment property purchased or acquired by the taxpayer pursuant to the project plan must exceed a minimum threshold amount of $50,000.
(ii) For Projects Beginning in Taxable Years Beginning On or After January 1, 2020. Before the credit may be claimed, the cost of all qualified investment property purchased or acquired by the taxpayer pursuant to the project plan must exceed a minimum threshold amount of $100,000.
7. Certificate of Approval. If the project plan satisfies the requirements of this paragraph, the Commissioner shall issue to the taxpayer a certificate of approval.
8. Timing. The taxpayer shall claim the credit for qualified investment property purchased or acquired pursuant to the project plan in the year immediately following the taxable year in which the requisite minimum threshold amount is purchased or acquired by the taxpayer.
9. Documentation. At the time the credit is claimed, the taxpayer must submit to the Commissioner certification of the total cost of all qualified investment property purchased or acquired pursuant to the project plan. Such certification shall be done by attaching Form IT-IC and an approved Form IT-APP and any other information the Commissioner may request to the taxpayer's state tax return. A software program's Form IT-IC that is electronically filed with the Georgia income tax return in the manner specified by the Department satisfies this requirement.
(d) Earliest Date of Eligibility. In order to count towards establishing the minimum threshold amount or to qualify as a basis for claiming the credit, the purchase or acquisition of qualified investment property must have occurred no sooner than January 1, 1994. Qualified investment property purchased or acquired by taxpayers on or after January 1, 1994, will only be eligible as a basis for the credit if all of the other requirements of these regulations are met.
(e) Establishing New Eligibility. The sale, merger, acquisition, reorganization or transfer in liquidation or bankruptcy of a taxpayer does not create new eligibility for any succeeding taxpayer, but any unused credits may be transferred and continued by any transferee of the taxpayer as long as the transferee meets other applicable requirements in law and regulation. If the taxpayer which earned the credits elects to transfer unused credits, such taxpayer must provide the transferee with a copy of the original approval of the credits it received from the Department, and a written statement indicating the assets transferred and the unused credit available at the time of transfer. When a taxpayer merely changes its name, recapitalizes, or liquidates subsidiaries not related to the manufacturing or telecommunications facility, however, no new eligibility need be established.
(4) Maximum Amount of Credit. The investment tax credit taken by a taxpayer in any taxable year shall not exceed 50 percent of the taxpayer's Georgia state income tax liability derived from operations within this state.
(5) Withholding Tax for Taxpayers in Rural Counties located in Tier 1 Counties or Tier 2 Counties. For a taxpayer with a manufacturing or telecommunications facility in a rural county located in a tier 1 county or tier 2 county that has purchased or acquired qualified investment property in a taxable year beginning on or after January 1, 2020 (which is then claimed on an income tax return in the taxable year after the purchased or acquired taxable year), the investment tax credit shall first be applied to such taxpayer's state income tax liability which is attributable to income derived from operations within this state for that taxable year, limited to 50 percent of such liability before the application of such credit. If the amount of the credit exceeds 50 percent of the taxpayer's liability or estimated tax liability before the application of the credit, the excess may be taken as provided in this regulation as a credit against such taxpayer's quarterly or monthly withholding payments under O.C.G.A. § 48-7-103. The taxpayer shall not be subject to any adverse consequences including penalties from the failure to estimate their tax liability correctly.
(6) Per Taxpayer Credit Limitation for Withholding Tax. The amount preapproved for a taxable year for a taxpayer to be used against withholding under paragraphs (5) and (9) together shall not exceed $1 million. This per taxpayer per taxable year $1 million credit limitation applies to all facilities that a taxpayer has in rural counties located in both tier 1 and tier 2 counties.
(7) Credit Cap. The total amount of tax credits preapproved to be used against withholding tax for taxpayers in rural counties located in tier 1 and tier 2 counties under paragraphs (5) and (9) together shall not exceed $10 million for all taxpayers per calendar year.
(8) Preapproval for Withholding Tax for Taxpayers in Rural Counties located in Tier 1 Counties or Tier 2 Counties. A taxpayer with a manufacturing or telecommunications facility in a rural county located in a tier 1 county or tier 2 county that has received an approved Form IT-APP from the Department for qualified investment property purchased or acquired in a taxable year beginning on or after January 1, 2020 (which is then claimed on an income tax return in the taxable year after the purchased or acquired taxable year), may request preapproval to use their excess credit against withholding tax by submitting the appropriate forms to the Department as provided in this paragraph.
(a) Mandatory Electronic Preapproval Application for Withholding Tax For Taxpayers in Rural Counties located in Tier 1 Counties or Tier 2 Counties. To claim any excess investment tax credit not used on the income tax return against the taxpayer's withholding tax liability, a taxpayer that has received an approved Form IT-APP from the Department shall electronically submit Form IT-WHRZ-APP through the Georgia Tax Center between April 1 and May 31 of the calendar year in which the taxable year for which they will claim the investment tax credit ends. Provided preapproval is granted as provided in paragraph (8)(b) of this regulation, the credit is then eligible to be claimed against withholding in the second month after the month the tax return claiming the investment tax credit is filed and the taxpayer reports using Form IT-WHRZ-RPT through the Georgia Tax Center that they have filed their return.
(i) Example. Taxpayer purchases qualified investment property in a year that begins on January 1, 2020 and ends on December 31, 2020; and taxpayer submits Form IT-APP and receives an approved Form IT-APP. Taxpayer applies for preapproval to use their excess credit against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2021 and May 31, 2021. Taxpayer files their 2021 Georgia income tax return and claims the investment tax credit as provided in paragraph (3)(c)9. of this regulation on October 15, 2022 and Taxpayer submits Form IT-WHRZ-RPT through the Georgia Tax Center to report that the return has been filed on such date. The investment tax credit is eligible to be claimed against withholding beginning on December 1, 2022. Alternatively, if the Taxpayer files their 2021 Georgia income tax return and claims the investment tax credit as provided in paragraph (3)(c)9. of this regulation on September 30, 2022 and Taxpayer submits Form IT-WHRZ-RPT through the Georgia Tax Center to report that the return has been filed on such date, the investment tax credit is eligible to be claimed against withholding beginning on November 1, 2022.
(ii) Example. Taxpayer purchases qualified investment property in a year that begins on December 1, 2020 and ends on November 30, 2021; and taxpayer submits Form IT-APP and receives an approved Form IT-APP. Taxpayer applies for preapproval to use their excess credit against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2022 and May 31, 2022. Taxpayer files their 2022 Georgia income tax return and claims the investment tax credit as provided in paragraph (3)(c)9. of this regulation on September 15, 2023 and Taxpayer submits Form IT-WHRZ-RPT through the Georgia Tax Center to report that the return has been filed on such date. The investment tax credit is eligible to be claimed against withholding beginning on November 1, 2023.
(iii) If the taxpayer is a disregarded entity, then Form IT-WHRZ-APP should be electronically submitted in the name of the owner of the disregarded entity.
(iv) The Department will not preapprove any use of the investment tax credit against withholding where the Form IT-WHRZ-APP is submitted or filed in any other manner. The filing of Form IT-WHRZ-APP is an irrevocable election and as such the amount approved by the Department for use against withholding tax can only be used against withholding tax it can never be used against income tax liability. The amount approved by the Department for use against withholding tax will not pass through to the shareholders, partners, or members of the taxpayer if the taxpayer is a pass-through entity. The Department shall treat the amount approved for use against withholding tax as a credit against future withholding tax payments and will not refund any previous withholding payments.
(b) Notification. The Department will notify each taxpayer of the tax credits preapproved and allocated to such taxpayer by June 30 of the calendar year in which the application was submitted.
(c) Allocation of Withholding Tax Credit. In the event the with holding tax credit amounts on applications filed with the Commissioner under paragraphs (8) and (10) of this regulation exceed the maximum aggregate withholding tax credits under paragraph (7) of this regulation, then the withholding tax credits shall be allocated among the taxpayers who filed a timely Form IT-WHRZ-APP through the Georgia Tax Center on a pro rata basis based upon the amounts otherwise allowed under O.C.G.A. §§ 48-7-40.2 and 48-7-40.3 and this regulation.
(d) The withholding tax benefit may only be applied against the withholding tax account used by the taxpayer for payroll. In the event the taxpayer is a single member limited liability company that is disregarded for income tax purposes, the withholding tax benefit may only be applied against the withholding tax liability that is attributable to wages paid by the single member limited liability company.
(e) In the event it is determined that the taxpayer has not met all the requirements of O.C.G.A. §§ 48-7-40.2 or 48-7-40.3 and this regulation, then the amount of credits shall not be tentatively approved or the tentatively approved credits shall be retroactively denied. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been claimed, except as provided in paragraph (5) of this regulation.
(9) Eligibility for Investment Tax Credit Carry Forward to be used against Withholding Tax.
(a) A taxpayer that has investment tax credit carry forward for qualified investment property that was purchased or acquired in a taxable year beginning before January 1, 2020, may request preapproval to use such investment tax credit carry forward against withholding tax, if within a single taxable year beginning on or after January 1, 2020 and before January 1, 2025 such taxpayer:
(i) Maintains in rural counties located in Tier 1 Counties at least 100 full-time employee jobs as such term is defined in O.C.G.A. § 48-7-40.24 and purchases or acquires at least $5 million of qualified investment property for manufacturing or telecommunications facilities in rural counties located in Tier 1 Counties. The number of full-time employee jobs shall be the monthly average number of eligible full-time employees subject to Georgia income tax withholding for the taxable year; or
(ii) Maintains in rural counties located in Tier 2 Counties at least 100 full-time employee jobs as such term is defined in O.C.G.A. § 48-7-40.24 and purchases or acquires at least $10 million of qualified investment property for manufacturing or telecommunications facilities in rural counties located in Tier 2 Counties. The number of full-time employee jobs shall be the monthly average number of eligible full-time employees subject to Georgia income tax withholding for the taxable year.
(b) If when the qualified investment property was purchased or acquired the taxpayer was located in a Tier 1 County but that county is now designated as a Tier 2 County, the taxpayer shall be eligible to meet the requirements of subparagraph (9)(a)(i) provided in the year they meet the requirements of subparagraph (9)(a)(i) such county is a rural county located in a Tier 2 County.
(10) Preapproval for Investment Tax Credit Carry Forward to be used against Withholding Tax. A taxpayer that expects to meet the requirements in paragraph (9) of this regulation may request preapproval to use such investment tax credit carry forward against withholding tax as provided in this paragraph.
(a) Mandatory Electronic Preapproval Application for Investment Tax Credit Carry Forward to be used against Withholding Tax. To claim investment tax credit carry forward, that was properly claimed and not used or expected to be used, against the taxpayer's withholding tax liability for taxable years beginning on or after January 1, 2020 and before January 1, 2025, a taxpayer shall electronically submit Form IT-WHRZ-APP through the Georgia Tax Center between April 1 and May 31 of the applicable calendar year that begins on or after January 1, 2020 and before January 1, 2025. The applicable calendar year is the calendar year in which the taxable year that the taxpayer expects to meet the requirements specified in paragraph (9) of this regulation ends. Provided preapproval is granted, the investment tax credit carry forward is then eligible to be claimed against withholding when the taxpayer reports that the requirements of paragraph (9) have been met by submitting Form IT-WHRZ-RPT through the Georgia Tax Center.
(i) Example. Taxpayer claimed and does not use or expects not to use the investment tax credit in a taxable year which begins on January 1, 2019 and ends on December 31, 2019. Taxpayer expects to meet the requirements in paragraph (9)(a) or (9)(b) of this regulation in the taxable year which begins on January 1, 2020 and ends on December 31, 2020. Taxpayer applies for preapproval to use their investment tax credit carry forward against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2020 and May 31, 2020.
(ii) Example. Taxpayer claimed and does not use or expects not to use investment tax credit in a taxable year which begins on December 1, 2019 and ends on November 30, 2020. Taxpayer expects to meet the requirements in paragraph (9)(a) or ((9)(b) of this regulation in the taxable year which begins December 1, 2020 and ends on November 30, 2021. Taxpayer applies for preapproval to use their investment tax credit carry forward against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2021 and May 31, 2021.
(iii) Example. Taxpayer claimed and does not use or expects not to use investment tax credit in a taxable year which begins on December 1, 2019 and ends on November 30, 2020. Taxpayer expects to meet the requirements in paragraph (9)(a) or (9)(b) in the taxable year which begins December 1, 2024 and ends on November 30, 2025. Taxpayer applies for preapproval to use their investment tax credit carry forward against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2025 and May 31, 2025.
(iv) If the taxpayer is a disregarded entity, then Form IT-WHRZ-APP should be electronically submitted in the name of the owner of the disregarded entity.
(v) The Department will not preapprove any use of the investment tax credit carry forward against withholding tax where Form IT-WHRZ-APP is submitted or filed in any other manner. The amount approved by the Department for use against withholding tax will not pass through to the shareholders, partners, or members of the taxpayer if the taxpayer is a pass-through entity. The filing of Form IT-WHRZ-APP is an irrevocable election and as such the amount approved by the Department for use against withholding tax can only be used against withholding tax it can never be used against income tax liability. The Department shall treat the amount approved for use against withholding tax as a credit against future withholding tax payments and will not refund any previous withholding payments.
(b) Notification. The Department will notify each taxpayer of the tax credits approved and allocated to such taxpayer by June 30 of the calendar year in which the application was submitted.
(c) Allocation of Withholding Tax Credit. In the event the withholding tax credit amounts on applications filed with the Commissioner under paragraphs (8) and (10) of this regulation exceed the maximum aggregate withholding tax credits under paragraph (7) of this regulation, then the withholding tax credits shall be allocated among the taxpayers who filed a timely Form IT-WHRZ-APP through the Georgia Tax Center on a pro rata basis based upon the amounts otherwise allowed under O.C.G.A. §§ 48-7-40.2 and 48-7-40.3 and this regulation.
(d) The withholding tax benefit may only be applied against the withholding tax account used by the taxpayer for payroll. In the event the taxpayer is a single member limited liability company that is disregarded for income tax purposes, the withholding tax benefit may only be applied against the withholding tax liability that is attributable to wages paid by the single member limited liability company.
(e) In the event it is determined that the taxpayer has not met all the requirements of O.C.G.A. §§ 48-7-40.2 or 48-7-40.3 and this regulation, then the amount of credits shall not be tentatively approved or the tentatively approved credits shall be retroactively denied. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been claimed.
(f) Qualified investment property purchased or acquired under paragraph (9) of this regulation may be eligible for the investment tax credit under O.C.G.A. § 48-7-40.2(b) or O.C.G.A. § 48-7-40.3(b), provided that the conditions for such credit are met independently of paragraphs (9) and (10) of this regulation.
(g) For the taxable years in which the jobs that are required to be maintained under subparagraph (9)(a) of this regulation are maintained, such jobs shall not be eligible to be used or claimed as the basis for any other tax credit or benefit allowed by state law.
(h) Paragraphs (9) and (10) of this regulation shall not extend the carry forward period for any credit.
(i) A taxpayer is only required to meet the requirements of paragraph (9) of this regulation one time. However, the taxpayer must apply for preapproval and report each year they qualify and may only reapply for amounts where the carry forward period has not yet expired. A taxpayer is only eligible to claim the credit for the year they meet the requirements and any eligible future years, not years before the year they meet the requirements.
1. Example. Taxpayer meets the requirements in 2020. They are eligible for years 2020 through 2024 but only need to meet the requirements one time in 2020.
2. Example. Taxpayer meets the requirements in 2022. They are eligible for years 2022 through 2024 but only need to meet the requirements one time in 2022.
(j) Required Reporting by Taxpayer.
1. Each taxpayer that receives preapproval for use of the credit under paragraph (10) of this regulation, must certify to the Department using Form IT-WHRZ-RPT that the Taxpayer:
(i) Maintained in rural counties located in Tier 1 Counties atleast 100 full-time employee jobs and actually purchased or acquired at least $5 million of qualified investment property for manufacturing or telecommunications facilities in rural counties located in Tier 1 Counties. For purposes of the full-time employee job requirement, the taxpayer may certify such requirement at the time it is certain the requirement will be fulfilled for the taxable year even though the taxable year has not yet been completed. For example, a taxpayer has 600 full-time employee jobs in January and 600 full-time employee jobs in February. Since the average number of jobs for the year at that time would be at least 100 (1,200/12) regardless of the number of jobs in the remaining months, the taxpayer will have met the requirement; or
(ii) Maintained in rural counties located in Tier 2 Counties at least 100 full-time employee jobs and actually purchased or acquired at least $10 million of qualified investment property for manufacturing or telecommunications facilities in rural counties located in Tier 2 Counties. For purposes of the full-time employee job requirement, the taxpayer may certify such requirement at the time it is certain the requirement will be fulfilled for the taxable year even though the taxable year has not yet been completed. For example, a taxpayer has 600 full-time employee jobs in January and 600 full-time employee jobs in February. Since the average number of jobs for the year at that time would be at least 100 (1,200/12) regardless of the number of jobs in the remaining months, the taxpayer will have met the requirement.
2. Such information shall be submitted electronically through the Georgia Tax Center using Form IT-WHRZ-RPT when the taxpayer completes such requirements. Until the taxpayer submit Form IT-WHRZ-RPT through the Georgia Tax Center, the credit cannot be utilized against withholding as provided in this regulation.
(11) Carry Forward.
(a) Income Tax Carry Forward. A credit which is claimed but not used in a taxable year may be carried forward for ten years from the close of the taxable year in which qualified investment property with an aggregate cost exceeding the minimum threshold amount is purchased or acquired, provided that such qualified investment property continues to be used in the manufacturing, recycling, or pollution control processes or in providing telecommunications services. As such the first year of the carry forward period is the year the credit is claimed since the credit is claimed in the year after the year the qualified investment property is purchased or acquired.
(b) Withholding Tax Carry Forward.
1. With respect to the use of the credit against withholding tax as allowed by paragraph (5) of this regulation, the remainder of the carry forward period begins at the beginning of the second month after the month the tax return claiming the credit is due (including extensions) and ends nine years from such date, provided that such qualified investment property continues to be used in the manufacturing, recycling, or pollution control processes or in providing telecommunications services.
(i) Example. Taxpayer purchases qualified investment property in a year that begins on January 1, 2020 and ends on December 31, 2020; taxpayer submits Form IT-APP and receives an approved Form IT-APP. The taxpayer applies for preapproval to use their excess credit against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2021 and May 31, 2021 and is granted preapproval on June 30, 2021. Taxpayer files their Georgia income tax return and claims the investment tax credit on the October 15, 2022 due date of the return and Taxpayer submits Form IT-WHRZ-RPT through the Georgia Tax Center to report that the return has been filed on such date. Taxpayer begins claiming the credit against withholding on December 1, 2022. The taxpayer's carry forward period expires on November 30, 2031.
2. With respect to the use of the credit against withholding tax as allowed by paragraph (9) of this regulation, the remainder of the carry forward period begins at the date the taxpayer meets the requirements of paragraph (9) of this regulation and ends based on the number of years that remain in the carry forward period, provided that such qualified investment property continues to be used in the manufacturing, recycling, or pollution control processes or in providing telecommunications services.
(i) Example. Taxpayer purchased qualified investment property in the taxable year that began on January 1, 2010 and ended on December 31, 2010. The credit was claimed on the taxable year that began on January 1, 2011 and ended on December 31, 2011. As such the taxable year that begins on January 1, 2020 and ends on December 31, 2020 is the last taxable year the credit can be claimed. For such taxable year, the taxpayer applies for preapproval to use their investment tax credit carry forward against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2020 and May 31, 2020 and is granted preapproval on June 30, 2020. Taxpayer meets the requirements of paragraph (9) of this regulation on July 1, 2020. The taxpayer's carry forward period expires on June 30, 2021.
(ii) Example. Taxpayer purchased qualified investment property in the taxable year that began on January 1, 2014 and ended on December 31, 2014. The credit was claimed on the taxable year that began on January 1, 2015 and ended on December 31, 2015. As such the taxable year that begins on January 1, 2024 and ends on December 31, 2024 is the last taxable year the credit can be claimed. For such taxable year, the taxpayer applies for preapproval to use their investment tax credit carry forward against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2024 and May 31, 2024 and is granted preapproval on June 30, 2024. Taxpayer meets the requirements of paragraph (9) of this regulation on July 1, 2024. The taxpayer's carry forward period expires on June 30, 2025.
(iii) If the taxpayer's carry forward amount includes multiple years, each year shall be given a separate carry forward period.
(12) Sunset for Paragraphs (9) and (10) of this regulation. Paragraphs (9) and (10) of this regulation shall be repealed on December 31, 2024; provided, however, such automatic repeal shall not impair or affect a taxpayer's ability or right to apply an unused credit for a taxable year after December 31, 2024, that such taxpayer accrued under such paragraphs under the conditions of such paragraphs prior to its automatic repeal.
(13) Coordination with Job, Quality Jobs, Headquarters Job and Optional Investment Tax Credits. A taxpayer may not claim or carry forward the investment tax credit for a given project in any year in which either a job tax credit is claimed or carried forward under O.C.G.A. Sections 48-7-40 or 48-7-40.1, a quality jobs tax credit or headquarters job tax credit is claimed under O.C.G.A. Section 48-7-40.17, or an optional investment tax credit is claimed under O.C.G.A. Sections 48-7-40.7, 48-7-40.8, or 48-7-40.9. Neither may a taxpayer alternately claim the investment tax credit in one year and either the job, quality jobs, headquarters job, or optional investment tax credit in the next year for a given project. The job, investment, and optional investment tax credits are not interchangeable. Taxpayers may elect to claim only one of the job, investment, or optional investment credits for a given project.
(14) Leases of Qualified Investment Property. Any lease for a period of five years or more of any real or personal property used in the construction or expansion of a manufacturing or telecommunications facility which would otherwise constitute qualified investment property will be treated as the purchase or acquisition of qualified investment property by the lessee. Such property will be treated as having been purchased or acquired by the taxpayer in the taxable year in which the lease becomes binding on the taxpayer and the lessor. In establishing eligibility and calculating the investment credit based on such property, the taxpayer will use the fair market value of the leased property as the cost of qualified investment property.
(15) Schedule of Additional Information. In addition to the information required under paragraph (c)(1) of O.C.G.A. Sections 48-7-40.2, 48-7-40.3, and 48-7-40.4, taxpayers must include for every year in which they claim the credit the following information:
(a) The taxpayer's basis in all qualified investment property purchased or acquired by the taxpayer in the taxable year;
(b) The fair market value of all leased property which may be treated as qualified investment property for the taxable year;
(c) A list of which recoverable materials are being recycled, and to what extent they are components of manufactured products;
(d) A certification from the Department of Natural Resources that all pollution control or prevention machinery or equipment that is a basis for a credit is necessary and adequate for the purposes intended; and
(e) Any other information that the Commissioner may reasonably require.
(16) Pass-Through Entities. When the taxpayer is a pass-through entity, and has no income tax liability of its own, the tax credits will pass to its members, shareholders, or partners based on the year ending profit/loss percentage. The credit forms will initially be filed with the tax return of the taxpayer to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2020. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2020 tax year.
(17) Specific Applications.
(a) Examples of some common items that do not qualify as an expansion for the investment tax credit include, but are not limited to, items used for safety, items and materials used in the repair, refurbishing, or reconditioning of machinery, hand tools, research and development expenditures, materials used in the repair of existing buildings, legal fees, consulting fees, expenditures for office, or office furniture, computer hardware or software which does not control manufacturing machinery or equipment, and automobiles.
(18) Effective Date. Except as specifically provided in this regulation, this regulation as amended shall be applicable to qualified investment property purchased or acquired in taxable years beginning on or after January 1, 2020. Qualified investment property purchased or acquired in taxable years beginning before January 1, 2020 will be governed by the regulations of Chapter 560-7 as they exist before January 1, 2020 in the same manner as if the amendments set forth in this regulation had not been promulgated.

Rule 560-7-8-.38 Child Care Credit, Definitions and Description

(1) Definitions. As used in this regulation:
(a) Child. The term "child" means a person under the age of 13 when the child care is provided who is a dependent of an employeeand for whom the employee can claim an exemption for Georgia income tax purposes.
(b) Cost of Operation. The term "cost of operation" means the reasonable, direct, operational costs incurred by an employer as a result of providing employer provided or employer sponsored child care facilities for such employer's employees. Such costs include, but are not limited to, salaries, supplies, rent, food, transportation, educational and special activities, and payments made to a qualified child care facility pursuant to a contractual arrangement. Such costs, however, do not include the cost to the employer of any property that is qualified child care property.
(c) Employee. "Employee" means any person employed full-time or part-time by an employer, whose actions are directed by the employer and who is subject to the payroll tax provided for in Article 5 of Chapter 7 of Title 48.
(d) Employer. "Employer" means any employer upon whom a Georgia income tax is imposed or who is otherwise required to file a Georgia income tax return.
(e) Employer Provided. The term "employer provided" refers to child care provided by the employer, offered to employees of the employer, and provided on the premises of the employer. However, the term "employer provided" does not include child care provided on the premises owned by the employer which are in turn leased to a third party providing the child care.
(f) Employer Sponsored. The term "employer sponsored" refers to child care provided for by the employer and offered to employees of the employer pursuant to a contractual arrangement between the employer and a party which operates a qualified child care facility in Georgia but only if the cost of the child care is paid for by the employer directly to the entity providing the child care.
(g) Premises of the Employer. The term "premises of the employer" means a location in Georgia which constitutes the workplace premises of the employer providing the child care or one of the employers providing the child care in the event that the child care property is owned jointly or severally by the taxpayer employer and one or more other employers. The term may also include a facility located within a reasonable distance from the workplace premises of the employer if such workplace premises are deemed by the Commissioner after application by the employer to be impracticable or otherwise unsuitable for the on-site location of the qualified child care facility. Factors to be considered in making this determination may include, but shall not be limited to:
1. The relative size of the qualified child care facility when compared to the size of the workplace premises site;
2. The presence of hazardous substances or other dangerous conditions, materials or structures on or near the workplace premises; or
3. Any other factor deemed relevant by the Commissioner to the safety and well-being of the children for whom the care is provided.
(h) Qualified Child Care Facility. The term "qualified child care facility" means any child-caring institution as defined under O.C.G.A. Section 49-5-3 which is licensed or commissioned as a "child welfare agency" by the Georgia Department of Human Services pursuant to O.C.G.A. Section 49-5-12, or approved by any successor agency having regulatory authority over child care services. This definition includes state regulated after school programs.
(i) Qualified Child Care Property. The term "qualified child care property" means all real and tangible personal property purchased or acquired on or after July 1, 1999, or which property is first placed in service on or after July 1, 1999, for use exclusively in the construction, expansion, improvement, or operation of an employer provided child care facility and for which applicable depreciation has been claimed for federal income tax purposes (except that depreciation is not required for any land that is qualified child care property). Such property may include amounts expended on land acquisition, improvements, buildings, and building improvements and furniture, fixtures, and equipment used for such facility when the facility is either owned or leased by the employer. Where property, previously owned by the taxpayer, is converted for use as a qualified child care facility, only those costs involved in the conversion to such qualified child care use shall be included. No such property shall be considered "qualified child care property" unless:
1. The facility is licensed or commissioned by the Department of Human Services pursuant to O.C.G.A. Section 49-5-12, or approved by any successor agency having regulatory authority over child care services;
2. At least 95 percent of the children who use the facility are children of the employees of the taxpayer and other employers if the child care property is owned jointly or severally by the taxpayer and one or more other employers; or a corporation that is a member of the taxpayer's "affiliated group" within the meaning of Section 1504(a) of the Internal Revenue Code. For the purposes of meeting the 95% requirement contained in this subparagraph, the number of children attending the facility should be reasonably representative of each employer's capital contribution to the facility; and
3. The taxpayer has not previously claimed any tax credit for the cost of operation for such qualified child care property placed in service prior to taxable years beginning on or after January 1, 2000.
(j) Recapture Amount. The term "recapture amount" means, with respect to property as to which a recapture event has occurred, an amount equal to the applicable recapture percentage of the aggregate credits claimed under O.C.G.A. Section 48-7-40.6(d)for all taxable years preceding the year of recapture, whether or not such credits were used, which amount must be added back in the tax year in which the recapture event occurs.
(k) Recapture Event. The term "recapture event" refers to any disposition by sale of qualified child care property by the taxpayer, or any other event or circumstance under which property ceases to be qualified child care property with respect to the taxpayer, except for:
1. Any transfer by reason of death;
2. Any transfer between spouses or incident to divorce;
3. Any transaction to which Section 381(a) of the Internal Revenue Code applies;
4. Any change in the form of conducting the taxpayer's trade or business so long as the property is retained in such trade or business as qualified child care property and the taxpayer retains a substantial interest in such trade or business;
5. Any accident or casualty; or
6. Any instance where qualified child care property can no longer function because of its structural or mechanical failure or its obsolescence.
(2) Tax Credit for Cost of Operation. The credit to be claimed pursuant to O.C.G.A. Section 48-7-40.6(b)is a tax credit against the Georgia income tax and it shall be granted to an employer who makes available employer provided or employer sponsored child care for employees of such employer.
(a) Calculation of Credit. The amount of the credit granted to an employer shall equal 75 percent of the cost of operation for an employer provided or employer sponsored qualified child care facility for that taxable year less any amounts paid to the employer by the employees for the child care. (75% X (costs of operation less any reimbursements paid by employees to the employer)). Where the qualified child care facility is jointly owned by the taxpayer employer and one or more other employers, the amount of the cost incurred by the taxpayer employer and eligible for the cost of operation tax credit calculation may not exceed the taxpayer employer's pro rata share of the total cost of operation of the facility measured by the number of children served by the facility during any part of the taxable year that are children of employees of the taxpayer employer when compared to the total number of children served during any part of the taxable year by the facility.
(b) Limitation. The amount of the cost of operation tax credit granted to any employer shall not exceed 50 percent of the employer's Georgia income tax liability for the taxable year as computed without regard to the application of any other credit including the cost of qualified child care property tax credit provided under paragraph (3) of this Regulation.
(c) When the Credit May be Taken. The cost of operation tax credit may be claimed in the same taxable year in which the cost of operation is incurred. Any unused credit may be carried forward for five years from the close of the taxable year in which the cost of operation was incurred.
(d) Certification. Employers must maintain in their files records for certifying the cost of operation to the Department. These records must include the names and social security numbers of employees who utilize the facility; the names, ages, and social security numbers (if age 1 or older) of children of employees utilizing the facility; the name and federal identification number of the child care provider; and such other information as may be required by the Department.
(e) Form IT-CCC75. Employer Child Care Computation Form IT-CCC75 must be attached to the Georgia Income Tax Return of the employer.
(3) Tax Credit for Cost of Qualified Child Care Property. The tax credit for the cost of qualified child care property, pursuant to O.C.G.A. Section 48-7-40.6(d)is a credit against the tax imposed under Article 2 of Chapter 7 O.C.G.A. which may be claimed for the taxable year in which the taxpayer first places in service qualified child care property and for each of the next succeeding nine taxable years. The aggregate amount of the credit shall equal 100 percent of the cost of all qualified child care property purchased or acquired by the taxpayer and first placed in service during a taxable year and such credit may be claimed at a rate of l0 percent per year for the ten year period.
(a) Limitation. The amount of the credit granted to any taxpayer employer may not exceed 50 percent of the employer's Georgia income tax liability for the taxable year as computed without regard to the application of any other credit including the tax credit for cost of operation provided for in paragraph (2) of this Regulation.
(b) When the Credit May be Taken. The credit may be claimed in the same year in which the qualified child care property is acquired or placed in service. Any unused credit in any taxable year may be carried forward for three years from the close of the taxable year in which the credit is claimed.
(c) Required Adjustments. If the taxpayer claims the cost of qualified child care property tax credit, Georgia taxable income shall be increased by the amount of any depreciation deductions attributable to such property to the extent that such deductions are used in determining federal taxable income or federal adjusted gross income.
(d) Reporting Requirements. For each year in which a taxpayer claims the tax credit for the cost of child care property, the taxpayer shall attach to the taxpayer's Georgia income tax return a properly completed form IT-CCC100 and a schedule setting forth the following information with respect to such tax credit:
1. A description of the qualified child care facility;
2. The amount of the qualified child care property acquired during the taxable year and the cost of such property;
3. The amount of tax credit claimed for the taxable year;
4. The amount of qualified child care property acquired in prior taxable years and the cost of such property;
5. The amounts of any tax credit utilized by the taxpayer in prior taxable years;
6. The amounts of tax credit carried over from prior taxable years;
7. The amount of tax credit claimed by the taxpayer for the current taxable year;
8. The amount of tax credit to be carried forward to subsequent taxable years; and
9. A description of any recapture event occurring during the taxable year, a calculation of the resulting reduction in tax credits allowable for the recapture year and future taxable years, and a calculation of the resulting increase in tax for the recapture year.
(e) Recapture. When a recapture event, as defined herein, occurs with respect to any specific qualified child care property, the tax credit for such property authorized by paragraph (3) of this regulation for the recapture year and all subsequent tax years shall be eliminated. All credits previously claimed by the taxpayer with respect to such property shall be recaptured in accordance with the recapture percentages provided for in O.C.G.A. Section 48-7-40.6(a)(9); and the taxpayer's tax for the recapture year shall be increased in accordance with O.C.G.A. Section 48-7-40.6(f).
(f) Certification. Employers must maintain records for certifying to the Department the amount of qualified child care property acquired during any taxable year and the cost of such property. Such records include the names and social security numbers of employees utilizing the child care facility; the names, ages, and social security numbers (if age 1 or older) of all children of employees for which the child care is provided; the name and federal identification number of the child care provider, and such other information as may be required by the Department.
(4) Pass-Through Entities. When the employer is a pass-through entity, and has no income tax liability of its own, the tax credits will pass to its members, shareholders, or partners based on the year ending profit/loss percentage. The credit forms will initially be filed with the tax return of the taxpayer to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2009. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2009 tax year.
(a) Shareholders, members, or partners who receive the credit from a pass-through entity under paragraph (4) of this regulation shall also be subject to any disallowance, if taken erroneously, or any recapture of those credits as provided for in this regulation.

Rule 560-7-8-.39 Withholding On Proceeds Paid By the Georgia Lottery Corporation

(1) Definition of Resident and Nonresident. O.C.G.A. § 48-7-1 provides the definition of both residents and nonresidents.
(2) Authority to Tax Lottery Proceeds. O.C.G.A. § 50-27-24(a)provides the authority to tax all proceeds of any lottery prize regardless of the amount.
(3) Lottery Prize Proceeds Subject to Income Tax Withholding. Lottery prize proceeds of more than $5,000 are subject to income tax withholding in accordance with O.C.G.A. § 48-7-101.
(4) Withholding From the Proceeds Paid to a Georgia Resident or Nonresident. For prize proceeds of more than $5,000 from a play with any lottery conducted by the Georgia Lottery Corporation, all such proceeds shall be subject to withholding in an amount equal to the maximum marginal rate provided in O.C.G.A § 48-7-20 multiplied by the proceeds. The Georgia Lottery Corporation shall issue to the recipient of such prize a W-2G showing the amount of the lottery prize proceeds and the amount of income tax withheld. The Georgia Lottery Commission shall remit income tax withheld on the proceeds to the Commissioner of Revenue as prescribed in the State income tax laws.

Rule 560-7-8-.40 Optional Investment Tax Credit

(1) Definitions.
(a) Qualified Investment Property. The meaning of the term "qualified investment property" as used in this Section is identical to the meaning of "qualified investment property" in O.C.G.A. Sections 48-7-40.2, 48-7-40.3, and 48-7-40.4, as well as Department of Revenue Regulations Section 560-7-8-.37(1)(a).
(b) Manufacturing Facility and Manufacturing Support Facility. The meaning of the terms "manufacturing facility" and "manufacturing support facility" as used in this Section is identical to the meaning of "manufacturing facility" and "manufacturing support facility" in Department of Revenue Regulations Sections 560-7-8-.37(1)(c) and 560-7-8-.37(1)(d).
(c) Expansion of an Existing Manufacturing Facility. The meaning of the term "expansion of an existing manufacturing facility" as used in this Section is identical to the meaning of "expansion of an existing manufacturing facility" in the Department of Revenue Regulations Section 560-7-8-.37(1)(b).
(d) Cost of Qualified Investment Property. The meaning of the term "cost of qualified investment property" as used in this Section is identical to the meaning of the "cost of qualified investment property" in the Department of Revenue Regulations Section 560-7-8-.37(1)(h).
(e) First Places in Service. The term "first places in service" as used in this Section means the first regular placement of qualified investment property in the manufacturing process of a manufacturing facility located in a county designated as a tier 1, tier 2, or tier 3 less developed area under O.C.G.A. Section 48-7-40. It does not mean merely physically placing regularly inactive or surplus property on the manufacturing facility site.
(f) Remains in Service. The term "remains in service" as used in this Section means the continued and regular use of qualified investment property in the manufacturing process in a manufacturing facility.
(g) Base Year. The term "base year" as used in this Section means the taxable year in which qualified investment property is first placed in service by the taxpayer.
(h) Base Year Average. The term "base year average" as used in this Section means the amount of state income tax owed by the taxpayer for the base year and each of the two immediately preceding taxable years (determined without regard to any credits) added together and divided by three.
(i) Aggregate Credit Amount Allowed. The term "aggregate credit amount allowed" as used in this Section means 10 percent, 8 percent, or 6 percent of the cost of all qualified investment property purchased or acquired by the taxpayer and first placed in service during a taxable year, depending on whether the taxpayer first places such property in service in a tier 1, tier 2, or tier 3 county. If the taxpayer first places such property in service in a tier 1, tier 2, or tier 3 county, then the taxpayer's aggregate amount of credit allowed will be 10 percent, 8 percent, and 6 percent, respectively.
(j) Project. The meaning of the term "project" as used in this Section is identical to the meaning of "project" in the Department of Revenue Regulations Section 560-7-8-.37(1)(b).
(2) Calculation of Credit.
(a) Timing. The taxpayer may begin to take the credit in the year following the year in which qualified investment property is first placed in service.
(b) Life of Credit. The taxpayer may claim a credit for qualified investment property placed in service in any one of the ten years following the taxable year in which the qualified investment property is first placed in service, so long as such property remains in service.
(c) Annual Amount of Credit. Against state income tax liability for a taxable year, the taxpayer will apply the lesser of the following amounts:
1. Ninety percent of the excess of the taxpayer's state income tax liability for the applicable year (determined without regard to any credits) over the taxpayer's base year average tax liability, or
2. The excess of the taxpayer's aggregate credit amount allowed for the applicable year over the sum of the credits under this Section already used by the taxpayer in the years following the base year.
(3) Establishing Eligibility for the Credit.
(a) Three-Year Threshold. Taxpayers must have operated an existing manufacturing facility or related manufacturing support facility in this state for three years and must have previously filed any required state tax returns in order to become eligible for the tax credit. Only qualified investment property which is purchased or acquired by taxpayers and first placed in service after the three-year eligibility requirement is met may be used to compute the tax credit. Qualified investment property purchased or acquired or first placed in service by taxpayers in taxable years prior to establishing the three year eligibility requirement may not be claimed for those years by filing an amended tax return.
(b) Approval of Project Plan.
1. Eligibility and Application Procedure; General Rule. To be eligible for the credit provided for in O.C.G.A. Sections 48-7-40.7, 48-7-40.8, and 48-7-40.9, a taxpayer must purchase and acquire qualified investment property and place it in service pursuant to a project plan. The taxpayer must submit a written application requesting approval of the project plan within thirty (30) days of the completion of the project. Such application must include a written narrative describing the project and a listing of the type, quantity, and cost of all qualified investment property purchased or acquired and placed in service pursuant to the project plan and for which tax credits will be claimed.
2. Procedure for Claiming Credit Before Completion of Project. In the event the taxpayer elects to claim the credit before the completion of the project, but after the purchase or acquisition and placing in service of qualified investment property in excess of the minimum threshold amount, the taxpayer may submit an application for approval of the project plan along with the tax return on which the credit will be claimed. This preliminary application must be amended within thirty (30) days of the completion of the project.
3. Amendment of Application for Approval of Project Plan. If necessary, a taxpayer may amend any application for approval of project plan by submitting additional project information.
4. Permission to File Late Application. In the event a taxpayer is unable to submit an application for approval of project plan within thirty (30) days of the completion of a project, the taxpayer may petition the Commissioner for express written approval to file its application after the thirty (30) day period has passed.
5. Certificate of Approval. If the project plan satisfies the requirements of this subparagraph, the Commissioner shall issue to the taxpayer a certificate of approval.
6. Minimum Threshold Amount. Before the credit may be claimed, the cost of all qualified investment property purchased or acquired by the taxpayer and placed in service pursuant to a project plan must exceed a minimum threshold amount which varies according to whether the taxpayer's manufacturing facility is located in a county designated as a tier 1, tier 2, or tier 3 county under O.C.G.A. Section 48-7-40. Depending on whether the manufacturing facility is located in a tier 1, tier 2, or tier 3 county, the aggregate cost of the qualified investment property purchased or acquired by the taxpayer pursuant to the project plan must exceed $5 million, $10 million, and $20 million, respectively.
7. Timing of Eligibility. The taxpayer shall be eligible to claim the credit for qualified investment property purchased or acquired and first placed in service pursuant to the project plan in the year immediately following the taxable year in which the requisite minimum threshold amount is reached by the taxpayer.
8. Duration of Project. The duration of a project shall not exceed 3 years unless expressly approved in writing by the Commissioner.
9. Documentation. At the time the credit is claimed, the taxpayer must submit to the Commissioner certification of the total cost of all qualified investment property purchased or acquired and placed in service pursuant to the project plan. Such certification shall be on forms provided by the Commissioner and shall be attached to the taxpayer's state income tax return.
(c) Earliest Date of Eligibility. In order to qualify as a basis for the credit or contribute towards establishing the requisite minimum threshold amount, the qualified investment property must be purchased or acquired by the taxpayer and first placed in service no sooner than January 1, 1996.
(4) Coordination with the Investment Tax Credit and the Job Tax Credit. The credit allowed under this Section is an optional investment tax credit in lieu of the regular investment tax credit allowed under O.C.G.A. Sections 48-7-40.2, 48-7-40.3, and 48-7-40.4. Taxpayers who elect to claim this credit for a given project make an irrevocable election and may not thereafter claim either the job tax credit or the regular investment tax credit for a given project. Taxpayers who have previously claimed credits under O.C.G.A. Sections 48-7-40, 48-7-40.1, 48-7-40.2, 48-7-40.3, or 48-7-40.4 for a given project in any taxable year are not eligible for the optional investment tax credit for the same project in any subsequent year.
(5) Leases of Qualified Investment Property. Any lease for a period of five years or more of any real or personal property used in the construction or expansion of a manufacturing facility which would otherwise constitute qualified investment property will be treated as the purchase or acquisition of qualified investment property by the lessee. Such property will be treated as having been purchased or acquired by the taxpayer in the taxable year in which the lease becomes binding on the taxpayer and the lessor. In establishing eligibility and calculating the credit based on such property, the taxpayer will use the fair market value of the leased property as the cost of qualified investment property.
(6) Pass-Through of Credit.
(a) "S" Corporations. Business enterprises that are "S" corporations will apply the optional investment tax credit to corporate income tax liability at the entity level if one exists. Any remaining credit will then be apportioned to shareholders based on their percentage share of ownership of the corporation in the same manner as other pass-through items.
(b) Partnerships. Where the business enterprise is a partnership, the optional investment tax credit will be apportioned to partners in the same manner as partnership income based on each partner's distributive share.
(c) Limited Liability Companies. Business enterprises that are limited liability companies will apportion the optional investment tax credit to shareholders based on their percentage ownership of the limited liability company.

Rule 560-7-8-.41 Repealed

Rule 560-7-8-.42 Tax Credit for Qualified Research Expenses

(1) Purpose. This rule provides guidance concerning the implementation and administration of the income tax credit under O.C.G.A. § 48-7-40.12.
(2) Definitions. As used in this regulation:
(a) Base Amount. The term "base amount" means the product of a business enterprise's Georgia gross receipts in the current taxable year and the average of the ratios of its aggregate qualified research expenses to Georgia gross receipts for the preceding three taxable years or 0.300, whichever is less; provided, however, that a business enterprise need not have had a positive taxable net income for the preceding three taxable years in order to claim the credit. "Georgia gross receipts" shall be the numerator of the gross receipts factor provided in subsection (d) of O.C.G.A. § 48-7-31. If a business enterprise had no Georgia gross receipts during any one or more of the three preceding tax years, the base amount shall be the product of the current year Georgia gross receipts and 0.300.
(b) Business enterprise. The term "business enterprise" shall have the same meaning as in Revenue Regulation 560-7-8-.46.
(c) Qualified Research Expenses. The term "qualified research expenses" means qualified research expenses for any business enterprise as that term is defined in Section 41 of the Internal Revenue Code of 1986, as amended, except that all wages paid and all purchases of services and supplies must be for research conducted within the State of Georgia.
(3) Establishing Eligibility for the Credit. A business enterprise that has qualified research expenses in Georgia in a taxable year exceeding a base amount, and for the same taxable year claims and is allowed a research credit under Section 41 of the Internal Revenue Code of 1986, as amended shall be eligible for the credit.
(4) Credit Amount. A business enterprise that has established eligibility for the research tax credit shall be allowed a tax credit equal to 10 percent of the excess of the qualified research expenses over the base amount. The credit taken in any one taxable year shall not exceed 50 percent of the business enterprise's remaining Georgia net income tax liability after all other credits have been applied.
(5) Claiming the Credit. For a business enterprise to claim the research tax credit, the business enterprise must submit Form IT-RD and Federal Form 6765, from the entity generating the credit, with its Georgia income tax return for each tax year in which the qualified research expenses were incurred.
(a) Withholding tax. A business enterprise whose credit amount exceeds 50 percent of the business enterprise's remaining Georgia net income tax liability after all other credits have been applied may elect to take the excess credit as a credit against such business enterprise's quarterly or monthly withholding payments under Code Section 48-7-103. The withholding tax benefit may only be applied against the withholding tax account used by the business enterprise for payroll. In the event the business enterprise is a single member limited liability company that is disregarded for income tax purposes, the withholding tax benefit may only be applied against the withholding tax liability that is attributable to wages paid by the single member limited liability company. A business enterprise must notify the commissioner each year of their irrevocable election to take all or a part of the credit against the quarterly or monthly withholding tax payment for such business enterprise. When this election is made, the excess research tax credit will not pass through to the shareholders, partners, or members of the business enterprise if the business enterprise is a pass-through entity.
1. Notice of Intent. To claim any excess tax credit not used on the income tax return against the business enterprise's withholding tax liability, the business enterprise must file Revenue Form IT-WH Notice of Intent through the Georgia Tax Center within thirty (30) days after the due date of the Georgia income tax return (including extensions) or within thirty (30) days after the filing of a timely filed Georgia income tax return, whichever occurs first. Failure to file this form as provided in this subparagraph will result in disallowance of the withholding tax benefit.
2. Review Period. The Department of Revenue has one hundred and twenty (120) days from the date the applicable Form IT-WH under subparagraph (5)(a)1. of this regulation is received to review the credit and make a determination of the amount eligible to be used against withholding tax.
3. Letter of Eligibility. Once the review is completed, a letter will be sent to the business enterprise stating the tax credit amount which may be applied against withholding and when the business enterprise may begin to claim the tax credit against withholding tax. The Department of Revenue shall treat this amount as a credit against future withholding tax payments and will not refund any previous withholding payments.
(6) Carry Forward. Any credit which is claimed but not used in a taxable year shall be allowed to be carried forward for ten years from the close of the taxable year in which the qualified research expenses were made.
(7) Pass-through Entities. When the business enterprise is a pass-through entity, and has no income tax liability of its own, the tax credits will pass to its members, shareholders, or partners based on the year ending profit/loss percentage and the limitations of this regulation. The credit forms will initially be filed with the tax return of the business enterprise to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The shareholders, members, or partners may not claim any excess research tax credit against their withholding tax liabilities. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2018. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2018 tax year.
(8) Effective Date. This regulation as amended shall be applicable to taxable years beginning on or after January 1, 2017. Taxable years beginning before January 1, 2017 will be governed by the regulations of Chapter 560-7 as they exist before January 1, 2017 in the same manner as if the amendments set forth in this regulation had not been promulgated.

Rule 560-7-8-.43 Qualified Caregiving Expense Credit

(1) Definitions.
(a) Qualified Caregiving Expenses. For purposes of this rule, Qualified Caregiving Expenses are defined as payments by the taxpayer for home health agency services, personal care services, personal care attendant services, homemaker services, adult day care, respite care, or health care equipment and supplies which equipment and supplies have been determined to be medically necessary by a physician. These services, care, or equipment and supplies must be:
1. Provided to a qualifying family member; and
2. Purchased or obtained from an organization or individual not related to the taxpayer or the qualifying family member.
(b) Qualifying Family Member. For purposes of this rule, qualifying family member is defined as the taxpayer or an individual who is related to the taxpayer by blood, marriage, or adoption and who is at least 62 years of age; or has been determined to be disabled by the Social Security Administration. The qualifying family member does not have to be a Georgia resident and does not have to be a dependent of the taxpayer. Additionally, the taxpayer does not have to be a Georgia resident.
(c) An Individual Who is Related to the Taxpayer by Marriage. For purposes of this rule, an individual who is related to the taxpayer by marriage is defined as follows:
1. Your spouse.
2. Parents and children of your spouse.
3. If your previous spouse is deceased, parents and children of your deceased spouse.
(2) Amount of the credit. A taxpayer shall be allowed a credit against the tax imposed by O.C.G.A. § 48-7-20 for qualified caregiving expenses in an amount not to exceed 10 percent of the total amount expended for qualified caregiving expenses.
(3) Limitations.
(a) No taxpayer shall be entitled to such credit with respect to the same qualified caregiving expenses claimed by another taxpayer.
(b) In no event shall the amount of the tax credit exceed $150.00 or the taxpayer's income tax liability, whichever is less. Any unused tax credit shall not be allowed to be carried forward to apply to the taxpayer's succeeding years' tax liability. No such tax credit shall be allowed the taxpayer against prior years' tax liability.
(c) No credit shall be allowed under this Code section with respect to any qualified caregiving expenses either deducted or subtracted by the taxpayer in arriving at Georgia taxable net income.
1. Amounts that are included as medical itemized deductions must be treated as follows. The ratio of the medical itemized deductions that are allowed after the Federal percentage limitation to the total medical itemized deductions before the Federal percentage limitation should be applied to the qualified caregiving expenses that are included in the medical itemized deductions before the Federal percentage limitation to determine the portion of expenses that are not allowed under this subparagraph. If the taxpayer does not have enough medical itemized deductions to exceed the Federal percentage limitation, no adjustment is necessary under subparagraph (3)(c).
2. No adjustment is necessary under subparagraph (3)(c) for qualified caregiving expenses that are used to compute Federal credits such as the child and dependent care credit provided the qualified caregiving expenses otherwise qualify.
(d) No credit shall be allowed under this Code section with respect to any qualified caregiving expenses for which amounts were excluded from Georgia net taxable income. For example, medical expenses reimbursed by an insurance company would not be eligible for this credit.

Rule 560-7-8-.44 Disabled Person Home Purchase or Retrofit Credit

(1) Definitions.
(a) Accessibility Features. For purposes of this rule, accessibility features are defined as:
1. One no-step entrance allowing access into the residence;
2. Interior passage doors providing at least a 32-inch wide clear opening;
3. Reinforcements in bathroom walls allowing later installation of grab bars around the toilet, tub, and shower, where such facilities are provided; and
4. Light switches and outlets placed in accessible locations.
(b) Taxpayer.
1. For purposes of this rule, taxpayer is defined as:
(i) A permanently disabled person who has been issued a permanent parking permit by the Department of Public Safety under O.C.G.A. § 40-6-222(c); or
(ii) A person who has been issued a special permanent parking permit by the Department of Public Safety under O.C.G.A. § 40-6-222(e).
2. The disabled person must be the taxpayer or the taxpayer's spouse if a joint return is filed. If the taxpayer's dependent is disabled, they would not qualify for this credit.
(2) Purchase of a new single-family home. A taxpayer shall be allowed a credit against the tax imposed by O.C.G.A. § 48-7-20. The credit is in the amount of $500.00 with respect to the purchase during the taxable year of a new, single-family home containing all of the accessibility features defined under subparagraph (1)(a). New is defined for purposes of this paragraph as brand new, not just new to the owner. The home must contain all of the accessibility features in order to qualify for the credit mentioned in this paragraph. If the home does not contain all of the accessibility features, no credit is allowed under this paragraph. However, the home does not have to have all of the features throughout the entire home. At a minimum, the home has to have at least one of each of the features listed in subparagraph (1)(a).
(3) Retrofit of an existing single-family home. A taxpayer shall be allowed a credit against the tax imposed by O.C.G.A. § 48-7-20. For qualifying expenditures made to retrofit an existing, single- family home with one or more accessibility features as defined under subparagraph (1)(a), a credit shall be allowed with respect to each such accessibility feature in the amount of $125.00 or the actual cost of such accessibility feature, whichever is lower, provided that the aggregate amount of such credit under this paragraph for such accessibility features shall not exceed $500.00. For purposes of this paragraph, the entire home does not have to be retrofitted with the particular accessibility feature. Part of the home could be retrofitted with one feature and the next year the other part of the home could be retrofitted with the same feature. In this case, a credit would be allowed for each year. Additionally, if the taxpayer lives in a home they rent instead of owning, they would still be allowed a credit under this paragraph provided the taxpayer pays for the expenditure.
(4) Limitations.
(a) In no event shall the total amount of the tax credit under this rule for a taxable year exceed $500.00 per residence or the taxpayer's income tax liability, whichever is less. If the taxpayer lives in more than one home, they would be allowed a credit for each home that is lived in during the year. The following example illustrates this:
1. The taxpayer retrofits his existing home during the year with all of the accessibility features listed in subparagraph (1)(a) and qualifies for a $500.00 credit. During the same year, the taxpayer purchases and moves into a new home that qualifies for the $500.00 credit. In this situation, the taxpayer would be entitled to a $500.00 credit for each home.
(b) Any unused tax credit shall be allowed to be carried forward to apply to the taxpayer's next three succeeding years' tax liability. No such tax credit shall be allowed the taxpayer against prior years' tax liability. No such tax credit shall be allowed the taxpayer against prior years' tax liability.

Rule 560-7-8-.45 Film Tax Credit

(1) Purpose. This rule provides guidance concerning the implementation and administration of the income tax credits contained within the Georgia Entertainment Industry Investment Act (hereinafter "Act") under O.C.G.A. § 48-7-40.26.
(2) Coordination of Agencies. The Department of Economic Development is the state agency responsible for determining which projects qualify for the tax credits authorized under the Act and specifying which projects were approved as interactive entertainment projects.
(3) Definitions.
(a) "Completion of the Base Investment or Excess Base Investment in this State" means the date the production company has finished qualified production activities and incurs no additional qualified production expenditures.
(b) "Film Tax Credit" means the credit allowed pursuant to the Georgia Entertainment Industry Investment Act, O.C.G.A. § 48-7-40.26.
(c) As used in this regulation, the terms "affiliates", "base investment", "game platform", "game sequel", "multimarket commercial distribution", "prereleased interactive game", "production company", "qualified Georgia promotion", "qualified production activities", "state certified production", and "total aggregate payroll" have the same meaning as in O.C.G.A. § 48-7-40.26.
(d) "Loan-out Company" means any personal service company contracted with and retained by the production company or qualified interactive entertainment production company to provide individual personnel (which are not employees of the production company or qualified interactive entertainment production company), such as artists, actors, directors, producers, writers, production designers, production managers, costume designers, directors of photography, editors, casting directors, first assistant directors, second unit directors, stunt coordinators, or similar personnel for the performance of services used directly in a qualified production activity, but not including persons retained by the production company or qualified interactive entertainment production company to provide tangible property or outside independent contractor service, such as catering, construction, trailers, equipment and transportation.
(e) "Personal Service Company" means any personal service corporation as defined in Internal Revenue Code Section 269A(b) or any other entity, which also includes a sole proprietorship or an individual being paid as an independent contractor, meeting the principal activity and the ownership requirements of Internal Revenue Code Section 269A(b).
(f) "Qualified Interactive Entertainment Production Company" means a company that:
1. Maintains a business location physically located in Georgia;
2. In the calendar year directly preceding the start of the taxable year of the qualified interactive entertainment production company, had a total aggregate payroll of $500,000 or more for employees working within the state; or in a taxable year beginning on or after January 1, 2018, had a total aggregate payroll of $250,000 or more for employees working within the state in the taxable year the qualified interactive entertainment production company claims the film tax credit;
3. Has gross income less than $100 million for the taxable year; and
4. Is primarily engaged in qualified production activities related to interactive entertainment which have been approved by the Department of Economic Development.

Any company that has gross income less than $100 million for the taxable year and is primarily engaged in qualified production activities related to interactive entertainment must meet the requirements in subparagraphs (3)(f)1. and (3)(f)2. of this regulation and be certified as meeting such as provided in subparagraph (5)(c) of this regulation in order to be eligible for the film tax credit.

This term shall not mean or include any form of business owned, affiliated, or controlled, in whole or in part, by any company or person which is in default on any tax obligation of the state, or a loan made by the state or a loan guaranteed by the state. For this definition, "primarily engaged" means a company whose gross income from qualified production activities related to interactive entertainment which has been approved by the Department of Economic Development exceeds 50% of their total gross income for their taxable year or whose expenses from qualified production activities related to interactive entertainment which has been approved by the Department of Economic Development exceeds 50% of their total expenses for their taxable year.

(4) Affiliates.
(a) Threshold Determination. O.C.G.A. § 48-7-40.26(c) and (d) discuss the investment of a production company or qualified interactive entertainment production company and its affiliates. The affiliates are included solely to determine whether or not the $30 million expenditure threshold has been exceeded for the purpose of determining under which of these subsections the film tax credit will be calculated. Once that determination is made, the $500,000 base investment threshold or excess base investment threshold is calculated for each separate production company or qualified interactive entertainment production company and the film tax credit is earned solely by the production company or qualified interactive entertainment production company which has qualified investment expenditures in a state certified production. If more than one affiliated production company or qualified interactive entertainment production company has qualifying productions in Georgia, then each production company or qualified interactive entertainment production company will calculate its film tax credit independently of its affiliates.
(b) Assignment of Credit to Affiliates. Once the production company or qualified interactive entertainment production company establishes the amount of the film tax credit by filing the tax return for the taxable year in which the credit was earned, the credit may then be assigned to the production company's or qualified interactive entertainment production company's affiliates under the provisions of O.C.G.A. § 48-7-42. When a film tax credit is assigned to an affiliated entity, the affiliated entity may apply the credit solely against its own income tax liability. The affiliated entity may not sell or transfer the credit pursuant to paragraph (13) of this regulation and may not claim any excess film tax credit against its withholding tax. Any unused credit may be carried forward by such affiliated entity until the credit is used or it expires, whichever occurs first.
(5) Certification of Qualified Production Activities. Prior to claiming the film tax credit (which includes the additional tax credit for including the qualified Georgia promotion), each new film, video, or digital project must be certified by the Department of Economic Development. Production companies that are required to reduce their investment basis by the amount of expenditures in prior years, must receive certification from the Department of Economic Development for current year projects prior to claiming the film tax credit. The Department of Economic Development will provide a Credit Certificate Number to the production company or qualified interactive entertainment production company for each qualifying project which is approved. The credit certificate number(s) will be used to report any transfer or sale of film tax credit by the production company or qualified interactive entertainment production company for the qualifying project(s).
(a) The Department of Economic Development shall electronically certify to the Department when the requirements for the additional tax credit for a qualified Georgia promotion have been met.
(b) The additional 10% tax credit for including a qualified Georgia promotion shall not be issued final certification by the Department under paragraph (19) of this regulation unless and until the state certificated production has been commercially distributed in multiple markets within five years of the date that the project was first certified by the Department of Economic Development. As such the additional 10% tax credit for including a qualified Georgia promotion will likely be issued final certification separately and later than the 20% base credit and therefore may be earned later and have a different three year carryover period.
(c) Certification for a Qualified Interactive Entertainment Production Company. Before the Department of Economic Development issues its certification under paragraph (5) of this regulation to a qualified interactive entertainment production company, the qualified interactive entertainment production company must electronically certify to the Department of Revenue through the Georgia Tax Center on Form IT-QIEPC that:
1. The qualified interactive entertainment production company maintains a business location physically located in this state; and
2. For taxable years beginning before January 1, 2018, the qualified interactive entertainment production company had expended a total aggregate payroll of $500,000 or more for employees working within this state during the calendar year directly preceding the start of the taxable year of the qualified interactive entertainment production company. For taxable years beginning on or after January 1, 2018, the qualified interactive entertainment production company had expended or intends to expend a total aggregate payroll of $250,000 or more for employees working within this state during the taxable year the qualified interactive entertainment production company claims the tax credit.
(d) The qualified interactive entertainment production company must attach the approved Form IT-QIEPC to their Department of Economic Development certification application. The Department of Economic Development shall not issue its certification until it receives an approved Form IT-QIEPC from the qualified interactive entertainment production company. The Department of Revenue shall not issue any Form IT-QIEPCs before July 1, 2014.
(e) If the qualified interactive entertainment project spans more than 1 year, then the qualified interactive entertainment production company must submit a separate Form IT-QIEPC for each year. Also, any qualified expenditures, including reshoots after the principal photography or additional photography, any of which occur outside of the taxable year on the Department of Economic Development's certificate for the project, require a separate certification from the Department of Economic Development.
(f) If the qualified interactive entertainment production company is a disregarded entity then Form IT-QIEPC should be submitted in the name of the owner of the disregarded entity.
(6) Production Expenditures.
(a) Base Investment. For taxable years beginning before January 1, 2018, a production company or qualified interactive entertainment production company can aggregate projects over a single tax year to meet the $500,000 investment threshold or excess base investment threshold. For taxable years beginning on or after January 1, 2018, a production company can aggregate projects over a single tax year to meet the $500,000 investment threshold or excess base investment threshold and a qualified interactive entertainment production company can aggregate projects over a single tax year to meet the $250,000 investment or excess base investment threshold. A television series (which can occur over two or more years), series pilot, or television movie shall each be considered a single television project. In the case of an episodic television series, an entire season of episodes is one project.
1. Example 1: A production company produces 20 commercials in one calendar year, and each commercial has $25,000 in production expenditures. The production company can aggregate their production expenditures for multiple commercials in one calendar year (20 x $25,000 = $500,000) to meet the $500,000 base investment threshold.
2. Example 2: A production company has $900,000 in production expenditures during two years (they spend $300,000 in year 1 and $600,000 in year 2) producing one television movie. The production company may aggregate their production expenditures over the two years for this single project (one television movie) to achieve the $500,000 base investment threshold. The production company can claim the credit in the year the $500,000 base investment has been achieved.
3. Example 3: For taxable years beginning on or after January 1, 2018, a qualified interactive entertainment production company completes two certified projects in one tax year, and each has $125,000 in production expenditures. The qualified interactive entertainment production company can aggregate their production expenditures for multiple projects completed in one tax year to meet the $250,000 base investment threshold for a qualified interactive entertainment production company.
4. Example 4: In a taxable year beginning on or after January 1, 2018, a qualified interactive entertainment production company has $400,000 in production expenditures during two years (they spend $100,000 in year 1 and $300,000 in year 2) completing one certified project. The qualified interactive entertainment production company may aggregate their production expenditures over the two years for this single project to achieve the $250,000 base investment threshold. The qualified interactive entertainment production company can claim the credit in the year the $250,000 base investment has been achieved.
(b) Direct use. A production company or qualified interactive entertainment production company may only claim production expenditures that are directly used in a qualified production activity. In determining whether an expenditure is directly used in a qualified production activity, the Department of Revenue will consider the proximity of the expenditure to the activity as well as the causal relationship between the expenditure and the activity.
(c) Production expenditures include preproduction, production, and postproduction expenditures incurred in this state that are directly used in a qualified production activity, including, but not limited to, the following: set construction and operation; wardrobes, make-up, accessories, and related services; costs associated with photography and sound synchronization; expenditures (excluding license fees) incurred with Georgia companies for sound recordings and musical compositions; sound recording projects used in feature films, series, pilots, or movies; lighting and related services and materials; editing and related services; rental of facilities and equipment; leasing of vehicles; costs of food and lodging; digital or tape editing; film processing; transfers of film to tape or digital format; sound mixing; computer graphics services; special effects services; animation services; total aggregate payroll; airfare, if purchased through a Georgia travel agency or travel company, airfare is generally limited to one roundtrip per production cycle and for this purpose a production cycle is defined as a single episode for television and as a run of show for all other productions; insurance costs and bonding, if purchased through a Georgia insurance agency; and other direct costs of producing the project in accordance with generally accepted entertainment industry practices. This term also includes payments to a loan-out company by a production company or its payroll service provider or by a qualified interactive entertainment production company or its payroll service provider that has met its withholding tax obligations in subparagraph (6)(d) of this regulation. The production company's tax basis (accrual or cash) shall be used to determine when the payment is made; provided however, prepayments for goods and services qualify in the tax year the payment applies to (the year the goods are delivered or the year the services are rendered), not the year it is prepaid. Also, any qualified expenditures, including reshoots after the principal photography or additional photography, any of which occur outside of the taxable year on the Department of Economic Development's certificate for the project, require a separate certification from the Department of Economic Development. With the exception of assets subject to depreciation under paragraph (6)(e) of this regulation, receipts for asset sales, rebates, insurance proceeds, federal government reimbursements or credits, or any other reimbursements, reduce the amount of qualified expenditures and are required to be reflected in the production cost journal.
1. This term shall not include:
(i) Postproduction expenditures for footage shot outside of Georgia, marketing, publicity, story rights, or distribution;
(ii) Any expenditure for work or services not conducted or rendered in Georgia. Expenditures for services not performed at the filming site shall only qualify if the vendor is a Georgia vendor. Expenditures for services conducted or rendered both in Georgia and outside Georgia shall only qualify to the extent the service is conducted or rendered in Georgia;
(iii) Expenditures for goods that were not purchased or rented or leased in this state from a Georgia vendor. Goods are not considered purchased or rented in Georgia if the goods are shipped or delivered from the Georgia vendor's location outside of Georgia unless more than a de minimis amount of the type of goods held and shipped or delivered from outside Georgia are normally held in inventory in the ordinary course of business in Georgia by the Georgia vendor. Expenditures for goods shall only qualify to the extent such goods are used in Georgia. A vendor that acts as a conduit to enable purchases or rentals to qualify that would not otherwise qualify shall not be considered a Georgia vendor with respect to such purchases, rentals, or leases;
(iv) Freight or shipping charges incurred relating to a non Georgia vendor; or
(v) Any transaction subject to taxation under Chapter 8 or Chapter 13 of Title 48 of the Official Code of Georgia for which taxes have not been demonstrably paid. For purposes of Chapter 8, use tax paid by the production company itself will be considered to have been demonstrably paid for purposes of this subparagraph provided the other requirements of O.G.C.A § 48-7-40.26 and this regulation are met.
(d) The production company or its payroll service provider or qualified interactive entertainment production company or its payroll service provider shall withhold Georgia income tax at the rate imposed by subsection (a) of O.G.C.A § 48-7-21 on all payments to loan-out companies for services performed in Georgia. Any amounts so withheld shall be deemed to have been withheld by the loan-out company on wages paid to its employees for services performed in Georgia pursuant to Article 5 of Chapter 7 of Title 48 notwithstanding the exclusion in Code Section 48-7-100(10)(K). The amounts so withheld shall be allocated to the loan-out company's employees based on the payments made to the loan-out company's employees for services performed in Georgia. For purposes of Chapter 7 of Title 48, the loan-out company nonresident employees performing services in Georgia shall be considered taxable nonresidents and the loan-out company shall be subject to income taxation in the taxable year in which the loan-out company's employees perform services in Georgia, notwithstanding any other provisions in Chapter 7 of Title 48.
1. Registration. A production company or its payroll service provider or a qualified interactive entertainment production company or its payroll service provider that makes payments to a loan-out company must electronically register with the Department using the Georgia Tax Center to obtain a film withholding account for the production company or qualified interactive entertainment production company. The loan-out company must register for a payroll withholding account using the Georgia Tax Center if they are not already registered. The loan-out company must provide the production company or its payroll service provider or the qualified interactive entertainment production company or its payroll service provider the loan-out company's federal identification number and Georgia withholding identification number.
2. Withholding Remittance and Filing. The production company or its payroll service provider on behalf of the production company or the qualified interactive entertainment production company or its payroll service provider on behalf of the qualified interactive entertainment production company shall for each calendar quarter use the Georgia Tax Center to: electronically file the Form G-7 Film; provide information regarding the loan-out company (name, identification numbers, and amount of withholding); and provide any other information required by the Commissioner. Additionally, the withholding payment required by this subparagraph (6)(d) must be electronically remitted using ACH debit or ACH credit in the same manner provided in Rule 560-3-2-.26. The due date for such filing and remittance shall be the last day of the month following the calendar quarter in which the withholding payments were required to be made.
3. Reporting Requirements. The production company or its payroll service provider on behalf of the production company or the qualified interactive entertainment production company or its payroll service provider on behalf of the qualified interactive entertainment production company shall complete Form G2-FP, which requires: the production company's or qualified interactive entertainment production company's name, address, and tax identification numbers; the loan-out company's name, address and tax identification numbers; the amount of tax paid and withheld by the production company or its payroll service provider or by the qualified interactive entertainment production company or its payroll service provider; the total amount paid by the production company or its payroll service provider or by the qualified interactive entertainment production company or its payroll service provider to the loan-out company for services performed in Georgia (before considering the withholding); and any other information required by the Commissioner. Listing the date(s) of the withholding payments remitted to the Department on the Form G2-FP shall be optional. The production company or its payroll service provider on behalf of the production company or the qualified interactive entertainment production company or its payroll service provider on behalf of the qualified interactive entertainment production company must provide Form G2-FP to the loan-out company by January 31st of the year following the calendar year in which the withholding payments were made. Such G2-FP shall not be submitted to the Commissioner, except upon request.
(i) The loan-out company shall complete Form G2-FL, which requires: the loan out company's name, address, and identification numbers; the allocated amount withheld (see subparagraph (6)(d)5.); the employee's name, address, and tax identification number; the name and identification numbers of the production company or qualified interactive entertainment production company that paid the withholding; and any other information required by the Commissioner. The loan-out company must provide Form G2-FL to the employee allocated the withholding amount by February 28th of the year following the calendar year in which the withholding payments were made. The loan-out company must also electronically file a copy of Form G-1003 and Form G2-FL by February 28th of the year following the calendar year in which the withholding payments were made.
4. Loan-out Filing Requirements. Upon completion of its tax year during which the loan-out company's employees performed services in Georgia, the loan-out company must file a Georgia income tax return (and net worth tax return if applicable) and report its income. The loan-out company must also pay its tax liability as would normally be required.
5. Allocation of Personal Income Credit Against Taxes. The amount deducted and withheld as tax under this subparagraph (6)(d) shall be allowed as a credit to the employee whose services were provided in the certified project against the employee's income tax. If the services of multiple employees are provided by the loan-out company, the amount deducted and withheld under this subparagraph (6)(d) shall be allocated to each employee based on the payments made to the loan-out company's employees performing services in Georgia.
(i) Employee Filing Responsibility. The employee providing services must file a Georgia income tax return attaching Form G2-FL provided by the loan-out company, and apply the credit for the withholding tax allocated to the employee against the calculated individual income tax liability for that employee.
6. Penalties and interest shall be imposed in the same manner as provided by Rule 560-7-8-.33. If the production company does not timely remit the loan out withholding for the calendar withholding quarters included in the taxable year specified on the Department of Economic Development certification, then the expenditure(s) does not qualify for the film tax credit, unless the Department determines there was reasonable cause for such delay; provided, however, the mere failure to withhold and remit the required loan out withholding would not by itself be considered reasonable cause. For example, the production period is October and November of 2020. The calendar withholding quarter runs from October through December of 2020. All amounts must be remitted no later than the January 31, 2021 due date for such quarter in order for the payment(s) to the loan out to qualify.
7. Amounts paid to a loan-out company where the loan-out company is not providing services used in a qualified production activity are not subject to the withholding required by O.C.G.A. § 48-7-40.26.
8. The failure of the loan-out company or the loan-out company's employees to comply with any registration, filing, and reporting obligations imposed by Georgia law, including those imposed by O.C.G.A. § 48-7-40.26 and this rule, shall not affect the film tax credit claimed by the production company or qualified interactive entertainment production company.
(e) Depreciation, amortization, or other expense on production expenditures with a useful life of more than one year. The costs of production expenditures with a useful life of more than one year are considered "other direct costs of producing the project in accordance with generally accepted entertainment industry practices." Such costs shall be included in the computation of the film tax credit for the taxable year based upon the depreciation, amortization, or other expense included in the computation of Georgia taxable income of the production company or qualified interactive entertainment production company for the applicable taxable year. Such depreciation, amortization, or other expense shall be prorated based upon the time the asset is used in qualified production activities in this state. Depreciation, amortization, or other expense on expenditures incurred before the pre-production period shall not be included in the computation of the Film Tax Credit in this state. In order to claim depreciation, amortization, or other expense, the expenditure for the asset that generated the depreciation, amortization, or other expense, must have been incurred in this State as provided in subparagraph (6)(f) of this regulation.
(f) Production expenditures incurred in this state. In order to be considered to have been incurred in this state, the following rules shall apply:
1. Production expenditures, which are attributable to the performance of services by individuals and companies directly at the filming site in Georgia who were not employees of the production company or qualified interactive entertainment production company, shall be attributed to Georgia in the same manner as salaries as provided in subparagraph (6)(g) of this regulation.
2. Except as otherwise provided in this regulation, expenditures for services which are not performed at the filming site (such as insurance, service fees paid to a payroll company including workers compensation if the service fees include such, editing and related services, digital or tape editing, film processing, transfers of film to tape or digital format, sound mixing, computer graphics services, special effects services, animation services, etc.) will be allowed if the vendor is a Georgia vendor and will be attributed to Georgia if and only to the extent the service is rendered in Georgia. If the production company or qualified interactive entertainment production company is unable to track the cost of the services rendered in Georgia, then some other reasonable method which approximates the cost of the services rendered in Georgia may be used to determine the amount attributable to Georgia but such approximation will be subject to adjustment by the Department. In the event the services are subcontracted to a company that would not otherwise qualify and/or such subcontracted company renders the services outside Georgia, the expenditure for such services shall not be considered to have been incurred in this state.
3. Purchases and rentals of property. In order to include production expenditures for purchases and rentals of property, the property must have been used in Georgia and purchased or rented from a Georgia vendor. Goods are not considered purchased or rented in Georgia if the goods are shipped or delivered from the Georgia vendor's location outside of Georgia unless more than a de minimis amount of the type of goods held and shipped or delivered from outside of Georgia are normally held in inventory in the ordinary course of business in Georgia by the Georgia vendor. Purchase receipts, invoices, contracts, packing slips, or other documentation shall be used to determine this.
4. Georgia Vendor. For purposes of this rule, a Georgia vendor is a vendor that:
(i) Sells or rents a type of property of which more than a de minimis amount is regularly held in their inventory in the ordinary course of business in Georgia, or provides a service not performed at the filming site, which is the subject of the production expenditure, in their ordinary course of business;
(ii) Has a physical location in Georgia with at least one individual working at such location on a regular basis, including home-based businesses that otherwise meet the requirements of a Georgia vendor. Registering with the Georgia Secretary of State or appointing a registered agent in Georgia does not establish a physical location in Georgia.

However, a vendor that acts as a conduit to enable purchases and rentals to qualify that would not otherwise qualify shall not be considered a Georgia vendor with respect to such purchases and rentals;

(iii) Is registered with the Department for collection of sales and use tax when required by Chapter 8 of Title 48;
(iv) Has a local Georgia business license. The production company is required to obtain a copy of the license from any Georgia vendor where the total amount of purchases exceed $10,000 for such vendor during the taxable year on the Department of Economic Development's certificate for the project; and
(v) For services rendered on set, such persons or vendors providing such services, are identified on the daily production reports or other reasonable evidence that such services were rendered on set is provided;

Failure to provide documentation in this subparagraph when requested will result in the purchases from the vendor being disqualified.

(g) Salaries. Total aggregate payroll, as such term is used in the Act, includes bonuses, incentive pay, and other compensation paid to an employee which is included in the employees Form W-2 "Wage and Tax Statement". Reimbursed expenses, per diems, or employer paid benefits and taxes are not included in aggregate payroll unless such amounts are included as wages, tips, or other compensation in the employee's Form W-2 "Wage and Tax Statement". For purposes of this rule, the term "employee" means any officer of a corporation or any individual who, under the Internal Revenue Service rules applicable in determining the employer-employee relationship, has the status of an employee. Only amounts included in total aggregate payroll shall be subject to the $500,000 limit provided in O.C.G.A. § 48-7-40.26(b)(14). Guaranteed payments to partners do not qualify for the film tax credit and are not included in total aggregate payroll. Except as otherwise provided in this paragraph, if the production company or qualified interactive entertainment production company is unable to track the actual time spent by an employee in Georgia, the production company or qualified interactive entertainment production company may calculate the total aggregate payroll in Georgia by some other reasonable method which approximates the actual time spent in Georgia but such approximation will be subject to adjustment by the Department. For all individuals who are paid a separate amount for preproduction, for actual production, and for post production excluding publicity, the amount that is incurred in Georgia shall be based on the amount paid for each such period and prorated based on the actual time spent in Georgia by the employee in each such period. For purposes of determining the time spent in Georgia for this subparagraph the following shall apply. Travel days are considered a half day. Hold days and other service days that do not begin and end in Georgia are not included in the numerator for purposes of the calculation but are included in the denominator. Prescreening, wardrobe, and free days are included in the numerator if performed in Georgia but in all cases are included in the denominator. Publicity and promotion days do not qualify and must be included in the denominator to the extent the services are contractually specified in the employment agreement. If the production company or qualified interactive entertainment production company is unable to track the actual time spent by the individual in Georgia, the production company or qualified interactive entertainment production company may calculate the total aggregate payroll in Georgia by some other reasonable method which approximates the actual time spent in Georgia for each such period but such approximation will be subject to adjustment by the Department.
(h) Fringe Benefits. The following benefits are attributed to Georgia in the same manner as salaries as provided in subparagraph (6)(g) of this regulation:
1. SUI (state unemployment insurance);
2. FUI (federal unemployment insurance);
3. FICA (employer portion);
4. Pension and welfare if the amounts are paid as part of pension, health, and welfare plans (these would not be required to be paid to a Georgia vendor);
5. Health insurance premiums if these amounts are paid as part of pension, health, and welfare plans (these would not be required to be paid to a Georgia vendor);
(i) Other Fringe Benefits. The following fringe benefits are attributed to Georgia as follows:
1. Meal and incidental allowance per diems, including those not taken on set, as set forth by United States General Services Administration, if incurred in Georgia;
2. Hotel and other overnight living accommodations per diems, as set forth by United States General Services Administration, if incurred in Georgia;
3. Any amounts that exceed the limits in subparagraph (6)(i) only qualify if either included in taxable compensation and if subject to the withholding imposed by subparagraph (6)(d) of this regulation, remitted as required by this regulation or if subject to wage withholding, remitted as required by Title 48.
(j) For services rendered on set, such persons or vendors providing such services, must be identified on the daily production reports or the production company must provide other reasonable evidence that such services were rendered on set.
(k) Production expenditures by a production company shall be subject to any limitations or reductions under paragraphs (17) through (24) of this regulation.
(7) Credit Amount.
(a) Except as provided in paragraph (7)(a)1 of this regulation, a production company or qualified interactive entertainment production company, that meets or exceeds the $500,000 base investment threshold provided in O.C.G.A. § 48-7-40.26(c) and this regulation, shall be allowed a tax credit of 20 percent of the base investment in this state; and an additional tax credit of 10 percent of the base investment shall be allowed if the qualified production activity includes a qualified Georgia promotion approved by the Georgia Department of Economic Development or an alternative marketing opportunity approved by the Georgia Department of Economic Development.
1. For taxable years beginning on or after January 1, 2018, a qualified interactive entertainment production company, that meets or exceeds the $250,000 base investment threshold provided in O.C.G.A. § 48-7-40.26(c) and this regulation, shall be allowed a tax credit of 20 percent of the base investment in this state; and an additional tax credit of 10 percent of the base investment shall be allowed if the qualified production activity includes a qualified Georgia promotion approved by the Georgia Department of Economic Development or an alternative marketing opportunity approved by the Georgia Department of Economic Development.
(b) Except as provided in paragraph (7)(b)1 of this regulation, a production company or qualified interactive entertainment production company, that meets or exceeds the $500,000 excess base investment threshold provided in O.C.G.A. § 48-7-40.26(d) and this regulation, shall be allowed a tax credit of 20 percent of the excess base investment; and an additional tax credit of 10 percent of the excess base investment shall be allowed if the qualified production activities includes a qualified Georgia promotion approved by the Georgia Department of Economic Development or an alternative marketing opportunity approved by the Georgia Department of Economic Development.
1. For taxable years beginning on or after January 1, 2018, a qualified interactive entertainment production company, that meets or exceeds the $250,000 excess base investment threshold provided in O.C.G.A. § 48-7-40.26(d) and this regulation, shall be allowed a tax credit of 20 percent of the excess base investment in this state; and an additional tax credit of 10 percent of the excess base investment shall be allowed if the qualified production activity includes a qualified Georgia promotion approved by the Georgia Department of Economic Development or an alternative marketing opportunity approved by the Georgia Department of Economic Development.
(c) The base investment and the credit amount allowed under paragraph (7)(a) of this regulation for a production company and the excess base investment and the credit amount allowed under paragraph (7)(b) of this regulation for a production company shall be subject to the limitations of and reductions required by paragraphs (17) through (24) of this regulation.
(8) Credit Amount Limitation for a Qualified Interactive Entertainment Production Company. Except as provided in paragraph (8)(a) of this regulation, a qualified interactive entertainment production company's credit amount shall not exceed the amounts in paragraph (9) of this regulation and for any single tax year shall not exceed the qualified interactive entertainment production company's total aggregate payroll expended to employees working within this state for the calendar year directly preceding the start of the taxable year the qualified interactive entertainment production company claims the film tax credit. Any amount in excess of this credit limit shall not be eligible for carry forward to succeeding years' tax liability, nor shall such excess amount be eligible for use against the qualified interactive entertainment production company's quarterly or monthly payment under O.C.G.A. § 48-7-103, nor shall such excess amount be assigned, sold, or transferred to any other taxpayer.
(a) For taxable years beginning on or after January 1, 2018, a qualified interactive entertainment production company's credit amount shall not exceed the amounts in paragraph (9) of this regulation and for any single tax year shall not exceed the qualified interactive entertainment production company's total aggregate payroll expended to employees working within this state for the taxable year in which the qualified interactive entertainment production company claims the tax credits. Any amount in excess of this credit limit shall not be eligible for carry forward to succeeding years' tax liability, nor shall such excess amount be eligible for use against the qualified interactive entertainment production company's quarterly or monthly payment under O.C.G.A. § 48-7-103, nor shall such excess amount be assigned, sold, or transferred to any other taxpayer.
(b) For taxable years beginning on or after January 1, 2018, qualified interactive entertainment production companies are eligible for film tax credits for prereleased interactive game production; provided such credits shall not be available for a period that exceeds three years for each such qualified interactive entertainment production company.
(9) Credit Cap for Film Tax Credit for Qualified Interactive Entertainment Production Companies and Affiliates. In no event shall the aggregate amount of tax credits allowed under O.C.G.A. § 48-7-40.26 for qualified interactive entertainment production companies and their affiliates which are qualified interactive entertainment production companies exceed the following amounts:
(a) For taxable years beginning on or after January 1, 2013, and before January 1, 2014, the aggregate amount of tax credits allowed under O.C.G.A. § 48-7-40.26 for qualified interactive entertainment production companies and their affiliates which are qualified interactive entertainment production companies shall not exceed $25 million. The maximum credit amount allowed for any qualified interactive entertainment production company and its affiliates which are qualified interactive entertainment production companies shall not exceed $5 million for taxable years beginning on or after January 1, 2013 and before January 1, 2014;
(b) For taxable years beginning on or after January 1, 2014, and before January 1, 2015, the aggregate amount of tax credits allowed under O.C.G.A. § 48-7-40.26 for qualified interactive entertainment production companies and their affiliates which are qualified interactive entertainment production companies shall not exceed $12.5 million. The maximum credit amount allowed for any qualified interactive entertainment production company and its affiliates which are qualified interactive entertainment production companies shall not exceed $1.5 million for taxable years beginning on or after January 1, 2014 and before January 1, 2015;
(c) For taxable years beginning on or after January 1, 2015, and before January 1, 2016, the aggregate amount of tax credits allowed under O.C.G.A. § 48-7-40.26 for qualified interactive entertainment production companies and their affiliates which are qualified interactive entertainment production companies shall not exceed $12.5 million. The maximum credit amount allowed for any qualified interactive entertainment production company and its affiliates which are qualified interactive entertainment production companies shall not exceed $1.5 million for taxable years beginning on or after January 1, 2015 and before January 1, 2016;
(d) For taxable years beginning on or after January 1, 2016, and before January 1, 2018, the aggregate amount of tax credits allowed under O.C.G.A. § 48-7-40.26 for qualified interactive entertainment production companies and their affiliates which are qualified interactive entertainment production companies shall not exceed $12.5 million for each taxable year. The maximum credit amount allowed for any qualified interactive entertainment production company and its affiliates which are qualified interactive entertainment production companies shall not exceed $1.5 million for each taxable year beginning on or after January 1, 2016 and before January 1, 2018; and
(e) For taxable years beginning on or after January 1, 2018, the aggregate amount of tax credits allowed under O.C.G.A. § 48-7-40.26 for qualified interactive entertainment production companies shall not exceed $12.5 million for each taxable year. The maximum credit amount allowed for any qualified interactive entertainment production company and its affiliates which are qualified interactive entertainment production companies shall not exceed $1.5 million for each taxable year beginning on or after January 1, 2018.
(f) Allocation of Film Tax Credit for Qualified Interactive Entertainment Production Company and Affiliates. For taxable years beginning on or after January 1, 2013 and before January 1, 2016, the Commissioner shall allow the film tax credit for any qualified interactive entertainment production company and affiliates on a first-come, first served basis. The paper filing date or electronic filing date of the qualified interactive entertainment production company's income tax return that claims the film tax credit as provided in paragraph (10) of this regulation shall be used to determine such first-come, first-served basis. At the time the credit is claimed, all qualified interactive entertainment production companies must also send a paper copy of the Form IT-FC "Film Tax Credit" to the address listed on such form. Failure to send such paper copy may cause the qualified interactive entertainment production company to not be allowed the film tax credit.
(g) Income Tax Returns Claiming the Credit on the Day the Aggregate Credit Amount is Reached. For taxable years beginning on or after January 1, 2013 and before January 1, 2016, on the day credit amounts on qualified interactive entertainment production companies' income tax returns, which claim the film tax credit as provided in paragraph (10) of this regulation, are received that exceed the aggregate limits in paragraph (9) of this regulation, then the tax credits shall be allocated among such qualified interactive entertainment production companies on a pro rata basis based upon amounts otherwise allowed by O.C.G.A. § 48-7-40.26 and this regulation. Only credit amounts on income tax returns filed on the day the aggregate limits were exceeded will be allocated on a pro rata basis.
(h) Preapproval for Taxable Years Beginning on or after January 1, 2016. For taxable years beginning on or after January 1, 2016, all qualified interactive entertainment production companies must be preapproved to claim the film tax credit and must submit the appropriate forms to the Department through the Georgia Tax Center as provided in this subparagraph.
1. Application. A qualified interactive entertainment production company seeking preapproval to claim the film tax credit must electronically submit Form IT-QIEPC-AP through the Georgia Tax Center. A qualified interactive entertainment production company that has submitted its Form IT-QIEPC for certification by the Department or that submits Form IT-QIEPC on the same day as Form IT-QIEPC-AP is submitted may request preapproval from the Department before meeting the requirements of the film tax credit. Such qualified interactive entertainment production company must estimate their credit amounts on Form IT-QIEPC-AP. The amount of tax credit claimed by the qualified interactive entertainment production company on the qualified interactive entertainment production company's applicable Georgia income tax return must be based on the actual film tax credit earned pursuant O.C.G.A. § 48-7-40.26 and this regulation and cannot exceed the amount preapproved. If the qualified interactive entertainment production company is preapproved for an amount that exceeds the amount that is calculated using the actual numbers when the return is filed, the excess preapproved amount cannot be claimed by the qualified interactive entertainment production company nor shall such excess preapproved amount be assigned, sold, or transferred to any other taxpayer.
2. Notification. The Department will notify each qualified interactive entertainment production company of the tax credits preapproved or denied to such qualified interactive entertainment production company.
3. Allocation of Tax Credit. The Commissioner shall allow the film tax credits for qualified interactive entertainment production companies on a first-come, first-served basis. The date the Form IT-QIEPC-AP is electronically submitted shall be used to determine such first-come, first-served basis.
4. Applications received on the day the maximum credit amount is reached. In the event that the credit amounts on applications received by the Commissioner exceed the maximum aggregate limit in subparagraph (9)(d) of this regulation, then the tax credits shall be allocated among the qualified interactive entertainment production companies who submitted Form IT-QIEPC-AP on the day the maximum aggregate limit was exceeded on a pro rata basis based upon amounts otherwise allowed under O.C.G.A. § 48-7-40.26, and this regulation. Only credit amounts on applications received on the day the maximum aggregate limit was exceeded will be allocated on a pro rata basis.
5. Once the credit cap is reached for a calendar year, qualified interactive entertainment production companies who meet the requirements of the film tax credit during such calendar year shall no longer be eligible for a credit under O.C.G.A. § 48-7-40.26. If any Form IT-QIEPC-AP is received after the calendar year preapproval limit has been reached, then it shall be denied and not be reconsidered for preapproval at any later date.
6. In the event it is determined that the qualified interactive entertainment production company has not met all the requirements of O.C.G.A. § 48-7-40.26 and this regulation, then the amount of credits shall not be preapproved or the preapproved credits shall be retroactively denied. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been claimed.
(10) Production Company or Qualified Interactive Entertainment Production Company Claiming Credit.
(a) Income Tax. Except as provided in paragraphs (17) through (24) of this regulation, for a production company or qualified interactive entertainment production company to claim the film tax credit, it must attach Form IT-FC "Film Tax Credit", the Department of Economic Development credit certification(s), and an approved Form IT-QIEPC-AP, if applicable to its Georgia income tax return for each tax year in which the qualified expenditures were incurred.
(b) Withholding Tax. The production company or qualified interactive entertainment production company may claim any excess film tax credit, which has been claimed as provided in subparagraph (10)(a) or paragraph (21), against its withholding tax liability or the withholding tax liability of its payroll service providers provided such withholding tax liability is with respect to the employees of the production company and is attributable to withholding for such employees for withholding periods approved in subparagraph (10)(b)3. The withholding tax benefit may only be applied against the withholding tax account used by the production company or its payroll service provider or qualified interactive entertainment production company or its payroll service provider for payroll purposes. In the event the production company or qualified interactive entertainment production company is a single member limited liability company that is disregarded for income tax purposes, the withholding tax benefit may only be applied against the withholding tax liability that is attributable to wages paid by the single member limited liability company or against the withholding tax liability of its payroll service providers provided such withholding tax liability is attributable to wages paid by its payroll service provider with respect to the individuals providing services to the single member limited liability company and is attributable to withholding for such employees for withholding periods approved in subparagraph (10)(b)3. Any production company or qualified interactive entertainment production company that qualifies to take all or a part of the film tax credit against withholding tax otherwise due the Department of Revenue, must make an irrevocable election to do so as a part of its notification to the Commissioner required under this subparagraph. When this election is made, the excess film tax credit will not pass through to the shareholders, partners, or members of the production company or qualified interactive entertainment production company if the production company or qualified interactive entertainment production company is a pass-through entity.
1. Notice of Intent. To claim any excess film tax credit not used on the income tax return against the production company's or qualified interactive entertainment production company's withholding tax liability, the production company or qualified interactive entertainment production company must file Revenue Form IT-WH Notice of Intent through the Georgia Tax Center within thirty (30) days after the due date of the Georgia income tax return (including extensions) or within (30) days after the filing of a timely filed Georgia income tax return, whichever occurs first. Failure to file this form as provided in this subparagraph will result in disallowance of the withholding tax benefit. However, in the case of a credit which is earned in more than one taxable year, the election to claim the withholding credit will be available for the credit earned in such subsequent year.
2. Review Period. The Department of Revenue has one hundred twenty (120) days from the date the applicable Form IT-WH under paragraph (10)(b)1. of this regulation is received to review the credit and make a determination of the amount eligible to be used against withholding tax.
3. Letter of Eligibility. Once the review is completed, a letter will be sent to the production company or qualified interactive entertainment production company stating the film tax credit amount which may be applied against withholding and when the production company or its payroll service provider or qualified interactive entertainment production company or its payroll service provider may begin to claim the film tax credit against withholding tax. The Department of Revenue shall treat this amount as a credit against future withholding tax payments and will not refund any previous withholding payments made by the production company or its payroll service provider or the qualified interactive entertainment production company or its payroll service provider.
(c) Use of Other Tax Credits. Production companies or qualified interactive entertainment production companies claiming the film tax credit may not claim the job tax credit, headquarters tax credit, or quality jobs tax credit for employees whose wages are used to calculate the film tax credit.
(11) Conditions and Limitations.
(a) A production company or qualified interactive entertainment production company must provide the Department of Revenue with sufficient detail of all qualifying expenditures used to meet the base investment and calculate the film tax credit.
(b) Except as otherwise provided, a taxpayer may utilize the film tax credit only to the extent of the taxpayer's income tax liability in a given tax year.
(c) Except as provided in paragraph (22) of this regulation, there is a five-year carry forward period from the end of the tax year in which the qualifying expenditures were made and the production company or qualified interactive entertainment production company established the amount of the film tax credit for such tax year. Any film tax credits that cannot be used against a taxpayer's income tax liability in the year established will be carried forward. For example, the amount of a film tax credit established in the calendar 2014 tax year may be carried forward until it expires on December 31, 2019.
(d) Film tax credits may not be carried back and applied against a prior year's income tax liability.
(e) Except as provided in paragraphs (17) through (24) of this regulation, any Department of Revenue audit triggered by a production company's or qualified interactive entertainment production company's use or transfer of a film tax credit will require the production company or qualified interactive entertainment production company to reimburse the Department of Revenue for all costs associated with the audit. The Department of Revenue will inform the production company or qualified interactive entertainment production company that the audit is a film tax credit audit and thus subject to this clause prior to the commencement of the audit. Routine audits of the taxpayer's activity in Georgia are not subject to this provision.
(12) Pass-Through Entities. When a production company or qualified interactive entertainment production company generating a film tax credit is a pass-through entity, and has no income tax liability of its own, the film tax credit will pass to its members, shareholders, or partners based on the year ending profit/loss percentage. The credit forms will initially be filed with the tax return of the production company or qualified interactive entertainment production company that incurred the qualifying expenditures to establish the amount of the film tax credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The shareholders, members, or partners may not claim any excess film tax credit against their withholding tax liabilities or against the withholding tax liabilities of their payroll service providers. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2014. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2014 tax year.
(13) Selling or Transferring the Film Tax Credit. The production company or qualified interactive entertainment production company may sell or transfer in whole or in part any film tax credit, previously claimed but not used by such production company or qualified interactive entertainment production company against its income tax, to another Georgia taxpayer subject to the following conditions:
(a) Each sale or transfer must be for a minimum of 60 percent of the credit amount being sold in each respective sale (i.e., the minimum price for each dollar of credit included in an installment must be at least 60 cents).
(b) The taxpayer may only make a one-time sale or transfer of film tax credits earned in each taxable year. However, the sale or transfer may involve more than one transferee and more than one sale date. The sale may occur in a year or years after the film tax credit is earned but must occur before the expiration of the carry forward period of such credit. For example, a production company or qualified interactive entertainment production company earns a $500,000 credit in year 1. In year 2 the production company or qualified interactive entertainment production company sells $200,000 of the credit to taxpayer 2 and $50,000 to taxpayer 3. In year 3 the production company or qualified interactive entertainment production company sells the remaining $250,000 of the credit to taxpayer 4. However, taxpayer 2, taxpayer 3, and taxpayer 4 are not allowed to resell the credit since the credit can only be sold one-time.
(c) Except as provided in paragraphs (17) through (24) of this regulation, the film tax credit may be transferred before the tax return is filed by the production company or qualified interactive entertainment production company provided the film tax credit has been earned. Preapproval for a qualified interactive entertainment production company by itself does not qualify as earning the credit. For credits subject to paragraphs (17) through (24) of this regulation, the film tax credit may be transferred before the tax return is filed by the production company provided the film tax credit has been finally certified. However, the amount transferred cannot exceed the amount of the credit which will be claimed and not used on the income tax return of the transferor.
(d) The production company or qualified interactive entertainment production company must file Form IT-TRANS "Notice of Tax Credit Transfer" with both the Department of Economic Development and Department of Revenue within 30 days of each transfer or sale of the film tax credit. Form IT-TRANS must be submitted electronically to the Department of Revenue through the Georgia Tax Center or alternatively as provided in subparagraph (13)(d)1. With respect to such production companies and qualified interactive entertainment production companies, the Department of Revenue will not process any Form IT-TRANS submitted or filed in any other manner. Before submitting Form IT-TRANS, the production company that earned the film tax credit must have reported to the Department of Revenue the information required by paragraph (16) of this regulation or for credits subject to paragraphs (17) through (24) of this regulation, the film tax credit must have been finally certified or the qualified interactive entertainment production company that earned the film tax credit must have received preapproval from the Department of Revenue if required by subparagraph (9)(h) of this regulation. If the production company or qualified interactive entertainment production company is a disregarded entity then Form IT-TRANS should be filed in the name of the owner of the disregarded entity but the certification from the Department of Economic Development and Form IT-FC should be in the name of the disregarded entity. With respect to production companies, the requirements of this subparagraph and subparagraph (13)(d)1. are also applicable to taxable years beginning before January 1, 2016 if the credit is or will be claimed on or after June 1, 2016.
1. The web-based portal on the Georgia Tax Center. The production company or qualified interactive entertainment production company may provide selective information to a representative for the purpose of allowing the representative to submit Form IT-TRANS on their behalf on the Georgia Tax Center outside of a login. The provision of such information shall authorize the representative to submit such Form IT-TRANS. The representative must provide all information required by the web-based portal on the Georgia Tax Center to submit Form IT-TRANS.
(e) The production company or qualified interactive entertainment production company must provide all required film tax credit detail and transfer information to the Department of Revenue. Failure to do so will result in the film tax credit being disallowed until the production company or qualified interactive entertainment production company complies with such requirements.
(f) The carry forward period of the film tax credit for the transferee will be the same as it was for the production company or qualified interactive entertainment production company. Except as provided in paragraph (22) of this regulation, this credit may be carried forward for five years from the end of the tax year in which the qualifying expenditures were incurred. For credits subject to paragraphs (17) through (24) of this regulation, the carryforward period is as provided in paragraph (22). For example for a credit that has a five year carryforward: The production company or qualified interactive entertainment production company sells a film tax credit on September 15, 2015. This credit is based on qualifying expenditures from the calendar 2014 tax year. The credit may be claimed by the transferee on the 2014, 2015, 2016, 2017, 2018, or 2019 return and the carry forward period for this credit will expire on December 31, 2019. This carry forward treatment applies regardless of whether it is being claimed by the production company, the qualified interactive entertainment production company or the transferee.
(g) A transferee shall have only such rights to claim and use the Film Tax Credit that were available to the production company or qualified interactive entertainment production company at the time of the transfer excluding the withholding tax benefit which is not available to the transferee. Thus, a transferee shall not have the right to subsequently transfer such credit since that right has been utilized by the transferor.
(14) How to Sell or Transfer the Tax Credit.
(a) Direct Sale. The production company or qualified interactive entertainment production company may sell or transfer the film tax credit directly to a Georgia taxpayer (or multiple Georgia taxpayers as provided in subparagraph (13)(b) of this rule). A pass-through entity may make an election to sell or transfer the unused film tax credit earned in a taxable year at the entity level. If the pass-through entity makes the election to sell the film tax credit at the entity level, the credit does not pass through to the shareholders, members, or partners. In all cases, the effect of the sale of the credit on the income of the seller and buyer of the credit will be the same as provided in the Internal Revenue Code.
(b) Pass-Through Entity. The production company or qualified interactive entertainment production company may be structured as a pass-through entity. If a pass-through entity does not make an election to sell or transfer the tax credit at the entity level as provided in subparagraph (14)(a) of this rule, the tax credit will pass through to the shareholders, partners or members of the entity based on their year ending profit/loss percentage. The shareholders, members, or partners may then sell their respective film tax credit to a Georgia taxpayer.
(c) Transferee Pass-Through Entity. The production company or qualified interactive entertainment production company, or its shareholders, members or partners, may sell or transfer the tax credit to a pass-through entity. The pass-through entity shall elect on behalf of its shareholders, members or partners which year the credit shall be passed through to its shareholders, members or partners (either its tax year in which the income tax year of the production company or qualified interactive entertainment production company, which claims the film tax credit for the project or project(s) associated with the credit being sold, ends; or during any later tax year before the three or five year carry forward period associated with the tax credit ends as provided in subparagraph (14)(d) of this rule). If the pass-through entity has no income tax liability of its own, the pass-through entity may then pass the credit through to its shareholders, members, or partners based on the pass-through entity's year ending profit/loss percentage for such elected year. For example, if a calendar year partnership is buying the credit earned by a production company or qualified interactive entertainment production company in the calendar 2014 tax year and elects to use the credit for such year, then all of the partners receiving the credit must have been a partner in the partnership no later than the end of the 2014 tax year in which the credit was established. Only partners who have a profit/loss percentage as of the end of the applicable tax year may receive their respective amount of the film tax credit.
(d) The credits are available for use by the transferee, provided the time has not expired for filing a claim for refund of a tax or fee erroneously or illegally assessed and collected pursuant to O.C.G.A. § 48-2-35:
1. In the transferee's tax year in which the income tax year of the production company or qualified interactive entertainment production company, which claims the film tax credit for the project or project(s) associated with the credit being sold, ends; or
2. During any later tax year before the five year carry forward period associated with the tax credit ends or the three year carryforward period under paragraph (22) of this regulation associated with the tax credit ends.
(i) Example: A production company or qualified interactive entertainment production company reaches the $500,000 base investment threshold and claims the film tax credit in calendar 2014 tax year. The production company or qualified interactive entertainment production company sells the film tax credit to a calendar year Georgia taxpayer in calendar year 2015. The transferee Georgia taxpayer may claim the purchased film tax credit on either their 2014 return (transferee's tax year in which the income tax year of the production company or qualified interactive entertainment production company ends) or their 2015, 2016, 2017, 2018, or 2019 return (during any later tax year before the five year carry forward associated with the tax credit ends).
(ii) Example: A production company or qualified interactive entertainment production company reaches the $500,000 base investment threshold and claims the film tax credit in its fiscal year end June 30, 2014. The production company or qualified interactive entertainment production company sells the film tax credit to a calendar year Georgia taxpayer in calendar year 2015. The transferee Georgia taxpayer may claim the purchased film tax credit on either their 2014 return (transferee's tax year in which the income tax year of the production company or qualified interactive entertainment production company ends) or their 2015, 2016, 2017, 2018, or 2019 return (during any later tax year before the five year carry forward associated with the tax credit ends).
(15) Reporting Required for Qualified Interactive Entertainment Production Companies. For taxable years beginning on or after January 1, 2016, the qualified interactive entertainment production company shall electronically report to the Department of Revenue through the Georgia Tax Center on Form IT-QIEPC-RPT the monthly average number of full-time employees subject to Georgia income tax withholding for the taxable year as provided in subparagraphs (a) and (b) of this paragraph. Such report shall be filed on the date the qualified interactive entertainment production company files its Georgia income tax return. For purposes of this paragraph, a full-time employee shall mean a person who performs a job that requires a minimum of 35 hours a week, and pays at or above the average wage earned in the county with the lowest average wage earned in this state, as reported in the most recently available annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor.
(a) For taxable years beginning on or after January 1, 2016, and before January 1, 2017, the qualified interactive entertainment production company shall report such number for such taxable year and separately for each of the prior two taxable years.
(b) For taxable years beginning on or after January 1, 2017, the qualified interactive entertainment production company shall report such number for each respective taxable year.
(c) Notwithstanding Code Sections 48-2-15, 48-7-60, and 48-7-61, for such taxable years, the commissioner shall report yearly to the House Committee on Ways and Means and the Senate Finance Committee. The report shall include the name, tax year beginning, and monthly average number of full-time employees for each qualified interactive entertainment production company. The first report shall be submitted by June 30, 2016, and each year thereafter by June 30.
(16) Reporting Required for Production Companies (not applicable to Qualified Interactive Entertainment Production Companies).
(a) Except with respect to projects subject to paragraphs (17) through (24) of this regulation, with respect to any film tax credit that is or will be claimed on or after June 1, 2016 (as well as credits for taxable years beginning before January 1, 2016 if the credit is or will be claimed on or after June 1, 2016), within 90 days of the completion of the base investment or excess base investment in this state, the production company that earned the film tax credit must electronically report and submit to the Department of Revenue through the Georgia Tax Center the following information:
1. The estimated base investment or excess base investment in this state;
2. The film tax credit percentage amount, either 20 percent or 30 percent;
3. The Department of Economic Development certification number; and
4. A copy of the Department of Economic Development certification.
(b) If the production company is a disregarded entity then such information should be submitted in the name of the owner of the disregarded entity but the certification from the Department of Economic Development that is attached to such submission should be in the name of the disregarded entity.
(c) If a project spans more than one year and the $500,000 base investment threshold or excess base investment threshold is not met in the first year, the production company shall only be required to report such information in the year in which the credit will be claimed which is the year the $500,000 base investment threshold or excess base investment threshold is met. In such case the Department of Economic Development certifications for all years should be submitted through the Georgia Tax Center. The Department of Economic Development certifications should either be submitted together as one file or the additional certification should be submitted using the additional document option.
(17) Mandatory Film Tax Credit Audit. For any project first certified by the Department of Economic Development on or after January 1, 2021 and on or before December 31, 2021, if the total amount of such film tax credit for the project exceeds $2.5 million, the film tax credit shall not be claimed, assigned, sold, transferred, or utilized in any manner until the production company applies for a mandatory film tax credit audit under paragraph (18) of this regulation and the Department issues a final certification(s) of the film tax credit under paragraph (19) of this regulation.
(a) For any project first certified by the Department of Economic Development on or after January 1, 2022 and on or before December 31, 2022, if the total amount of such film tax credit for the project exceeds $1.25 million, the film tax credit shall not be claimed, assigned, sold, transferred, or utilized in any manner until the production company applies for a mandatory film tax credit audit under paragraph (18) of this regulation and the Department issues a final certification(s) of the film tax credit under paragraph (19) of this regulation.
(b) For any project first certified by the Department of Economic Development on or after January 1, 2023, the film tax credit shall not be claimed, assigned, sold, transferred, or utilized in any manner until the production company applies for a mandatory film tax credit audit under paragraph (18) of this regulation and the Department issues a final certification(s) of the film tax credit under paragraph (19) of this regulation.
(c) Prior to issuing a final certification to projects covered under this paragraph, the Department shall conduct or cause to be conducted an audit of each project by either the Department or an independent third party certified by the Department as an eligible auditor under paragraph (19) of this regulation.
(d) Only projects that meet the requirements of paragraph (17) shall receive a mandatory film tax credit audit. If the production company intends to seek and is qualified for the 10% qualified Georgia promotion credit, such credit amount shall be considered in determining if the project meets the requirements of paragraph (17). If a production company applies for a mandatory film tax credit audit for a project and the Department or an eligible auditor performs an audit and the credit amount is less than the required amount under this paragraph, the project will not receive a final certification but the production company may request that a voluntary audit be completed. If the production company does not apply for a mandatory film tax credit audit for a project that meets the requirements of this paragraph, then the credit will not be allowed to be claimed, assigned, sold, transferred, or utilized in any manner without a mandatory film tax credit audit.
1. Example 1: On February 1, 2021 the Department of Economic Development first certifies a project for the 20% film tax credit and the 10% credit for a qualified Georgia promotion, the project has estimated expenditures of $10 million. At the completion of the base investment the project has a credit amount of $3 million (the estimated expenditures of $10 million equal the expenditures at the completion of the base investment). Therefore, the production company must apply for a mandatory audit for this project as provided in paragraph (18) of this regulation.
2. Example 2: On March 1, 2021 the Department of Economic Development first certifies a project for the 20% film tax credit, the project has $10 million in estimated expenditures. At the completion of the base investment the project has a credit amount of $2 million (the estimated expenditures of $10 million equal the expenditures at the completion of the base investment). This project does not qualify for or require a mandatory film tax credit audit.
3. Example 3: On January 31, 2021, the Department of Economic Development first certifies a project for the 20% film tax credit, the project has $10 million in estimated expenditures. At the completion of the base investment the project has a credit amount of $3 million (the expenditures at the completion of the base investment were $15 million instead of $10 million). Therefore, the production company must apply for a mandatory film tax credit audit for this project as provided in paragraph (18) of this regulation.
4. Example 4: On December 20, 2020, the Department of Economic Development first certifies a project for the 20% film tax credit, the project has $15 million in estimated expenditures. On January 3, 2022 the Department of Economic Development certifies the same project for reshoots. This project does not qualify for or require a mandatory film tax credit audit.
(e) For projects that do not qualify for or require a mandatory film tax credit audit, the production company may request a voluntary film tax credit audit. Voluntary film tax credit audits for projects that do not qualify for or require a mandatory film tax credit audit are accepted based on availability and the procedures established by the Department. Voluntary film tax credit audits are not subject to paragraphs (17) through (24) of this regulation.
(f) If a production company is issued final certification of a tax credit pursuant to paragraphs (17) through (24) of this regulation, such tax credit shall be considered earned in the taxable year in which it is issued final certification.
(18) Application for Mandatory Audit. A production company seeking to claim the film tax credit for projects covered under paragraph (17) of this regulation, must apply for an audit of the film tax credit in the manner provided by the Department within one year from the date of the completion of the state certified production where such date is defined as the date of the completion of principal photography.
(a) The following information shall be submitted with the application or prior to the commencement of the audit required under paragraph (17) of this regulation:
1. A description of the state certified production, along with its certification as a state certified production from the Department of Economic Development;
2. A detailed accounting of all qualified production activities and the attendant production expenditures included in the base investment for the state certified production;
3. A detailed listing of the employee names, social security numbers, and Georgia wages when salaries are included in the base investment;
4. Vendor invoices for goods or services included in the base investment as requested by the Department or the eligible auditor hired to conduct the audit for the state certified production;
5. Contracts for goods or services included in the base investment as requested by the Department or the eligible auditor hired to conduct the audit for the state certified production;
6. An Internal Revenue Service Form W-9 completed and issued by each vendor for which expenditures are included in the base investment as requested by the Department or the eligible auditor hired to conduct the audit for the state certified production. The Department or the eligible auditor shall not request a Form W-9 from any Georgia vendor where the total amount of purchases does not exceed $10,000 for such vendor during the taxable year on the Department of Economic Development's certificate for the project;
7. Notification of any intent to utilize an auditor other than the Department;
8. A description of the status of the distribution of the state certified production and information related to any qualified Georgia promotion connected with such production;
9. The total amount of the tax credit sought for the state certified production;
10. A statement affirming that the contents of the application are true and correct;
11. Production payroll information (summary of payroll and loan out payments by person, W-2s, 1099s, etc.) issued by the payroll company must be submitted directly by the payroll company to the Department or the eligible auditor;
12. Disclosure of related persons or related members as such terms are defined in O.C.G.A. § 48-7-28.3. Disclosure of the total value of goods and services provided by related parties to the production company for the project as well as a breakdown of all such related party transactions. All transactions with related persons or related members must be in accordance with an "arm's length" standard and a minimum of 3 comparison bids and/or studio rate cards will be requested;
13. Disclosure of contracts, agreements, purchase orders or other financially binding instruments with all related persons or related members as such terms are defined in O.C.G.A. § 48-7-28.3;
14. Fees for the audit or the portion of the audit that will be completed by the Department; and
15. Any other information requested by the Department.
(19) Certification and Decertification of Auditors and Issuing of the Final Certification.
(a) The Department shall provide for certification and decertification of certified public accountants as eligible auditors. For purposes of this regulation, the Department will certify the accounting firm. One or more persons of such accounting firm must meet the requirements of this regulation in order for the accounting firm to be certified. When the audit is submitted to the Department, one of such persons must certify on behalf of the accounting firm that the requirements of O.C.G.A. § 48-7-40.26, this regulation, and procedures developed by the Department were completed or met. To obtain certification as an eligible auditor, an eligible certified public accounting firm shall:
1. Register with the Department and be accepted by the Department on an annual basis;
2. Maintain its registration with the Georgia State Board of Accountancy and provide documentation of such when it registers and when otherwise requested by the Department;
3. Agree to and be capable of completing audits related to O.C.G.A. § 48-7-40.26 in accordance with O.C.G.A. § 48-7-40.26 and this regulation and procedures developed by the Department;
4. Pay the Department a registration fee that the Department shall set in an amount that reflects the expenses incurred by the Department for registration, etc;
5. Post and maintain any bond that the Department establishes for each eligible auditor;
6. Successfully complete all training required by the Department and pay any applicable training fees;
7. In order to be an eligible auditor in 2021 and 2022, have at least two years experience in auditing ten productions certified by the Department of Economic Development with a minimum base investment of at least $5 million for each production; and in order to be an eligible auditor for 2023 and later years, have completed all requirements in O.C.G.A. § 48-7-40.26 and this regulation; provided however, if for 2023 and later years, an auditor has not previously been certified by the Department or does not have at least two years experience in auditing ten productions certified by Department of Economic Development with a minimum base investment of at least $5 million for each production, such auditor will only be eligible to work on film tax credit audits where the base investment is less than $5 million until the auditor has completed ten audits; and
8. Have an office in Georgia and, based on hours worked, perform at least 90 percent of the work for the audit in Georgia.
(b) The Department shall decertify an eligible auditor, if such auditor fails to meet the conditions or comply with the provisions of subparagraph (a) of this paragraph.
(c) The Department may decertify an eligible auditor if such auditor fails to complete an audit in accordance with O.C.G.A. § 48-7-40.26 and this regulation.
(d) A certified eligible auditor shall at no cost to the Department:
1. Notify the Department of the commencement of the mandatory film tax credit audit for each audit assigned to it and complete the audit in a timely manner:
2. Submit audit workpapers and supporting documentation in the format required by the Department and provide copies of written correspondence and conversation memos with the production company in the format required by the Department;
3. Submit an affidavit of independence with each audit in the format required by the Department;
4. Maintain for a period of seven years after completion of each mandatory film tax credit audit copies of all records pertaining to the mandatory film tax credit audit; and shall make the records available upon request from the Department;
5. Participate in periodic compliance discussion group meetings with eligible auditors and the Department;
6. Participate in administrative proceeding or legal proceedings or inquiries as required regarding the mandatory film tax credit audit;
7. Present and conduct themselves as a credible representative of the Department and the state to maintain the public's trust; and
8. Maintain taxpayer information and confidentiality as set forth in the American Institute of Certified Public Accountant's Code of Professional Conduct.
(e) Each audit shall:
1. Be completed in accordance with O.C.G.A. § 48-7-40.26 and this regulation and procedures developed by the Department;
2. Utilize sampling methods that the Department adopts;
3. Follow guidance published by the Department regarding expenditures incurred with related persons or related members as such terms are defined in O.C.G.A. § 48-7-28.3;
4. Verify each reported expenditure that is included in the audit and identify and exclude each such expenditure that does not fully meet the requirements of O.C.G.A. § 48-7-40.26 and this regulation;
5. Exclude any expenditure:
(i) Not submitted with the application required under paragraph (18) or with respect to any expenditure required to be submitted when requested by the Department or the eligible auditor, not submitted within 60 days of such request; or
(ii) That was incurred after the application required under paragraph (18) of this regulation was submitted;
6. Not be performed by an eligible accounting entity that is not determined to be independent as provided in the American Institute of Certified Public Accountants Code of Professional Conduct with respect to the production company or any of its related persons or related members as such terms are defined in O.C.G.A. § 48-7-28.3 or as otherwise provided by the Department; and
7. Be submitted to the Department which shall review the audit, make adjustments as necessary, and issue a final certification to the production company.
(f) The Department shall:
1. Publish and regularly update a list of all eligible auditors that the Department will select to conduct the audit required under paragraph (17) of this regulation. The production company may not choose its own auditor;
2. Publish on its website the application to be certified as an eligible auditor as well as all requirements related to certification and conducting an audit under this paragraph. Publish on its website the auditor registration fee and any auditor bond requirements;
3. Prepare periodic training for approving eligible auditors and conduct annual review of certification of eligible auditors;
4. Review protests of disqualified or decertified auditors;
5. Develop standardized work papers for use by the production company and eligible auditors;
6. Develop secure data file transfer protocol for the Department and eligible auditors;
7. Determine whether and when sampling methods shall be used for the audits required under paragraph (17) of this regulation, the appropriate sample method and size, and if a sampling method is used, ensure that it accurately captures a truly representative sample of all ineligible expenditures across all submitted expenditures and projects the type, rate, and amount of ineligible expenditures across all submitted expenditures;
8. Notify the production company through the production company's designee, that the audit was received from the eligible auditor;
9. Perform the audit of expenditures when, due to confidentiality of information, the eligible auditor is unable to access necessary information that the Department is able to access;
10. Review each audit conducted by an eligible auditor, conduct the portions of the audit described in subparagraph (f)9. of this paragraph, perform additional auditing as necessary, adjust the value of the tax credit as necessary, finalize the audit, and issue the final certification of the tax credit to the production company;
11. For an audit it conducts without an eligible auditor, complete the audit, adjust the value of the tax credit as necessary, and issue the final certification of the tax credit to the production company.
12. Issue final list of exceptions to the eligible auditor, if applicable, and the production company's designee; and
13. Review, evaluate, and respond to a protest by the production company.
(20) Reimbursement Costs for Audit. The production company applying for a final certification of the tax credit shall agree and be required to reimburse the Department for all costs incurred by the Department for the performance of a related audit, or any portion thereof, including for review of an audit conducted by an eligible auditor, at the time of application.
(a) The cost of any such audit whether conducted in whole or in part by the Department, an eligible auditor, or a combination of the two shall be borne by the production company and shall not be included as an expenditure claimed under the film tax credit.
1. The cost of the audit depends on the production company's audit selection of either an audit performed by the Department or an audit performed in part by an eligible auditor selected by the Department. The cost for a mandatory film tax credit audit performed by the Department will be as published on the Department's website. If a portion of the film tax credit audit is performed by an eligible auditor selected by the Department, the Department fees will be reduced. Once the eligible auditor is selected, such auditor shall contract directly with the production company and as such any fees that are paid for services rendered by an eligible auditor are paid directly to such eligible auditor. The Department may at its discretion establish fees that an eligible auditor may charge.
(21) Claiming the film tax credit for projects that receive a final certification. If the production company is issued final certification of the film tax credit under paragraph (19) of this regulation such film tax credit shall be considered earned in the taxable year in which it is issued final certification. For a production company to claim the film tax credit for a project that has received a final certification, the production company must complete the appropriate income tax credit schedule on their Georgia income tax return even if the film tax credit is sold or transferred. No Form IT-FC "Film Tax Credit" is required. The production company may elect to use their excess film tax credit against withholding as provided in subparagraph (10)(b) of this regulation.
(22) Carry forward for projects that receive a final certification. In no event shall the amount of film tax credit for a taxable year exceed the production company's income tax liability. For a project that has been issued a final certification under paragraph (19) of this regulation any unused film tax credit, for the production company or any transferees, shall be allowed to be carried forward for three years from the close of the taxable year in which the film tax credit was issued its final certification. Film tax credits may not be carried back and applied against prior year's income tax liability.
(23) No Recapture for Transferee. The Department shall not recapture the film tax credit from the transferee if the film tax credit was issued a valid final certification under paragraph (19) of this regulation.
(24) Mandatory Film Tax Credit Audit Due Process. The production company must protest under O.C.G.A. § 48-2-46 or file an appeal with the tribunal or superior court within 30 days of the issuance of the final certification. If protested under O.C.G.A. § 48-2-46, any final determination can be appealed with the tribunal or superior court.
(25) Not applicable to Qualified Interactive Entertainment Production Companies. Paragraphs (17) through (24) of this regulation shall not apply to qualified interactive entertainment production companies.
(26) Effective Date. This regulation as amended shall become effective on January 1, 2021.

Rule 560-7-8-.46 Definition of Business Enterprise

(1) Purpose. This regulation identifies the North American Industry Classification System (NAICS) Codes that are assigned to the industries that qualify as a business enterprise under O.C.G.A. §§ 48-7-40.12 and 48-7-40.22.
(2) Business Enterprise Defined. The term "business enterprise" means any corporation, partnership, limited liability company, sole proprietorship, or other business entity or the headquarters of such business entity that is engaged in manufacturing, warehousing and distribution, processing, telecommunications, broadcasting, tourism, or research and development industries. The term "business enterprise" excludes all child care businesses and retail businesses, except as referenced in O.C.G.A. § 48-7-40.22. The Department of Revenue will use the North American Industry Classification System (NAICS) published by the United States Office of Management and Budget, 2017 edition, to determine whether an entity is engaged in any of the qualifying industries listed in this paragraph (2). Taxpayers self-select their NAICS Codes. However, upon review the Department may determine that the self-selected NAICS code does not match the taxpayer's primary activity. The NAICS website is located at the following address:http://www.census.gov/epcd/www/naics.html
(a) Manufacturing means those establishments classified by the NAICS Codes that belong to Sectors 31-33.
(b) Warehousing and distribution means a warehouse, facility, structure, or enclosed area which is used primarily for the storage, shipment, preparation for shipment, or any combination of such activities, of goods, wares, merchandise, raw materials, or other tangible personal property, and those establishments classified by the NAICS Codes that belong to Subsectors 423, 424 and 493. Warehousing and distribution shall also include the following:
1. Establishments that are both primarily engaged in scheduled freight air transportation, and included in NAICS U.S. Industry 481112;
2. Establishments that are both primarily engaged in nonscheduled chartered freight air transportation, and included in NAICS U.S. Industry 481212;
3. Establishments that are both primarily engaged in line-haul railroads, and included in NAICS U.S. Industry 482111;
4. Establishments that are both primarily engaged in short line railroads, and included in NAICS U.S. Industry 482112;
5. Establishments that are both primarily engaged in deep sea freight transportation, and included in NAICS U.S. Industry 483111;
6. Establishments that are both primarily engaged in inland water freight transportation, and included in NAICS U.S. Industry 483211;
7. Establishments that are both primarily engaged in general freight trucking, local, and included in NAICS U.S. Industry 484110;
8. Establishments that are both primarily engaged in general freight trucking, long-distance, truckload, and included in NAICS U.S. Industry 484121;
9. Establishments that are both primarily engaged in general freight trucking, long-distance, less than truckload, and included in NAICS U.S. Industry 484122;
10. Establishments that are both primarily engaged in specialized freight (except used goods) trucking, local, and included in NAICS U.S. Industry 484220;
11. Establishments that are both primarily engaged in specialized freight (except used goods) trucking, long-distance, and included in NAICS U.S. Industry 484230;
12. Establishments that are both primarily engaged in mixed mode transit systems and included in NAICS U.S. Industry 485111;
13. Establishments that are both primarily engaged in pipeline transportation of crude oil, and included in NAICS U.S. Industry 486110;
14. Establishments that are both primarily engaged in pipeline transportation of natural gas, and included in NAICS U.S. Industry 486210;
15. Establishments that are both primarily engaged in pipeline transportation of refined petroleum products, and included in NAICS U.S. Industry 486910;
16. Establishments that are both primarily engaged in all other pipeline transportation, and included in NAICS U.S. Industry 486990;
17. Establishments that are both primarily engaged in marine cargo handling, and included in NAICS U.S. Industry 488320;
18. Establishments that are both primarily engaged in freight transportation arrangement, and included in NAICS U.S. Industry 488510; and
19. Establishments that are both primarily engaged in providing consulting services to clients relating to physical distribution of goods and services and included in NAICS U.S. Industry 541611.
(c) Processing includes manufacturing establishments classified in NAICS Sectors 31-33; and those establishments primarily engaged in providing data processing services, which shall consist of only the following:
1. Establishments that are both primarily engaged in providing data processing services, and included in NAICS U.S. Industry 518210;
2. Establishments that are both primarily engaged in providing third party administration services of insurance and pension funds, and included in NAICS U.S. Industry 524292;
3. Establishments that are both primarily engaged in providing either:
(i) automated clearinghouses, check clearinghouse associations; or
(ii) financial transaction or credit card processing services, and included in NAICS U.S. Industry 522320;
4. Establishments that are both primarily engaged in furnishing physical or electronic marketplaces for the purpose of facilitating the buying and selling of stocks, stock options, bonds or commodity contracts and included in NAICS U.S. Industry 523210;
5. Establishments that are both primarily engaged in producing and distributing computer software, and included in NAICS U.S. Industry 511210;
6. Establishments that are both primarily engaged in providing computer systems design and related services, and included in NAICS Industry Group 5415;
7. Establishments that are both primarily engaged in providing payroll services, and included in NAICS U.S. Industry 541214; and
8. Establishments that are both primarily engaged in providing telephone call center services, and included in NAICS Industry 56142.
(d) Telecommunications means those establishments that are primarily engaged in operating, maintaining and/or providing access to facilities for the transmission of voice, data, text, sound and video and classified within NAICS U.S. Industries 517311, 517312, 517410, 517911 and 517919.
(e) Broadcasting means those establishments that are primarily engaged in the transmission or licensing of audio, video, text, or other programming content to the general public, subscribers, or to third parties via radio, television, cable, satellite, or the Internet or Internet Protocol, including motion picture and sound recording, editing, production, post production, and distribution, and which are included in NAICS Subsectors 512, 515, 517 and 519.
(f) Tourism means only the following establishments:
1. Establishments that are both primarily engaged in providing lodging for the public, and included in NAICS Industry Group 7211; however, establishments offering lodging for more than 30 consecutive days to the same customer are not deemed a business enterprise under this regulation;
2. Establishments that are both primarily engaged in providing overnight or short term sites for recreational vehicles, trailers, campers or tents, and included in NAICS U.S. Industry 721211; however, establishments primarily engaged in the operation of residential trailer parks or primarily engaged in providing accommodations for more than 30 consecutive days to the same customer are not deemed a business enterprise under this regulation;
3. Establishments that are both primarily engaged in the operation of recreational camps, and included in NAICS U.S. Industry 721214; however, establishments primarily engaged in the operation of summer camps are not deemed a business enterprise under this regulation;
4. Establishments that are both primarily engaged in the operation of either:
(i) convention centers;
(ii) sports stadiums or arenas; or
(iii) sports complexes open to the general public on a contractor fee basis, and included in NAICS U.S. Industry 711310;
5. Establishments that are both primarily engaged in the operation of golf courses open to the general public on a contract or fee basis, which are associated with a resort development, and included in NAICS U.S. Industry 713910; however, establishments engaged in the operation of golf courses associated with housing developments are not deemed a business enterprise under this regulation;
6. Establishments that are both primarily engaged in the operation of professional or semi-professional sport clubs, and included in NAICS U.S. Industry 711211; however, for the purposes of this provision professional and semi-professional sport clubs include only those clubs that compensate athletes for their services as players and does not include amateur sport clubs, amateur sport leagues, or amateur sport associations;
7. Establishments that are both primarily engaged in the operation of racing facilities, including drag-strips, motorcycle race tracks, auto or stock car race tracks or speedways, and included in NAICS U.S. Industry 711212;
8. Establishments that are both primarily engaged in the operation of amusement centers, amusement parks, theme parks, or amusement piers, and included in NAICS U.S. Industry 713110;
9. Establishments that are both primarily engaged in the operation of tours within the State of Georgia, and included in NAICS U.S. Industry 561520;
10. Establishments that are both primarily engaged in the operation of airplanes, helicopters, buses, trolleys, vans, scenic railroads, aerial tramways, or boats for excursion or sightseeing purposes within the State of Georgia, and included in NAICS Subsector 487;
11. Establishments that are both primarily engaged in the operation of hunting preserves, trapping preserves, or fishing preserves or lakes which are open to the general public on a contract or fee basis for finfish, shellfish, or other marine fishing, and included in NAICS U.S. Industries 114111, 114112, 114119, or 114210;
12. Establishments that are both primarily engaged in the operation of museums, planetariums, art galleries, botanical gardens, aquariums, or zoological gardens, and included in NAICS Subsector 712; however, establishments that derive 50 percent or more of their gross revenue from the sale of goods or merchandise are not deemed a business enterprise under this regulation.
(g) Research and development means only the following establishments: establishments primarily engaged in conducting research and experimental development in biotechnology and the physical, engineering and life sciences and classified in NAICS U.S. Industry 54171; and establishments primarily engaged in conducting research and analysis in cognitive development, sociology, psychology, language, behavior, economic, and other social science and humanities research and classified in NAICS US Industry 541720.
(3) "Retail businesses" defined. The term "retail businesses" as used in paragraph (2) of this regulation means: any establishment that is primarily engaged in retailing merchandise and rendering services incidental to the sale of merchandise and included in NAICS Sector 44-45; any establishment that is primarily engaged in providing professional services and included in NAICS Industry Groups 5411, 5412 and 5413; and establishments that are primarily engaged in banking, savings and lending functions and included in NAICS Industry Groups 5211, 5221, 5222, 5231, and 5239, and NAICS Industries 52231 and 52239.
(4) Request for Determination. In the event that a business believes that it qualifies as a business enterprise for a tax credit governed by this regulation, but is unsure if it meets the eligibility requirements outlined in the relevant Code and this regulation, a Request for Determination may be requested from the Department of Revenue. The business should provide a detailed explanation of the activity for which the tax credits are being requested, along with any documentation to support the request. The Department shall have 30 days from receipt of all necessary information to complete the review and issue a determination regarding the eligibility of the business for the tax credit.
(5) Effective Date. This regulation as amended shall be applicable to tax credits earned in taxable years beginning on or after January 1, 2018. Taxable years beginning before January 1, 2018 will be governed by the regulations of Chapter 560-7 as they exist before January 1, 2018 in the same manner as if the amendments set forth in this regulation had not been promulgated.

Rule 560-7-8-.47 Qualified Education Expense Credit

(1) Purpose. The purpose of this regulation is to provide guidance concerning the administration of O.C.G.A. § 48-7-29.16, which provides a credit for qualified education expenses. Other provisions and conditions regarding student scholarship organizations and the qualified education expense credit are set forth in O.C.G.A. § 48-7-29.16 and Chapter 2A of Title 20.
(2) Definitions for purposes of O.C.G.A. § 48-7-29.16, Chapter 2A of Title 20, and this regulation.
(a) "Qualified Education Expense Credit" means the credit allowed pursuant to O.C.G.A. § 48-7-29.16.
(b) "Fiscal Year" means the taxable year of the SSO.
(c) "Calendar Year Report" means the annual report that must be prepared on a calendar year basis and submitted to the Department of Revenue by January 12 of the year following the calendar year.
(d) "Audit Report" means the annual report that is prepared by an independent certified public accountant after completing the annual audit that is required by O.C.G.A. § 20-2A-2.
(e) "SSO" means a student scholarship organization as defined in O.C.G.A. § 20-2A-1.
(f) "Expenditure of Funds" means the expenditure of lawful money of the United States and does not include other intangible assets such as stocks, bonds, etc.
(g) "Federal Poverty Level" means the poverty guidelines issued each year in the Federal Register by the Department of Health and Human Services.
(3) Coordination of Agencies.
(a) Each SSO must annually submit notice to the Department of Education, in accordance with the Department of Education's guidelines, concerning their participation as an SSO.
(b) The Department of Education will maintain on its website a current list of all SSOs that have provided notice.
(4) Annual Audit Report.
(a) O.C.G.A. § 20-2A-2 requires that an annual audit be conducted by an independent certified public accountant. The audit shall be completed and the audit report issued within 120 days after the end of the SSO's fiscal year.
(b) The audit report must verify that the SSO has complied with all requirements of O.C.G.A. § 20-2A-2.
(c) As is required by O.C.G.A. § 20-2A-3, the annual audit report shall be submitted to the Department of Revenue on or before the January 12 date following completion of the audit report.
(5) Fees or Assessments Report. Each student scholarship organization shall submit an annual report to the Department of Revenue by January 12, showing the amount of any fees or assessments retained by the student scholarship organization during the calendar year. The report shall be prepared on a calendar year basis regardless of the fiscal year of the SSO and shall be included on the Form IT-QEE-SSO2. Such information shall not be published on the Department's website.
(6) Calendar Year Report.
(a) The calendar year report shall be submitted by the SSO by January 12. Form "IT-QEE-SSO2" shall be the form used to submit the report. The report shall be submitted electronically in the manner specified by the Department.
(b) The report shall be prepared on a calendar year basis regardless of the fiscal year of the SSO.
(c) The report shall include the following:
1. The total number and dollar value of individual contributions and qualified education expense credits preapproved, individual contributions include contributions made by those filing income tax returns as single, head of household, married filing separate, and married filing joint;
2. The total number and dollar value of corporate and trust contributions and qualified education expense credits preapproved;
3. The total number and dollar value of scholarships awarded to eligible students;
4. The total number of scholarship recipients whose families' adjusted gross income falls:
(i) Under 125% of the federal poverty level;
(ii) At or above 125% and below or at 250% of the federal poverty level;
(iii) Above 250% and below or at 400% of the federal poverty level; and
(iv) Above 400% of the federal poverty level;
5. The average scholarship dollar amount by adjusted gross income category as provided in subparagraph (c)4. of this paragraph. For scholarships awarded in a particular calendar year, the SSO shall use that calendar year's federal poverty level. The SSO shall consider the number of persons in the scholarship recipient's family when making the determination under subparagraph (c)4. of this paragraph.
(i) Example. For the 2019 calendar year Form "IT-QEE-SSO2" which is due on January 12, 2020, the SSO shall use the 2019 federal poverty level.
6. A list of donors (which includes the donor's name and address), including the dollar value of each donation and the dollar value of each preapproved qualified education expense credit; and
7. A copy of the audit conducted pursuant to O.C.G.A. § 20-2A-2.
8. The amount of the fees or assessments as required by paragraph (5) of this regulation.
(d) The Department of Revenue shall post on its website the information received from each SSO under subparagraphs (c)1. through (c)5. of this paragraph.
(7) Examples of the Timing of Reports.
(a) An SSO's first year begins on January 1, 2019, and ends on December 31, 2019. By January 12, 2020, the SSO must submit the required calendar year report and the required fees or assessments report for the calendar year that ended December 31, 2019. No audit report will need to be submitted for this first year since the due date for completing the audit report falls after the deadline of January 12, 2020. The audit report submitted on or before January 12, 2021, will include the results of the audit for the year ending December 31, 2019.
(b) An SSO's first fiscal year begins on May 1, 2019, and ends on April 30, 2020. By January 12, 2020, the SSO must submit the required calendar year report and the required fees or assessments report for the calendar year that ended December 31, 2019. No audit report will need to be submitted for this first year since the due date for completing the audit report falls after the deadline of January 12, 2020. The audit report submitted on or before January 12, 2021, will include the results of the audit for the fiscal year ending April 30, 2020.
(c) An SSO's first fiscal year begins on December 1, 2019, and ends on November 30, 2020. By January 12, 2020, the SSO must submit the required calendar year report and the required fees or assessments report for the calendar year that ended December 31, 2019. No audit report will need to be submitted for this first year since the due date for completing the audit report falls after the deadline of January 12, 2020. By January 12, 2021, they must submit the required calendar year report and the required fees and assessments report for the calendar year that ended December 31, 2020. No audit report will need to be submitted for this second year since the due date for completing the audit report falls after the deadline of January 12, 2021. The audit report submitted on or before January 12, 2022, will include the results of the audit for the fiscal year ending November 30, 2020.
(8) Failure of the Audit Report to Verify or Failure to Submit the Audit Report as Required under O.C.G.A. § 20-2A-2. Notwithstanding O.C.G.A. §§ 20-2A-7, 48-2-15, 48-7-60, 48-7-61 and paragraph (9) of this regulation, if the audit report submitted by the SSO fails to verify: that the SSO obligated its annual revenue received from donations for scholarships or tuition grants as required under O.C.G.A. § 20-2A-2; that obligated revenues were designated for specific student recipients within the time frame required under O.C.G.A. § 20-2A-2; and that all obligated and designated revenue distributed to a qualified school or program for the funding of multiyear scholarships or tuition grants complied with this regulation; then the Department shall post on its website the details of such failure to verify. If the audit report is not submitted by the required time, the SSO shall be deemed to have failed all three of the requirements. Until the noncompliant SSO submits an amended audit (or the required audit report in the case of a failure to submit the audit report by the required time), which to the satisfaction of the Department contains the verifications required under O.C.G.A. § 20-2A-2, the Department shall not preapprove any contributions to the noncompliant SSO.
(9) Failure to Report and Confidentiality. Any SSO that does not submit the audit report, the calendar year report, or fees or assessments report as required under this regulation or receives a qualified opinion or a disclaimer on their audit report from an independent certified public accountant or otherwise fails to comply with the requirements of Chapter 2A of Title 20 shall be given written notice of their failure and shall have 90 days from receipt of such notice to correct all deficiencies.
(a) If the SSO fails to correct all deficiencies within 90 days of receipt of notice from the Department, such SSO shall:
1. Be immediately removed from the Department of Education's list of approved SSOs.
2. Be required to cease all operations as an SSO and transfer all scholarship account funds to a properly operating SSO within 30 calendar days of receipt of notice from the Department of removal from the approved list; and
3. Have all applications for preapproval of tax credits under O.C.G.A. § 48-7-29.16 rejected by the Department on or after the date that the Department of Education removes the SSO from its list of approved SSOs.
(b) Except for information reported under subparagraphs (c)1. through (c)5. of paragraph (6) of this regulation and any failure to report and verify under paragraph (8) of this regulation, all information or reports provided by SSOs to the Department shall be confidential taxpayer information, governed by O.C.G.A. §§ 48-2-15, 48-7-60, and 48-7-61.
(10) Credit Limitations for Individuals and Corporations. The amount of qualified education expense credit granted to a taxpayer shall not exceed:
(a) For an individual taxpayer, except as otherwise provided in this paragraph, the credit is limited to the lesser of the actual amount expended or the dollar amount provided in O.C.G.A. § 48-7-29.16.
(b) For an individual taxpayer filing a married filing separate return, the credit is limited to the lesser of the actual amount expended or $1,250.00 per tax year.
(c) For an individual taxpayer who is a member of a limited liability company duly formed under state law (including a member who owns a single member limited liability company that is disregarded for income tax purposes), a shareholder of a Subchapter 'S' corporation, or a partner in a partnership, the credit is limited to the lesser of the actual amount expended or $10,000 per tax year, whichever is less; provided, however, that the tax credits shall only be allowed for the Georgia income on which such tax was actually paid by such member of a limited liability company, shareholder of a Subchapter 'S' corporation, or partner in a partnership. If the individual taxpayer is a member, partner, or shareholder in more than one pass through entity, the total credit allowed cannot exceed $10,000; the individual taxpayer decides which pass through entities to include when computing Georgia income for purposes of the qualified education expense credit. All Georgia income, loss, and expense from the taxpayer selected pass through entities will be combined to determine Georgia income for purposes of the qualified education expense credit. Such combined Georgia income shall be multiplied by the applicable marginal tax rate to determine the tax that was actually paid. If the taxpayer is filing a joint return, the taxpayer's spouse may also claim a credit for their ownership interests and shall separately be eligible for a credit as provided in this subparagraph. If the taxpayer(s) chooses to be preapproved pursuant to this subparagraph, for all purposes of claiming the credit they shall be subject to the provisions of this subparagraph and shall not be entitled to claim any other amounts provided in O.C.G.A. § 48-7-29.16 and this regulation. If the taxpayer is preapproved for an amount that exceeds the amount that is calculated as allowed when the return is filed, the excess amount cannot be claimed by the taxpayer and cannot be carried forward.
1. Example: Taxpayer, an individual taxpayer, is the sole shareholder of A, Inc., an S corporation, Taxpayer is also a 50% partner, in BC Company, a partnership, and Taxpayer is also a 20% member of a limited liability company, XYZ Company, which is taxed as a partnership. Taxpayer requests preapproval for the qualified education expense credit for calendar year 2019 by submitting Form IT-QEE-TP1. On Form IT-QEE-TP1, Taxpayer estimates that the taxpayer's Georgia income from A, Inc. is $120,000, and that Taxpayer's share of Georgia income from BC Company is $60,000, Taxpayer chooses not to include any income from XYZ Company when estimating Georgia income for purposes of the qualified education expense credit; therefore the Department preapproves Taxpayer for $10,000 qualified education expense credit (since $10,000 is less than $10,350 (5.75% of $180,000)), the applicable marginal tax rate for 2019 is 5.75%. Taxpayer makes a $10,000 donation to the SSO within 60 days of receiving preapproval from the Department and before the end of 2019. When Taxpayer files Taxpayer's 2019 Georgia income tax return, Taxpayer received a salary from A, Inc. of $50,000 and A, Inc.'s actual Georgia income is $60,000; Taxpayer's actual share of Georgia income from BC Company is $20,000 and Taxpayer received a guaranteed payment from BC Company of $15,000; Taxpayer's actual share of Georgia income from XYZ Company is $5,000 (the Taxpayer can choose to include this company even though it was not considered at the time of preapproval), Taxpayer can only claim $8,625 qualified education expense credit (which is 5.75% of the $150,000 actual income from Taxpayer's selected pass through entities), and the extra $1,375 cannot be claimed by Taxpayer and cannot be carried forward. Any amount of the $8,625 qualified education expense credit claimed but not used on the taxpayer's 2019 Georgia income tax return shall be allowed to be carried forward to apply to the taxpayer's succeeding five years' tax liability.
(d) For a corporate or fiduciary taxpayer, the credit is limited to the lesser of the actual amount expended or 75 percent of the corporation's or fiduciary's income tax liability. A fiduciary cannot pass-through the credit to its beneficiaries.
1. Example: Taxpayer, a Corporation, requests preapproval for the qualified education expense credit for calendar year 2019 by submitting Form IT-QEE-TP1. On Form IT-QEE-TP1, Taxpayer estimates its income tax liability for the 2019 tax year to be $100,000; therefore the Department preapproves Taxpayer for $75,000 qualified education expense credit for calendar year 2019. Taxpayer makes a $75,000 donation to the SSO within 60 days of receiving preapproval from the Department and before the end of 2019. When Taxpayer files their 2019 Georgia income tax return, Taxpayer's income tax liability for tax year 2019 is $80,000, Taxpayer can only claim $60,000 of qualified education expense credit (which is 75% of their actual income tax liability for tax year 2019), and the extra $15,000 cannot be claimed by Taxpayer and cannot be carried forward. Any amount of the $60,000 qualified education expense credit claimed but not used on the taxpayer's 2019 Georgia income tax return shall be allowed to be carried forward to apply to the taxpayer's succeeding five years' tax liability.
(e) When the taxpayer is a pass-through entity which has no income tax liability of its own, the tax credits will be considered earned by its members, shareholders, or partners based on their profit/loss percentage at the end of the year and the limitations of subparagraph (10)(c) of this regulation. The expenditure is made by the pass-through entity but all credit forms (preapproval, claiming, and reporting) will be filed in the name of its members, shareholders, or partners and the credit can only be applied against the shareholders', members', or partners' tax liability on their income tax returns. The pass-through entity shall provide all necessary information to the student scholarship organization so that the preapproval, claiming, and reporting forms can be filed in the name of its members, shareholders, or partners.
(11) Credit Cap. In no event shall the total amount of tax credits allowed under O.C.G.A. § 48-7-29.16 exceed:
(a) One hundred million dollars for calendar years beginning on January 1, 2019, and ending on December 31, 2028; and
(b) Fifty-eight million dollars for the calendar year beginning on January 1, 2029, and for all subsequent calendar years.
(12) Reporting the Availability of the Credit. The Department shall post on its website the current amount of qualified education expense credits available.
(13) Preapproval of the Contribution.
(a) The taxpayer must electronically submit Form IT-QEE-TP1 through the Georgia Tax Center to request preapproval of the qualified education expense credit from the Department of Revenue. The Department will not preapprove any qualified education expense credit where the Form IT-QEE-TP1 is submitted or filed in any other manner. Each SSO shall be registered with the Department to facilitate the web-based preapproval process for Form IT-QEE-TP1.
(b) The contributor should not submit Form IT-QEE-TP1 to the Department of Revenue until the contributor's recipient SSO is listed on the Department of Education's website. If the contributor's recipient SSO is not listed on the website at the time that the Department of Revenue attempts to verify the SSO's listing, the Department of Revenue shall deny the request. If at a later date the contributor's recipient SSO becomes listed, it will be necessary for a new Form IT-QEE-TP1 to be submitted by the contributor to the Department of Revenue.
(c) The electronic Form "IT-QEE-TP1" shall include the following information:
1. The name of the SSO listed on the Department of Education's website to which the contribution will be made. The SSO should be listed on the Department of Education's website before the Form "IT-QEE-TP1" is filed with the Department of Revenue.
2. The taxpayer identification number of the SSO to which the contribution will be made.
3. The name, address and taxpayer identification number of the contributor.
4. The type of taxpayer.
5. If the contributor is an individual, the filing status.
6. If the contributor is an individual filing a joint return, the name and identification number of the joint filer.
7. The intended contribution amount.
8. If the contributor is a corporation or fiduciary, 75% of the estimated income tax liability the corporation or fiduciary expects for the tax year of the corporation or fiduciary in which the contribution will be made.
9. Tax year end of the contributor.
10. Calendar year in which the contribution will be made.
11. Any other information the Commissioner of the Department of Revenue may require.
12. Certification that all information contained on the Form "IT-QEE-TP1" is true to his/her best knowledge and belief and is submitted for the purpose of obtaining preapproval from the Commissioner.
(d) The qualified education expense credit shall be allowed on a first-come, first-served basis. The date the Form IT-QEE-TP1 is electronically submitted shall be used to determine such first-come, first-served basis.
(e) The Department will notify each taxpayer and the taxpayer's selected SSO of the tax credits preapproved and allocated to such taxpayer within thirty days from the date the Form IT-QEE-TP1 was received.
(f) On the day any Form IT-QEE-TP1 is received for a calendar year that causes the calendar year limit in paragraph (11) of this regulation to be reached, then the remaining tax credits shall be allocated among the applicants who submitted the Form IT-QEE-TP1 on the day the calendar year limit was exceeded on a pro rata basis based upon the amounts otherwise allowed by O.C.G.A. § 48-7-29.16 and this regulation. Only credit amounts on Form IT-QEE-TP1(s) received on the day the calendar year limit was exceeded shall be allocated on a pro rata basis.
(g) The contribution must be made by the taxpayer within sixty days of the date of the preapproval notice received from the Department and within the calendar year in which it was preapproved.
(h) In the event it is determined that the contributor has not met all the requirements of O.C.G.A. § 48-7-29.16, then the amount of the qualified education expense credit shall not be preapproved or the preapproved qualified education expense credit shall be retroactively denied. With respect to such denied credit, tax and interest shall be due if the qualified education expense credit has already been claimed.
(i) Notwithstanding any laws to the contrary, the Department shall not take any adverse action against donors to SSOs if the Commissioner preapproved a donation for a tax credit prior to the date the SSO is removed from the Department of Education list pursuant to O.C.G.A. § 20-2A-7, and all such donations shall remain as preapproved tax credits subject only to the donor's compliance with O.C.G.A. § 48-7-29.16(f)(3).
(j) Once the calendar year limit is reached for a calendar year, taxpayers shall no longer be eligible for a credit pursuant to O.C.G.A. § 48-7-29.16, for such calendar year. If any Form IT-QEE-TP1 is received after the calendar year limit has been reached, then it shall be denied and not be reconsidered for preapproval at any later date.
(14) Letter of Confirmation. Form IT-QEE-SSO1 shall be provided by the SSO to the taxpayer to confirm the contribution.
(15) Claiming the Credit. A taxpayer claiming the qualified education expense credit, unless indicated otherwise by the Commissioner, must submit Form IT-QEE-TP2 with the taxpayer's Georgia tax return when the qualified education expense credit is claimed. A software program's Form IT-QEE-TP2 that is electronically filed with the Georgia income tax return in the manner specified by the Department satisfies this requirement.
(16) E-filing Attachment Requirements. If a taxpayer claiming the credit electronically files their tax return, the Form IT-QEE-SSO1 shall be required to be attached to the return only if the Internal Revenue Service allows such attachments when the data is transmitted to the Department. In the event the taxpayer files an electronic return and such information is not attached because the Internal Revenue Service does not, at the time of such electronic filing, allow electronic attachments to the Georgia return, such information shall be maintained by the taxpayer and made available upon request by the Commissioner.
(17) Carry Forward. Any credit which is claimed but not used in a taxable year shall be allowed to be carried forward to apply to the taxpayer's succeeding five years' tax liability. However, any amount in excess of the credit amount limits in paragraph (10) of this regulation shall not be eligible for carry forward to the taxpayer's succeeding years' tax liability nor shall such excess amount be claimed by or reallocated to any other taxpayer.
(18) Taxpayer Must Add Back Portion of Federal Deduction on State Return if Taxpayer Takes State Credit. O.C.G.A. § 48-7-29.16(h)(1) provides that no qualified education expense credit shall be allowed under O.C.G.A. § 48-7-29.16, with respect to any amount deducted from taxable net income by the taxpayer as a charitable contribution to a bona fide charitable organization qualified under Section 501(c)(3) of the Internal Revenue Code. If the taxpayer is allowed the state income tax deduction in place of the charitable contribution deduction as allowed by the Internal Revenue Service, for purposes of this paragraph such deduction shall be considered a charitable contribution to the extent such deduction is allowed federally. Accordingly, the taxpayer must add back to Georgia taxable income that part of any federal deduction taken on a federal return for which a Georgia qualified education expense credit is allowed under O.C.G.A. § 48-7-29.16.
(a) If a taxpayer's itemized deductions are limited federally (and therefore for Georgia purposes) because their Federal Adjusted Gross Income exceeds a certain amount, the taxpayer is only required to add back to Georgia taxable income that portion of the federal charitable deduction that was actually deducted pursuant to the following formula. The federal charitable deduction that must be added back to Georgia taxable income shall be the amount of the federal charitable contribution relating to the qualified education expense credit multiplied by the following ratio. The numerator is the amount of the itemized deductions subject to limitation and allowed as itemized deductions after the limitation is applied. The denominator is the total itemized deductions that are subject to limitation before the limitation is applied.
1. For example. A taxpayer has a $2,500 charitable contribution relating to the qualified education expense credit and has property taxes of $1,500 both of which are subject to limitation. The taxpayer also has investment interest expense of $10,000 (which is not limited). Accordingly, the taxpayer's total itemized deductions before limitation are $14,000. After applying the federal limitation, the taxpayer is allowed $13,000 in itemized deductions. As such only $3,000 ($13,000 less the $10,000 investment interest expense which is not limited) of the original $4,000 charitable deduction and property taxes are allowed to be deducted. Applying the ratio from the subparagraph above, the taxpayer must add back $1,875 of the charitable contribution to their Georgia taxable income ($2,500) X ($3,000 / $4,000)).
(19) Scholarships.
(a) For all scholarships including multi-year scholarships, the SSO shall deliver the scholarship check directly to the qualified school or program selected as a result of the private choice of the parent or guardian of the child to whom the scholarship was awarded. The parent or guardian of the student shall come to such qualified school or program and restrictively endorse the check to such qualified school or program for deposit into the account of such qualified school or program as is required by O.C.G.A. § 20-2A-5. Such qualified school or program shall not be allowed to endorse the check over to a different qualified school or program.
(b) In the event an SSO awards a multi-year scholarship, the SSO may disburse the entire scholarship at the time the scholarship is awarded.
(c) For all scholarships including multi-year scholarships, the qualified school or program shall separately account for each scholarship awarded. Additionally, the income earned on the portion of the scholarship which has not yet been applied to tuition shall be separately accounted for and shall be used to provide tuition for such eligible student. The scholarship shall be applied to tuition on the same due dates as the general population of students of such school.
(d) In making a multi-year distribution to a qualified school or program, the SSO shall require that if the designated student becomes ineligible or for any other reason the qualified school or program elects not to continue disbursement of the multi-year scholarship or tuition grant to the designated student for all the projected years, then the qualified school or program shall immediately return the remaining funds to the SSO and the income earned on such portion. Upon receipt of such returned scholarship, such SSO shall allocate and obligate such money for scholarships or tuition grants on or before the end of the following calendar year; 100% of such returned money (including the remaining funds and the income earned on such portion) shall be allocated and obligated. Once a qualified school or program receives such returned money and such income earned on such returned money, 100% of such amounts received shall be used for an eligible student.
1. Once the student scholarship organization designates obligated revenues for specific student recipients, in the case of multiyear scholarships or tuition grants for which the student scholarship organization distributes the obligated and designated revenues to a qualified school or program annually rather than the entire amount, if the designated student becomes ineligible or for any other reason the student scholarship organization elects not to continue disbursement for all years, then the student scholarship organization shall designate any remaining previously obligated revenues for a new specific student recipient on or before the end of the following calendar year.
(20) Designation of Contributions. The tax credit shall not be allowed if the taxpayer directly or indirectly designates the taxpayer's qualified education expense for the direct benefit of any particular individual, whether or not such individual is a dependent of the taxpayer.
(a) In soliciting contributions, an SSO shall not represent, or direct a qualified school or program to represent, that in exchange for contributing to the SSO, a taxpayer shall receive a scholarship for the direct benefit of any particular individual, whether or not such individual is a dependent of the taxpayer. Their status as an SSO shall be revoked for any such organization which violates this subparagraph and as such the SSO shall be removed from the Department of Education's list of approved SSOs and the Department shall not preapprove any contributions to such SSO.
(21) Effective Date. This rule is applicable to years beginning on or after January 1, 2019. Years beginning before January 1, 2019 will be governed by the regulations of Chapter 560-7 as they existed before January 1, 2019 in the same manner as if the amendments thereto set forth in this regulation had not been promulgated.

Rule 560-7-8-.48 Clean Energy Property and Wood Residuals Tax Credits

(1) Purpose. T7his regulation provides guidance concerning the implementation and administration of the tax credits under O.C.G.A. § 48-7-29.14.
(2) Coordination of Agencies. The Georgia Environmental Finance Authority and the Department of Revenue have been designated as the primary agencies responsible within Georgia to administer the program. Additionally, the Georgia Forestry Commission is the state agency responsible for certifying the dollar amount of wood residuals transported or diverted to a renewable biomass qualified facility. The Office of Insurance and Safety Fire Commissioner is the state agency that administers the gross premium tax.
(3) Tax Credits for the Construction, Purchase, or Lease of Clean Energy Property. The tax credit under O.C.G.A. § 48-7-29.14(b)(1) is a tax credit against Georgia income tax, or if the taxpayer is an insurance company, against Georgia premium tax. It shall be granted to a taxpayer for the construction, purchase, or lease of clean energy property that is placed into service in this state between July 1, 2008 and December 31, 2014.
(a) Confirmation. Prior to submitting an application for approval to claim the clean energy property tax credit (Form IT-CEP-AP), the taxpayer must complete a pre-application through the Georgia Environmental Finance Authority. After completing this form, the taxpayer will receive a confirmation. Such confirmation must be attached to Form IT-CEP-AP.
(b) Credit limitations. The amount of the clean energy property tax credit granted to a taxpayer shall not exceed:
1. For all types of clean energy property placed into service for any purpose other than single family residential, the credit allowed may not exceed the lesser of 35 percent of the cost of the clean energy property described in O.C.G.A. § 48-7-29.14(a)(3)(A) through O.C.G.A. § 48-7-29.14(a)(3)(C), or the following credit amounts for any clean energy property:
(i) For solar energy equipment for solar electric (photovoltaic), other solar thermal electric applications, and active space heating as described in O.C.G.A. § 48-7-29.14(a)(3)(A) the credit amount shall not exceed $500,000.00 per installation;
(ii) For clean energy property related to solar energy equipment for domestic water heating as described in O.C.G.A. § 48-7-29.14(a)(3)(A), which is certified for performance by the Solar Rating Certification Corporation, Florida Solar Energy Center, or by a comparable entity approved by the Georgia Environmental Finance Authority to have met the certification of Solar Rating Certification Corporation OG-100 or Florida Solar Energy Center-GO-80 for solar thermal collectors, the credit amount shall not exceed $100,000.00 per installation;
(iii) For Energy Star certified geothermal heat pump systems as described in O.C.G.A. § 48-7-29.14(a)(3)(B), the credit amount shall not exceed $100,000.00;
(iv) For a lighting retrofit project as described in O.C.G.A. § 48-7-29.14(a)(3)(C)(i), the credit amount shall not exceed $0.60 per square foot of the building with a maximum credit amount of $100,000; and
(v) For an energy efficient building as described in O.C.G.A. § 48-7-29.14(a)(3)(C)(ii), the credit amount for all energy efficient products installed during construction shall not exceed $1.80 per square foot of the building, with a maximum credit amount of $100,000.00.
(I) Example of credit limit in subparagraph 3(b)1. (iv) of this regulation. Taxpayer installs a lighting retrofit project described in O.C.G.A. § 48-7-29.14(a)(3)(C)(i) into a 1,500 square foot building. The lighting retrofit project costs $1,000. Since 35% of the cost of the lighting retrofit project (equals $350) is less than $.60 per square foot of the building (equals $900), the taxpayer would request a credit amount of $350 on Form IT-CEP-AP for preapproval.
(II) Example of the credit limit in subparagraph 3(b)1. (v) of this regulation. Taxpayer installs energy efficient products in an energy efficient building, which is 15,000 square feet, as described in O.C.G.A. § 48-7-29.14(a)(3)(C)(ii). The cost of all energy efficient products installed in the building is $12,000. Since 35% of the cost of all energy efficient products (equals $4,200) is less than $1.80 per square foot of the building (equals $27,000), the taxpayer would request a credit amount of $4,200 on Form IT-CEP-AP for preapproval.
2. For wind equipment as described in O.C.G.A. § 48-7-29.14(a)(3)(D) the credit amount shall not exceed $500,000.00 per installation.
(i) For biomass equipment as described in O.C.G.A. § 48-7-29.14(a)(3)(E) the credit amount shall not exceed $500,000.00 per installation.
3. The following credit limits apply to clean energy property placed in service for single family residential purposes, the lesser of 35 percent of the cost or:
(i) For clean energy property related to solar energy equipment for domestic water heating as described in O.C.G.A. § 48-7-29.14(a)(3)(A), which is certified for performance by the Solar Rating Certification Corporation, Florida Solar Energy Center, or by a comparable entity approved by the Georgia Environmental Finance Authority to have met the certification of Solar Rating Certification Corporation OG-100 or Florida Solar Energy Center-GO-80 for solar thermal collectors, Solar Rating Certification Corporation certification OG-300 or Florida Solar Energy Center-GP-5-80 for solar thermal residential systems, or both, the credit amount shall not exceed $2,500.00 per dwelling unit;
(ii) For clean energy property related to solar energy equipment for solar electric (photovoltaic), other solar thermal electric applications, and active space heating as described in O.C.G.A. § 48-7-29.14(a)(3)(A), the credit amount shall not exceed $10,500.00 per dwelling unit; and
(iii) For Energy Star certified geothermal heat pump systems described in O.C.G.A. § 48-7-29.14(a)(3)(B), the credit amount shall not exceed $2,000.00 per installation.
(c) Credit amount. Any credit allowed under O.C.G.A. § 48-7-29.14(b)(1) for calendar year 2012, 2013, or 2014 must be taken in four equal installments over four successive taxable years beginning with the taxable year in which the credit is allowed.
(d) Carry forward. Any unused credit or unused installment credit amount in a taxable year may be carried forward for five years from the close of the taxable year in which the installation of the clean energy property occurred.
(4) Tax Credit for Transporting or Diverting Wood Residuals. The tax credit under O.C.G.A. § 48-7-29.14(b)(2) is a tax credit against Georgia income tax and shall be granted to a taxpayer who transports or diverts wood residuals to a renewable biomass qualified facility on or after July 1, 2008. The taxpayer eligible to claim this credit shall be the taxpayer that received certification from the Georgia Forestry Commission for transporting or diverting wood residuals.
(a) Certification. Prior to submitting an application for approval (Form IT-WR-AP) to claim the tax credit for transporting or diverting wood residuals, the taxpayer must receive certification, which attributes a dollar value to such transported or diverted wood residuals, from the Georgia Forestry Commission. Such certification must be attached to Form IT-WR-AP.
(b) Credit limitation. The amount of wood residual tax credit granted to a taxpayer shall not exceed the actual amount certified by the Georgia Forestry Commission to the taxpayer.
(c) Carry forward. Any unused credit for transporting or diverting wood residuals shall be allowed against succeeding years' tax liability.
(5) Credit Cap. In no event shall the total amount of tax credits allowed under both O.C.G.A. § 48-7-29.14(b)(1)and(b)(2) exceed the following amounts:
(a) For calendar year 2008, $2,500,000;
(b) For calendar year 2009, $2,500,000;
(c) For calendar year 2010, $2,500,000;
(d) For calendar year 2011, $2,500,000;
(e) For calendar year 2012, $5,000,000;
(f) For calendar year 2013, $5,000,000; and
(g) For calendar year 2014, $5,000,000.
(6) Denial of Credit. In the event it is determined that the taxpayer has not met all the re-quirments of O.C.G.A. § 48-7-29.14 and this regulation, then the amount of the credits shall not be tentatively approved or the tentatively approved credits shall be retroactively denied. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been claimed.
(7) Claiming tax credits under O.C.G.A. § 48-7-29.14(b)(1)and(b)(2). Any taxpayer seeking to claim tax credits under O.C.G.A. § 48-7-29.14(b)(1)or(b)(2), must submit the appropriate forms to the Department of Revenue as provided in this paragraph.
(a) Application. A taxpayer seeking to claim tax credits under O.C.G.A. § 48-7-29.14(b)(1), whether utilizing the credit against income tax or premium tax, must submit Form IT-CEP-AP and a confirmation from the Georgia Environmental Finance Authority to the Commissioner for tentative approval.
1. A taxpayer seeking to claim tax credits under O.C.G.A. § 48-7-29.14(b)(2), must submit Form IT-WR-AP, and a certification from the Georgia Forestry Commission, to the Commissioner for tentative approval.
(b) Notification. The Department will notify each taxpayer of the tax credits, tentatively approved and allocated to such taxpayer, within sixty (60) days from the date the application was received.
(c) Allocation of tax credits. The Commissioner shall allow tax credits under O.C.G.A. § 48-7-29.14(b)(1)and(b)(2) on a first-come, first-served basis. The postmark of Form IT-CEP-AP and Form IT-WR-AP shall be used to determine such first-come, first-served basis.
(d) Applications received on the day the maximum credit amount is reached. In the event that the credit amounts on applications received by the Commissioner exceed the maximum aggregate limits in paragraph (5) of this regulation, then the tax credits shall be allocated among the taxpayers whose applications were received by the Commissioner on the day the maximum aggregate limit was exceeded on a pro rata basis based upon amounts otherwise allowed under O.C.G.A. § 48-7-29.14 and this regulation. Only credit amounts on applications received on the day the maximum aggregate limits were exceeded will be allocated on a pro rata basis.
(e) Waiting list. If a taxpayer is denied all or part of the tax credit under O.C.G.A. § 48-7-29.14(b)(1), because the credit cap in paragraph (5) of this regulation has been reached, the Commissioner shall add such taxpayer to a waiting list prioritized by the postmark of the taxpayer's first application. For the credit allocation in subsequent years, taxpayers on the waiting list shall have priority over other taxpayers with a later postmark regardless of the year the clean energy property was installed. A taxpayer that is allowed the credit pursuant to this subparagraph in calendar year 2012, 2013, or 2014 must take the credit in four equal installments over four successive taxable years beginning with the taxable year in which the credit is allowed.
(f) Income or Premium tax. A taxpayer claiming income or premium tax credits under O.C.G.A. § 48-7-29.14(b)(1) must attach an approved Form IT-CEP-AP and Form IT-CEP to its Georgia income or premium tax return for each tax year in which income or premium tax credits are claimed.
1. A taxpayer claiming income tax credits under O.C.G.A. § 48-7-29.14(b)(2) must attach an approved Form IT-WR-AP and Form IT-WR to its Georgia income tax return each year in which income tax credits are claimed.
(g) Withholding tax. A taxpayer may claim any excess tax credit from O.C.G.A. § 48-7-29.14(b)(1), the clean energy property tax credit, against its withholding tax liability. For taxpayers preapproved to claim the clean energy property tax credit in calendar year 2012, 2013, or 2014, the excess tax credit amount cannot exceed the limit in paragraph (3)(c) of this regulation. The withholding tax benefit may only be applied against the withholding tax account used by the taxpayer for payroll purposes.
1. Notice of Intent. To claim any excess tax credit not used on the income tax return against the taxpayer's withholding tax liability, the taxpayer must file Revenue Form IT-WH at least thirty (30) days prior to the due date of the Georgia income tax return (including extensions) or at least thirty (30) days prior to the filing of the income tax return, whichever occurs first. Failure to file this form as indicated will result in disallowance of the withholding tax benefit. However, in the case of a credit which is earned in more than one taxable year, the election to claim the withholding credit will be available for the credit earned in such subsequent year.
(i) If the taxpayer is an insurance company, to claim any excess tax credit not used on the premium tax return against the taxpayer's withholding tax liability, the taxpayer must file Revenue Form IT-WH-CEP with both the Department of Revenue and the Office of Insurance and Safety Fire Commissioner at least thirty (30) days prior to the due date of the Georgia premium tax return (including extensions) or at least thirty (30) days prior to the filing of the premium tax return, whichever occurs first. Failure to file this form as indicated will result in disallowance of the withholding tax benefit. However, in the case of a credit which is earned in more than one taxable year, the election to claim the withholding credit will be available for the credit earned in such subsequent year.
2. Review Period. The Department of Revenue has ninety (90) days from the date the income tax return claiming the tax credit is received to review the credit and make a determination of the amount eligible to be used against withholding tax.
(i) The Department of Revenue has ninety (90) days from the date the premium tax return claiming the tax credit is received by the Office of Insurance and Safety Fire Commissioner to review the credit and make a determination of the amount eligible to be used against withholding tax.
3. Letter of Eligibility. Once the review is completed, a letter will be sent to the taxpayer stating the tax credit amount which may be applied against withholding and when the taxpayer may begin to claim the tax credit against withholding tax. The Department of Revenue shall treat this amount as a credit against future withholding tax payments and will not refund any previous withholding payments.
(8) Pass-Through Entities. When the taxpayer is a pass-through entity, and has no income tax liability of its own, the tax credits will pass to its members, shareholders, or partners based on the year ending profit/loss percentage. The credit forms will initially be filed with the tax return of the taxpayer to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The shareholders, members, or partners may not claim any excess clean energy property tax credit against their withholding tax liabilities. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2009. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2009 tax year.
(9) Annual Reports. The Georgia Environmental Finance Authority shall provide an annual report of a determination of associated energy and economic benefits to the state.
(a) The Department of Revenue shall provide an annual report consisting of:
1. The number of taxpayers that claimed the credits allowed under O.C.G.A. § 48-7-29.14;
2. The cost of business property and clean energy property with respect to which credits were claimed;
3. The location and type of clean energy property installed; and
4. The total amount of credits allowed.
(10) Tracking and Reporting the Status and Availability of Credits. By the end of the month following the end of each calendar year quarter, the Department of Revenue shall post on its website the amount of credits preapproved through the end of such quarter, the amount preapproved year to date, and the amount of credits that are available to be claimed.

Rule 560-7-8-.49 Seed-Capital Fund Tax Credits

(1) Purpose. This regulation provides guidance concerning the implementation and administration of tax credits under O.C.G.A. §§ 48-7-40.27 and 48-7-40.28.
(2) Research Fund. O.C.G.A. §§ 48-7-40.27 and 48-7-40.28 together create a maximum of one research fund which is used for purposes of both O.C.G.A. §§ 48-7-40.27 and 48-7-40.28.
(3) Tax Credits for Qualified Investments under O.C.G.A. § 48-7-40.27. The tax credit under O.C.G.A. § 48-7-40.27 shall be granted to a taxpayer for any qualified investment in the research fund made on or after July 1, 2008.
(a) Credit amount. The amount of the tax credit granted to a taxpayer shall be equal to 25 percent of the taxpayer's qualified investment.
(b) Certification. Prior to claiming the seed-capital fund tax credit for any qualified investment in the research fund, the qualified investment must be certified by the research fund. This certification must be attached to Form IT-SCF when claiming the credit.
(c) Credit limitation. Once qualified investments in the research fund reach $30 million in private investments, private investments will no longer be eligible for the credit.
(d) Qualified Investment. No taxpayer shall be eligible to claim the tax credits under O.C.G.A. § 48-7-40.27 for a cash investment if they claim the tax credit provided in O.C.G.A. § 48-7-40.28 for such cash investment.
(e) Annual Report. The research fund shall provide the Department, at least on an annual basis, a report that includes the taxpayer's name, the last four digits of the taxpayer's social security number or the employer identification number, as appropriate, and the amount of the taxpayer's qualified investment for which the research fund has issued to such taxpayer the certification pursuant to O.C.G.A. § 48-7-40.27. Such report shall also include copies of each certification issued during the reporting year. The research fund shall file this report with the Department no later than January 31 of the year following the end of the reporting year.
(4) Tax Credits for Qualified Investments under O.C.G.A. § 48-7-40.28. The tax credit under O.C.G.A. § 48-7-40.28 shall be granted to a taxpayer for any qualified investment made on or after July 1, 2008, in a legal entity in which the research fund has invested.
(a) Credit Amount. The amount of the tax credit granted to a taxpayer shall be equal to 10 percent of the taxpayer's qualified investment.
(b) Certification. Prior to claiming the seed-capital fund tax credit for any qualified investment in a legal entity in which the research fund has invested, the qualified investment must be certified by the research fund. This certification must be attached to Form IT-SCF when claiming the credit.
(c) Credit limitation. Once the total amount of qualified investments in legal entities that the research fund has invested in reaches $75 million, investments will no longer be eligible for the credit.
(d) Qualified Investment. A taxpayer cannot claim the tax credit provided under O.C.G.A. § 48-7-40.28 for a cash investment into the research fund.
(e) Annual Report. The research fund shall provide the Department, at least on an annual basis, a report that includes the taxpayer's name, the last four digits of the taxpayer's social security number or the employer identification number, as appropriate, and the amount of the taxpayer's qualified investment for which the research fund has issued to such taxpayer the certification pursuant to O.C.G.A. § 48-7-40.28. Such report shall also include copies of each certification issued during the reporting year. The research fund shall file this report with the Department no later than January 31 of the year following the end of the reporting year.
(5) Claiming tax credits under O.C.G.A. §§ 48-7-40.27 and 48-7-40.28. Any taxpayer seeking to claim tax credits under O.C.G.A. § 48-7-40.27 and/or §48-7-4.28 must submit Form IT-SCF and certification(s) issued by the research fund with the taxpayer's Georgia income tax return each year in which tax credits are claimed.
(6) Carry Forward. Any credit which is claimed under O.C.G.A. § 48-7-40.27 or § 48-7-40.28 but not used in a taxable year may be carried forward for a maximum of ten years.
(7) Pass-Through Entities. When the taxpayer is a pass-through entity, and has no income tax liability of its own, the tax credits will pass to its members, shareholders, or partners in the same manner as they would account for their proportionate shares of income or loss from such entities. The credit forms will initially be filed with the tax return of the taxpayer to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2009. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2009 tax year.
(8) Effective Date. The effective date for this regulation is July 1, 2008.

Rule 560-7-8-.50 Conservation Tax Credit

(1) Purpose. This regulation provides guidance concerning the implementation and administration of the tax credit under O.C.G.A. § 48-7-29.12.
(2) Coordination of Agencies. The Department of Natural Resources (DNR) is the state agency responsible for determining that the qualified donation under O.C.G.A. § 48-7-29.12 is suitable for two conservation purposes and meets the additional requirements provided by O.C.G.A. § 48-7-29.12(c). The State Properties Commission is the state agency responsible for approving the appraisal amount submitted or for recommending a lower appraisal amount based on its review.
(3) Definition. "Tax parcel" means adjacent or contiguous real property with common ownership valued as a unit by the county tax assessor.
(4) Credit Amount. Except as otherwise provided in this regulation, a taxpayer shall be granted a tax credit for each qualified donation under O.C.G.A. § 48-7-29.12 in an amount not to exceed the lesser of: $500,000, or 25 percent of the fair market value of the donated real property as fair market value is established for the year in which the donation occurred, or 25 percent of the difference between the fair market value and the amount paid to the donor if the donation is effected by a sale of property for less than fair market value as established for the year in which the donation occurred.
(a) Credit Amount for a Partnership. If the taxpayer is a partnership, the partnership shall be granted a tax credit for each qualified donation of real property for conservation purposes in an amount not to exceed the lesser of: $500,000, or 25 percent of the fair market value of the donated real property as fair market value is established for the year in which the donation occurred, or 25 percent of the difference between the fair market value and the amount paid to the donor if the donation is effected by a sale of property for less than fair market value as established for the year in which the donation occurred.
(5) Per Taxpayer Credit Limitation. The credit amount allowed under paragraph (4) of this regulation shall be further limited for each taxpayer for a taxable year and shall not exceed the following amounts:
(a) Entity Limit. $500,000 for an entity with respect to tax liability determined under O.C.G.A. § 48-7-21. This limit applies to a return filed by a C-Corporation, S-Corporation with an entity level income tax liability, and to each return filed by partners in a partnership where such partners are C-Corporations or S-Corporations with an entity level income tax liability.
(b) Other Limit. $250,000 with respect to tax liability determined under O.C.G.A. § 48-7-20. This limit applies to a return filed by an individual or a married couple filing a joint return, a return filed by a trust or an estate, and each return filed by partners in a partnership, members of a limited liability company, and shareholders of an S-Corporation where such partners, members, or shareholders are individuals, trusts, or estates.
1. Example 1 of Credit Amount and Per Taxpayer Credit Limitations. A taxpayer donates real property for conservation purposes. The taxpayer is a partnership composed of two partners: Partner A owns 60% and is an S-Corporation (with no entity level income tax liability) composed of one individual shareholder, shareholder C; Partner B owns 40% and is an individual taxpayer. The fair market value of the donated property, which is not effected by a sale of property for less than fair market value, is $5 million. The credit amount for the partnership is $500,000 (because $500,000 is less than $1,250,000, which is 25 percent of the fair market value). Partner A's (an S-Corporation) credit amount is $300,000. Shareholder C's credit amount is $250,000 (due to an individual credit limit of $250,000). Partner B's (individual taxpayer) credit amount is $200,000.
2. Example 2 of Credit Amount and Per Taxpayer Credit Limitations. A taxpayer donates real property for conservation purposes. The taxpayer is a limited liability company treated as a partnership for tax purposes, composed of three individual members: Member A owns 80 percent, members B and C each own 10 percent. The fair market value of the donated property, which is not effected by a sale of property for less than fair market value, is $3 million. The credit amount for the limited liability company is $500,000 (because $500,000 is less than $750,000, which is 25 percent of the fair market value). Member A's credit amount is $250,000 (due to an individual credit limit of $250,000). The credit amount for Members B and C is $50,000.
(6) Qualified Donation Limitation. Only one qualified donation may be made with respect to any real property that was, in the five years prior to the year of the donation, within the same tax parcel of record, except that a subsequent donation may be made by a person who is not a related person with respect to any prior eligible donors of any portion of such tax parcel. There must be five years between each donation year in the case of a phased easement. For example, a donation is made in year 1. The five intervening years are years two through six. A donation would be allowed in year seven. This is allowed even when the evidence of the easement might remain as part of the same deed filing because once the easement is contributed its value is removed and it then is not part of the same tax parcel of record.
(7) Credit Cap. Beginning with qualified donations occurring on or after January 1, 2016, the total amount of tax credits preapproved under O.C.G.A. § 48-7-29.12 and this regulation shall not exceed $30 million per calendar year.
(8) Preapproval of the Credit. Any taxpayer seeking preapproval to claim a tax credit under O.C.G.A. § 48-7-29.12 for a qualified donation that occurs on or after January 1, 2016, must submit the appropriate forms to the Department through the Georgia Tax Center as provided in this paragraph. Before submitting an application to the Department of Revenue, the taxpayer shall have completed the donation, received the State Property Commission's determination, and certification from DNR. The taxpayer must apply for preapproval for the calendar year for which the qualified donation occurred.
(a) Application. A taxpayer seeking preapproval to claim the tax credit under O.C.G.A. § 48-7-29.12 must electronically submit Form IT-CONSV-AP, the appraisal of the donated property, certification from DNR, and the State Property Commission's determination for approval through the Georgia Tax Center.
(b) Notification. The Department will notify each taxpayer of the tax credits preapproved and allocated to such taxpayer.
(c) Allocation of Tax Credit. The Commissioner shall allow the tax credit under O.C.G.A. § 48-7-29.12 on a first-come, first-served basis. The date the Form IT-CONSV-AP is electronically submitted shall be used to determine such first-come, first-served basis.
(d) Applications received on the day the maximum credit amount is reached. In the event that the credit amounts on applications received by the Commissioner exceed the maximum aggregate limit in paragraph (7) of this regulation, then the tax credits shall be allocated among the taxpayers who submitted Form IT-CONSV-AP on the day the maximum aggregate limit was exceeded on a pro rata basis based upon amounts otherwise allowed under O.C.G.A. § 48-7-29.12 and this regulation. Only credit amounts on applications received on the day the maximum aggregate limit was exceeded will be allocated on a pro rata basis.
(e) Once the calendar year preapproval limit is reached for a calendar year, taxpayers shall no longer be eligible for a credit under O.C.G.A. § 48-7-29.12 for a qualified donation that occurred during such calendar year. If any Form IT-CONSV-AP is received after the calendar year limit has been reached, then it shall be denied and not be reconsidered for preapproval at any later date.
(f) Any amount preapproved under this paragraph is subject to the limitations of paragraph (5) of this regulation.
(g) In the event it is determined that the taxpayer has not met all the requirements of O.C.G.A. § 48-7-29.12 and this regulation, then the amount of credits shall not be preapproved or the preapproved credits shall be retroactively denied. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been claimed.
(9) Claiming the conservation tax credit. Any taxpayer claiming the conservation tax credit for a qualified donation that occurred before January 1, 2016, must submit Form IT-CONSV, certification(s) from DNR, the State Property Commission's determination, and the appraisal of the donated property with the taxpayer's Georgia income tax return in the tax year in which the qualified donation occurred; Form IT-CONSV must be submitted with the Georgia income tax return each year the credit is claimed. Any taxpayer claiming the conservation tax credit for a qualified donation that occurs on or after January 1, 2016, must submit Form IT-CONSV with the taxpayer's Georgia income tax return each year the conservation tax credit is claimed.
(10) Carry Forward. Any credit which is claimed but not used in a taxable year shall be allowed to be carried forward to apply to the taxpayer's succeeding ten years' tax liability (five years' tax liability for credits earned in taxable years beginning before January 1, 2008). However, the amount in excess of the annual dollar limits specified in paragraph (5) of this regulation shall not be eligible for carryover to the taxpayer's succeeding years' tax liability nor shall such excess amount be claimed by, reallocated to, or transferred or sold to any other taxpayer.
(11) Joint Tenancy, Tenancy in Common, and Similar Groups. When owners of real property included in a joint tenancy, tenancy in common, or similar group make a qualified donation, the tax credits will be allocated to each owner based on that owner's ownership percentage of the donated real property.
(12) Add Back Federal Deduction. For qualified donations made in taxable years beginning on or after January 1, 2013, no credit shall be allowed under O.C.G.A. § 48-7-29.12 with respect to any amount deducted from taxable net income by the taxpayer as a charitable contribution.
(a) Example 1. A taxpayer claims a $100,000 charitable deduction on their federal return. The taxpayer is allowed a $25,000 state tax credit ($100,000 x 25%). The taxpayer must add back $100,000 of the charitable contribution deduction on their Georgia return.
(b) Example 2. A taxpayer claims a $100,000 charitable deduction on their federal return in year 1 but due to federal limitations is only allowed to deduct $25,000 in year 1 and $75,000 in year 2. The taxpayer is allowed a $25,000 state tax credit ($100,000 x 25%). The taxpayer must add back $25,000 in year 1 and $75,000 in year 2 of the charitable contribution deduction on their Georgia returns.
(c) Example 3. A taxpayer claims a $2,000,000 charitable deduction on their federal return. The taxpayer computes a $500,000 state tax credit ($2,000,000 x 25%) before considering the per taxpayer credit limitation. After considering the per taxpayer credit limitation, the taxpayer is allowed a $250,000 state tax credit. The taxpayer must add back $1,000,000 of the charitable contribution deduction on their Georgia return ($250,000 / 25%).
(d) Example 4. A taxpayer claims a $2,000,000 charitable deduction on their federal return in year 1 but due to federal limitations is allowed to deduct $750,000 in year 1 and $1,250,000 in year 2. The taxpayer computes a $500,000 state tax credit ($2,000,000 x 25%) before considering the per taxpayer credit limitation. After considering the per taxpayer credit limitation, the taxpayer is allowed a $250,000 state tax credit. The taxpayer must add back a total of $1,000,000 of the charitable contribution deduction on their Georgia returns ($250,000 / 25%). The taxpayer must add back $750,000 in year 1 and $250,000 in year 2 on their Georgia returns.
(13) Pass-Through Entities. When the taxpayer is a pass-through entity, and has no income tax liability of its own, the tax credits will pass to its members, shareholders, or partners based on the year ending profit/loss percentage and the limitations of this regulation. The credit forms will initially be filed with the tax return of the taxpayer to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2014. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2014 tax year.
(14) Selling or Transferring the Conservation Tax Credit. Beginning on January 1, 2012, a taxpayer may sell or transfer in whole or in part any conservation tax credit, previously claimed but not used by such taxpayer against its income tax, to another Georgia taxpayer subject to the following conditions:
(a) For qualified donations made in taxable years beginning on or after January 1, 2013, the taxpayer may only make a one-time sale or transfer of conservation tax credits earned in each taxable year. However, the sale or transfer may involve more than one transferee. For example, taxpayer 1 earns a $50,000 credit in year 1. In year 2 they sell $20,000 of the credit to taxpayer 2. In year 3 they are allowed to sell the remaining $30,000 of the credit to taxpayer 3. However, both taxpayer 2 and taxpayer 3 are not allowed to resell the credit since the credit can only be sold one-time.
(b) The conservation tax credit may be transferred before the tax return is filed by the taxpayer. However, the amount transferred cannot exceed the amount of the credit which will be claimed and not used on the income tax return of the transferor.
(c) The taxpayer must file Form IT-TRANS "Notice of Tax Credit Transfer" with the Department of Revenue within 30 days of the transfer or sale of the conservation tax credit. With respect to any taxpayer which sells the credit on or after January 1, 2017, Form IT-TRANS must be submitted electronically to the Department of Revenue through the Georgia Tax Center or alternatively as provided in subparagraph (14)(c)1. With respect to such taxpayer, the Department of Revenue will not process any Form IT-TRANS submitted or filed in any other manner. If the taxpayer is a disregarded entity then Form IT-TRANS should be filed in the name of the owner of the disregarded entity but the certification from the Department of Natural Resources and Form IT-CONSV should be in the name of the disregarded entity.
1. The web-based portal on the Georgia Tax Center. The taxpayer may provide selective information to a representative for the purpose of allowing the representative to submit Form IT-TRANS on their behalf on the Georgia Tax Center outside of a login. The provision of such information shall authorize the representative to submit such Form IT-TRANS. The representative must provide all information required by the web-based portal on the Georgia Tax Center to submit Form IT-TRANS.
(d) The taxpayer must provide all required conservation tax credit detail and transfer information to the Department of Revenue. Failure to do so will result in the conservation tax credit being disallowed until the taxpayer complies with such requirements.
(e) The carry forward period of the conservation tax credit for the transferee will be the same as it was for the taxpayer. This credit may be carried forward to apply to the taxpayer's succeeding ten years' tax liability (five years' tax liability for credits earned in taxable years beginning before January 1, 2008). For example: The taxpayer sells a conservation tax credit on May 15, 2013. This credit is based on a donation from calendar 2013 tax year. The credit may be claimed by the transferee on the 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, or 2023 return and the carry forward period for this credit will expire on December 31, 2023. This carry forward treatment applies regardless of whether it is being claimed by the taxpayer or the transferee.
(f) A transferee shall have only such rights to claim and use the conservation tax credit that were available to the taxpayer at the time of the transfer. Thus, a transferee shall not have the right to subsequently transfer such credit since that right has been utilized by the transferor.
(15) How to sell or transfer the tax credit.
(a) The taxpayer may sell or transfer the conservation tax credit directly to a Georgia taxpayer. A pass-through entity may make an election to sell or transfer the unused conservation tax credit earned in a taxable year at the entity level. However, the amount of the credit that may be sold by a pass-through entity cannot exceed the amount that the shareholders, members, or partners would be allowed pursuant to paragraph (5) of this regulation for the year the qualified donation is made. To the extent the pass-through entity makes the election to sell the conservation tax credit at the entity level, the credit does not pass through to the shareholders, members, or partners. The elected amount is then subtracted proportionally from the amount each shareholder, member, or partner would receive.
1. Example: A taxpayer donates real property for conservation purposes. The taxpayer is a partnership composed of two partners: Partner A owns 75% and is an S-Corporation (with no entity level income tax liability) composed of two individual shareholders, shareholder C (75% ownership) and shareholder D (25% ownership); Partner B owns 25% and is an individual taxpayer. The fair market value of the donated property, which is not effected by a sale of property for less than fair market value, is $5 million. The credit amount for the partnership is $500,000 (because $500,000 is less than $1,250,000, which is 25 percent of the fair market value). Partner A's (an S-Corporation) credit amount is $375,000. Shareholder C's credit amount is $250,000 (reduced from the $281,250 by the per taxpayer credit limitation), and Shareholder D's credit amount is $93,750. Partner B's (individual taxpayer) credit amount is $125,000. The taxpayer sells $225,000 of the credit at the partnership level which leaves $243,750 that will flow though. Shareholder C's credit is reduced by $120,000($250,000/$468,750 x $225,000) and therefore is entitled to a credit of $130,000. Shareholder D's credit is reduced by $45,000 ($93,750/$468,750 x $225,000) and therefore is entitled to a credit of $48,750. Partner B's credit is reduced by $60,000 ($125,000/$468,750 x $225,000) and therefore is entitled to a credit of $65,000.
(b) In all cases, the effect of the sale of the credit on the income of the seller and buyer of the credit will be the same as provided in the Internal Revenue Code.
(c) Pass-Through Entity. The taxpayer may be structured as a pass-through entity. To the extent the pass-through entity does not make an election to sell or transfer the tax credit at the entity level as provided in paragraph (15) of this regulation, the tax credit will pass through to the shareholders, partners, or members of the entity based on their year ending profit/loss percentage and as provided in this regulation. The shareholders, members, or partners may then sell their respective conservation tax credit to a Georgia taxpayer.
(d) Transferee Pass-through Entity. The taxpayer, or its shareholders, members, or partners, may sell or transfer the credit to a pass-through entity. The pass-through entity shall elect on behalf of its shareholders, members or partners which year the credit shall be passed through to its shareholders, members or partners (as provided in subparagraph (15)(e) of this regulation). If the pass-through entity has no income tax liability of its own, the pass-through entity may then pass the credit through to its shareholders, members, or partners based on the pass-through entity's year ending profit/loss percentage for such elected year. For example, if a calendar year partnership is buying the credit earned by a taxpayer in the calendar year 2013 tax year and elects to use the credit in such year, then all of the partners receiving the credit must have been a partner in the partnership no later than the end of the 2013 tax year in which the credit was established. Only partners who have a profit/loss percentage as of the end of the applicable tax year may receive their respective amount of the conservation tax credit.
(e) The credits are available for use by the transferee provided the time has not expired for filing a claim for refund of a tax or fee erroneously or illegally assessed and collected pursuant to O.C.G.A. § 48-2-35 as provided in subparagraphs 1. through 3. below, and provided that unused conservation tax credits earned in taxable years beginning before January 1, 2012 can only be claimed by the transferee in a taxable year beginning on or after January 1, 2012:
1. In the transferee's tax year in which the income tax year of the taxpayer, which generates and claims the conservation tax credit for the qualified donation associated with the credit being sold, ends; or
2. During any later tax year before the ten year carry forward period (five year carry forward period for credits earned in taxable years beginning before January 1, 2008) associated with the tax credit ends.
(i) Example: A taxpayer makes a qualified donation and claims the conservation tax credit in calendar year 2013. The taxpayer sells the conservation tax credit to a Georgia taxpayer in calendar 2014 tax year. The transferee Georgia taxpayer may claim the purchased conservation tax credit on either their 2013 return (transferee's tax year in which the income tax year of the taxpayer transferor ends) or their 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, or 2023 return (during any later tax year before the ten year carry forward associated with the tax credit ends).
3. The transferee's tax credit amount cannot exceed the limits in paragraph (5) of this regulation in the year in which the qualified donation was made. Any tax credit amount that exceeds the limits in paragraph (5) of this regulation for the year in which the qualified donation was made cannot be claimed or transferred by the transferee in any tax year.
(i) Example: In 2013, an individual taxpayer makes a qualified donation, after applying the limits in paragraph (5) of this regulation the taxpayer claims the conservation tax credit for $250,000 on their joint tax return. In 2015, this taxpayer purchases $100,000 conservation tax credit from a qualified donation made in 2013. Since this taxpayer has already met the limits in paragraph (5) of this regulation for 2013, the taxpayer cannot claim the $100,000 conservation tax credit in any tax year.
(16) Sunset Date. The Department of Natural Resources shall accept no new applications for tax credits after December 31, 2021.

Rule 560-7-8-.51 Quality Jobs Tax Credit

(1) Purpose. This regulation provides guidance concerning the implementation and administration of the quality jobs tax credit under O.C.G.A. § 48-7-40.17.
(2) Definitions. As used in this regulation:
(a) County average wage. The term "county average wage" means the average wage of the county in which a new quality job is located as reported in the most recent annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor as specified in this regulation. For purposes of this definition, wages means the total dollars paid during the year to an employee, including but not limited to bonuses, incentive pay, and deductions from gross pay. As such, contributions by an employee to 401(k) plans, cafeteria plans, etc. shall be included in determining the wages. Wages does not mean contributions made by employers on behalf of employees to health insurance, retirement, or any other benefit program.
1. For all purposes of this regulation, bonuses shall be treated as being paid ratably during the months for which the job existed during the taxable year in which the bonus was paid.
(b) New quality job. The term "new quality job" means employment for an individual located in this state which:
1. Has a regular work week of thirty (30) hours or more;
2. Is not a job that is or was already located in Georgia regardless of which taxpayer the individual performed services for;
3. Pays at or above 110 percent of the county average wage. For purposes of determining the 110% requirement in years one through seven, the job must pay at or above 110% of the county average wage as reported in the most recent annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor that is available as of the last day of the tax year in which the taxpayer first elected jobs to qualify as new quality jobs; thus the 110% county average wage threshold remains constant over the life of the credit; and
4. For a taxpayer that initially claimed the credit in a taxable year beginning before January 1, 2012, the job has no predetermined end date.
(c) Qualified investment property. The term "qualified investment property" means all real and personal property purchased or acquired by a taxpayer for use in a qualified project, including, but not limited to, amounts expended on land acquisition, improvements, buildings, building improvements, and any personal property to be used in the facility or facilities. Any lease for a period of three years or longer of any real or personal property used in a new or expanded facility or facilities which would otherwise constitute qualified investment property shall be treated as the purchase or acquisition thereof by the lessee. The taxpayer may treat the full value of the leased property as qualified investment property in the year in which the lease becomes binding on the lessor and the taxpayer.
(d) Qualified investment property requirement. The term "qualified investment property requirement" means the requirement that a minimum of $2.5 million in qualified investment property will have been purchased or acquired by the taxpayer to be used with respect to a qualified project. Such qualified investment property must be placed in service by the end of the two-year period specified in subparagraph (4)(b) of this regulation.
(e) Qualified project. The term "qualified project" means a project which meets the qualified investment property requirement and which involves the lease or construction of one or more new facilities in this state or the expansion of one or more existing facilities in this state. For purposes of this definition, the term "facilities" means all facilities comprising a single project, including noncontiguous parcels of land, improvements to such land, buildings, building improvements, and any personal property that is used in the facility or facilities.
(f) Project. The term "project" is defined in Department of Revenue Regulation 560-7-8-.37.
(g) Rural County. The term "rural county" means a county that has a population of less than 50,000 with 10 percent or more of such population living in poverty based upon the most recent, reliable, and applicable data published by the United States Bureau of the Census. On or before December 31, of each year, the Commissioner of the Department of Community Affairs shall publish a list of such counties.
(h) Taxpayer. For a taxpayer that initially qualifies to claim the credit in a taxable year beginning on or after January 1, 2016, the term "taxpayer" means any person required by law to file a return or to pay taxes, except that any taxpayer may elect to consider the jobs within its disregarded entities, as defined in the Internal Revenue Code, for purposes of calculating the number of new quality jobs created by the taxpayer. Such election shall be irrevocable and must be made on the initial qualifying return (on Form IT-QJ) or within one year of the earlier of the date the initial qualifying return was filed or the date such return was due, including extensions. In the event such election is made, such disregarded entities shall not be separately eligible for the credit.
(3) Transferred jobs do not qualify. New quality jobs must be new to the state of Georgia. Jobs that are transferred from other Georgia locations of the taxpayer, or from other Georgia locations of an affiliate of the taxpayer, would not be jobs that are new to the state of Georgia. However, an employee in a new quality job may be employed at a temporary location in this state pending completion of construction or renovation work.
(4) Establishing eligibility for the credit.
(a) A taxpayer must establish new quality jobs or relocate new quality jobs in a taxable year that begins on or after January 1, 2009. If the taxpayer first withholds wages for new quality jobs in this state (pursuant to Code Section 48-7-101) on a date in a taxable year beginning before January 1, 2017, the taxpayer is required to employ at least fifty (50) persons in new quality jobs within one year from the first date on which the taxpayer withholds wages for new quality jobs in this state (pursuant to Code Section 48-7-101). For purposes of determining the start of such one year period, the taxpayer shall elect the month in which they want jobs to qualify as new quality jobs. When the number of new quality jobs in a particular month, during such one year period, exceeds the monthly average of new quality jobs that existed in the prior twelve month period by fifty (50), such requirement shall be met. Taxpayers who were not located in Georgia during the prior twelve month period shall use a prior twelve month period average of zero.
1. For purposes of such prior twelve month determination:
(i) The number of new quality jobs for each month in such period shall be computed by determining the number of jobs that would have met the definition of new quality jobs (except for the requirement that the job be new to Georgia) even if a portion of such prior twelve month period occurs before the tax year that begins on or after January 1, 2009; and
(ii) For purposes of determining the 110% requirement for any months that occurred in the prior taxable year, the job must have paid at or above 110% of the county average wage as reported in the most recent annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor that is available as of the last day of the prior taxable year.
2. Example: A calendar year taxpayer elects to have jobs qualify as new quality jobs in July of 2009. The average number of new quality jobs from July 2008 until June 2009 is 89. In August of 2009 the taxpayer has 140 new quality jobs and therefore meets the 50 new quality jobs requirement (140-89=51). Accordingly, the taxpayer may claim the credit in the tax year ending 12/31/09.
(b) Except as provided in subparagraphs (4)(c) and (4)(d) of this regulation if the taxpayer first withholds wages for new quality jobs on a date in a taxable year beginning on or after January 1, 2017, the taxpayer is required to employ at least fifty (50) persons in new quality jobs within two years from the first date on which the taxpayer withholds wages for new quality jobs in this state (pursuant to Code Section 48-7-101). For purposes of determining the start of such two year period, the taxpayer shall elect the month in which they want jobs to qualify as new quality jobs. When the number of new quality jobs in a particular month, during such two year period, exceeds the monthly average of new quality jobs that existed in the prior twelve month period prior to the start of the two year period by fifty (50), such requirement shall be met. Taxpayers who were not located in Georgia during the prior twelve month period shall use a prior twelve month period average of zero.
1. For purposes of such prior twelve month determination:
(i) The number of new quality jobs for each month in such period shall be computed by determining the number of jobs that would have met the definition of new quality jobs (except for the requirement that the job be new to Georgia) even if a portion of such prior twelve month period occurs before the tax year that begins on or after January 1, 2017; and
(ii) For purposes of determining the 110% requirement for any months that occurred in the prior taxable year, the job must have paid at or above 110% of the county average wage as reported in the most recent annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor that is available as of the last day of the prior taxable year.
2. Example: A calendar year taxpayer elects to have jobs qualify as new quality jobs in January of 2017. The average number of new quality jobs from January 2016 until December 2016 is 109. In August of 2018 the taxpayer has 160 new quality jobs and therefore meets the 50 new quality jobs requirement (160-109=51). Accordingly, the taxpayer may claim the credit in the tax year ending 12/31/2018.
(c) If the taxpayer first withholds wages for new quality jobs on a date in a taxable year beginning on or after January 1, 2020, the taxpayer is only required to employ at least ten (10) persons in new quality jobs within a single rural county within one year from the first date on which the taxpayer withholds wages for new quality jobs in this state (pursuant to Code Section 48-7-101), provided that such county is designated as a tier 1 county by the Commissioner of Community Affairs in accordance with Code Section 48-7-40. For purposes of determining the start of such one year period, the taxpayer shall elect the month in which they want jobs to qualify as new quality jobs. When the number of new quality jobs in a particular month, during such one year period, exceeds the monthly average of new quality jobs that existed in the prior twelve month period by ten (10), such requirement shall be met. Taxpayers who were not located in Georgia during the prior twelve month period shall use a prior twelve month period average of zero.
1. For purposes of such prior twelve month determination:
(i) The number of new quality jobs for each month in such period shall be computed by determining the number of jobs that would have met the definition of new quality jobs (except for the requirement that the job be new to Georgia) even if a portion of such prior twelve month period occurs before the tax year that begins on or after January 1, 2020; and
(ii) For purposes of determining the 110% requirement for any months that occurred in the prior taxable year, the job must have paid at or above 110% of the county average wage as reported in the most recent annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor that is available as of the last day of the prior taxable year.
2. Example: A calendar year taxpayer elects to have jobs qualify as new quality jobs in July of 2020. The average number of new quality jobs from July 2019 until June 2020 is 60. In August of 2020 the taxpayer has 71 new quality jobs in a rural county that is in a tier 1 county and therefore meets the 10 new quality jobs requirement (71-60=11) for a rural county located in a tier 1 county. Accordingly, the taxpayer may claim the credit in the tax year ending 12/31/2020.
(d) If the taxpayer first withholds wages for new quality jobs on a date in a taxable year beginning on or after January 1, 2020, the taxpayer is only required to employ at least twenty-five (25) persons in new quality jobs within a single rural county within one year from the first date on which the taxpayer withholds wages for new quality jobs in this state (pursuant to Code Section 48-7-101), provided that such county is designated as a tier 2 county by the Commissioner of Community Affairs in accordance with Code Section 48-7-40. For purposes of determining the start of such one year period, the taxpayer shall elect the month in which they want jobs to qualify as new quality jobs. When the number of new quality jobs in a particular month, during such one year period, exceeds the monthly average of new quality jobs that existed in the prior twelve month period by twenty-five (25), such requirement shall be met. Taxpayers who were not located in Georgia during the prior twelve month period shall use a prior twelve month period average of zero.
1. For purposes of such prior twelve month determination:
(i) The number of new quality jobs for each month in such period shall be computed by determining the number of jobs that would have met the definition of new quality jobs (except for the requirement that the job be new to Georgia) even if a portion of such prior twelve month period occurs before the tax year that begins on or after January 1, 2020; and
(ii) For purposes of determining the 110% requirement for any months that occurred in the prior taxable year, the job must have paid at or above 110% of the county average wage as reported in the most recent annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor that is available as of the last day of the prior taxable year.
2. Example: A calendar year taxpayer elects to have jobs qualify as new quality jobs in July of 2020. The average number of new quality jobs from July 2019 until June 2020 is 50. In August of 2020 the taxpayer has 76 new quality jobs in a rural county located in a tier 2 county and therefore meets the 25 new quality jobs requirement (76-50=26) in a rural county located in a tier 2 county. Accordingly, the taxpayer may claim the credit in the tax year ending 12/31/2020.
(e) In the taxable year in which the taxpayer first employs the required number of persons in new quality jobs under this paragraph, the taxpayer shall be entitled to claim the quality jobs tax credit even if the average number of new quality jobs is less than the required number of new quality jobs under this paragraph for such taxable year. However, in subsequent taxable years the average number of new quality jobs must be at least the required number of new quality jobs under this paragraph for a taxable year in order for the new quality jobs to be claimed. If such required average number of new quality jobs requirement is not met, the taxpayer shall forfeit the right to claim the credit for such jobs in such taxable year. However, if in a subsequent taxable year such required average number of new quality jobs requirement is met, the taxpayer may continue taking the credit and shall resume the credit schedule from when the credit was initially claimed.
(f) Once the taxpayer has determined under subparagraph (4)(a), (4)(b), (4)(c), or (4)(d) of this regulation that they qualify for the credit, the new quality jobs are determined for a taxable year by computing the average number of new quality jobs subject to Georgia income tax withholding for the taxable year and subtracting from this number the average number of new quality jobs in the prior taxable year.
1. These averages shall be determined by the following method:
(i) For each month of the taxable year, count the total number of new quality jobs that are subject to Georgia income tax withholding as of the last payroll period of the month (each job must individually meet the definition of new quality job as provided in subparagraphs (2)(b)1., 3., and 4. of this regulation and cannot have been, for any time before the taxpayer first elects to have jobs qualify as new quality jobs, a job that is or was already located in Georgia regardless of which taxpayer the individual performed services for).
(ii) Add the monthly totals of new quality jobs (each job must individually meet the definition of new quality job as provided in subparagraphs (2)(b)1., 3., and 4. of this regulation and cannot have been, for any time before the taxpayer first elects to have jobs qualify as new quality jobs, a job that is or was already located in Georgia regardless of which taxpayer the individual performed services for).
(iii) Divide the results by the number of months in the taxable year.
2. However, for the initial year the new quality jobs credit is claimed (year one) the increase in new quality jobs is determined for such taxable year by computing the average number of new quality jobs subject to Georgia income tax withholding for the taxable year in the manner specified above and subtracting from this number the average number of new quality jobs in the prior twelve month period as determined in subparagraph (4)(a), (4)(b), (4)(c), or (4)(d) of this regulation.
3. Example: Taxpayer elects to have jobs qualify as new quality jobs in July of 2009. The prior twelve month period average number of jobs from July 2008 until June 2009 is 89. In August of 2009 the taxpayer meets the 50 new quality jobs requirement because they have 140 jobs (140-89=51) so the tax year ending 12/31/09 will be the taxpayer's year one. Assume the average number of new quality jobs from January 2009 to December 2009 is 132. The taxpayer is eligible to claim credits for 43 new quality jobs (132-89) in year one. Assume the average number of new quality jobs from January 2010 to December 2010 is 180. The taxpayer is eligible to claim 48 new quality jobs in year two (180-132) and the 43 new quality jobs maintained from year one.
4. Example: Taxpayer elects to have jobs qualify as new quality jobs in January of 2017. The prior twelve month period average number of jobs from January 2016 until December 2016 is 109. In August of 2018 the taxpayer meets the 50 new quality jobs requirement because they have 160 jobs (160-109=51) so the tax year ending 12/31/2018 will be the taxpayer's year one. Assume the average number of new quality jobs from January 2018 to December 2018 is 158. The taxpayer is eligible to claim credits for 49 new quality jobs (158-109) in year one. Assume the average number of new quality jobs from January 2019 to December 2019 is 240. The taxpayer is eligible to claim 82 new quality jobs in year two (240-158) and 49 new quality jobs maintained from year one.
(g) Other credits.
1. The taxpayer must elect not to receive the tax credits provided for by Code Sections 48-7-40 and 48-7-40.1 for such jobs. This election is deemed to have been made when the taxpayer claims the quality jobs tax credit on its state income tax return. Taxpayers may not alternatively claim the jobs credit provided by Code Sections 48-7-40 and 48-7-40.1 and the quality jobs tax credit with respect to such jobs. These credits are not interchangeable. Jobs for which the job tax credit is claimed under Code Sections 48-7-40 and 48-7-40.1 shall be excluded from all calculations for the quality jobs tax credit under this regulation.
2. The taxpayer must elect not to receive the tax credits provided for by Code Sections 48-7-40.2, 48-7-40.3, 48-7-40.4, 48-7-40.7, 48-7-40.8, and 48-7-40.9 for such project. This election is deemed to have been made when the taxpayer claims the quality jobs tax credit on its state income tax return. Taxpayers cannot alternatively elect to claim the investment tax credit or the optional investment tax credit in one year and the quality jobs tax credit in the next year for a given project. These credits are not interchangeable. Taxpayers may elect to take only one of the investment, optional investment, or quality jobs tax credit for a given project.
(5) Credit amount per new quality job created in the same tax year. A taxpayer that has established eligibility for the quality jobs tax credit shall receive the same credit amount for each new quality job created in the same tax year. The credit amount is as follows and is based on a comparison of the average weekly wage for all new quality jobs in both prior and subsequent seven-year periods (determined below in subparagraph (5)(c) of this regulation) with the county average wage, as reported in the most recent annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor that is available as of the last day of the taxable year in which the new quality jobs were created:

Average Weekly Wage/County Average Wage

Credit Amount

110% but less than 120%

$2,500

120% but less than 150%

$3,000

150% but less than 175%

$4,000

175% but less than 200%

$4,500

200% or more

$5,000

(a) Credit for new quality jobs created in year one may be claimed in year one and may also be claimed for each of the four immediately succeeding taxable years, provided the new quality jobs are maintained in each year, and provided that the average number of new quality jobs required in subparagraph (4)(e) of this regulation are maintained in each year. The credit amount for new quality jobs created in the same tax year must be recalculated each year for the four immediately succeeding taxable years using the applicable county average wage (from the year in which the new quality jobs were created).
(b) Credit amount for additional new quality jobs created in years two through seven. Additional new quality jobs means those new quality jobs created in years two through seven that increase the monthly full-time employment average for such years above the monthly full-time employment average for year one. The credit amount for additional new quality jobs created in years two through seven shall be determined by using the applicable county average wage from the year in which the additional new quality jobs are created.
(c) The average weekly wage for all new quality jobs in a taxable year shall be calculated using the following method:
1. Aggregate the actual wages paid for all new quality jobs in that taxable year.
2. Divide the result by the average number of all new quality jobs.
3. Divide the result by 52 to arrive at the average weekly wage paid to each new quality job.
(d) The average weekly wage shall then be compared to the county average wage from the year in which the new quality jobs were deemed created.
(e) Example: Taxpayer creates 50 new quality jobs in year one. The average weekly wage paid for each of these 50 jobs is $725. The county average wage is $652. Taxpayer creates 20 additional new quality jobs in year two which results in 70 new quality jobs that are eligible for the credit. The average weekly wage paid for each of these 70 jobs is $785. The county average wage for year two is $660.
1. Year One: Since the taxpayer's "average weekly wage/county average wage" for year one is 111% ($725/$652), which is between 110% and 120% of the county average wage, the taxpayer will be eligible to claim a credit of $2,500 for each of the 50 new quality jobs. The taxpayer's credit amount for year one is $125,000.
2. Year Two:
(i) Jobs created in year one: The taxpayer will be eligible to claim a credit amount of $3,000 for the year one 50 new quality jobs deemed maintained in year two since the "average weekly wage/county average wage" is 120% ($785/$652) (credit=$3,000 x 50 new quality jobs=$150,000).
(ii) Jobs created in year two: Since the taxpayer's "average weekly wage/county average wage" for year two is 119% ($785/$660), which is between 110% and 120% of the county average wage, the taxpayer will be eligible to claim a credit of $2,500 for each of the 20 new quality jobs deemed created in year two (credit=$2,500 x 20 new quality jobs=$50,000).
(iii) The taxpayer's total credit amount for year two is $150,000 + $50,000=$200,000.
(f) Credit amount for a taxpayer with new quality jobs in more than one county. If a taxpayer qualifies for the quality jobs tax credit and has new quality jobs located in different counties, for each year jobs are created, a weighted county average wage for the counties must be computed to calculate the credit amount. If a taxpayer creates a subsequent seven-year job creation period under paragraph (8) of this regulation and the new qualified project is located in a different county then the previous seven-year job creation period counties, all new quality jobs created in such subsequent seven-year job creation period shall be treated as being created in such different county and as such this subparagraph shall not apply. First, the average wage for each county, as reported in the most recent annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor that is available as of the last day of the taxable year in which the new quality jobs were deemed created, must be multiplied by a ratio. The numerator of the ratio consists of the total new quality jobs in the county created in such year and the denominator of the ratio consists of the total new quality jobs created in such year in all counties. Once this multiplication is done for all counties, the resulting amounts should be added together to arrive at the weighted county average wage for the counties. The weighted county average wage for each year jobs are created is compared to the average weekly wage for all new quality jobs to determine the taxpayer's credit amount in the same manner as provided in paragraph (5) of this regulation. Such weighted county average wage is not used to determine if the job is a new quality job.
(6) Computation of the quality jobs tax credit based on twelve month periods only. In years two through seven, a taxpayer must compute increases and decreases in full-time jobs on the basis of twelve month periods only, even when the taxpayer has taxable years that are not equal to twelve months. This may cause the quality jobs tax credit calculation period to be different from the tax year of the taxpayer.
(7) Claiming the credit. The quality jobs tax credit shall be claimed on an income tax return for the first taxable year in which the taxpayer first becomes eligible for the credit. The quality jobs tax credit must be claimed within one year of the earlier of the date the original return was filed or the date such return was due, including extensions.
(a) Income tax. For a taxpayer to claim the quality jobs tax credit, the taxpayer must submit Form IT-QJ and a listing of new quality jobs employees, which includes the name of the employee, the last four digits of the employee's social security number, wages, and any other information that the Commissioner may request, with the taxpayer's Georgia income tax return. A software program's Form IT-QJ that is electronically filed with the Georgia income tax return in the manner specified by the Department satisfies this requirement.
(b) Withholding tax. A taxpayer may claim any excess quality jobs tax credit against its withholding tax liability. The withholding tax benefit may only be applied against the withholding tax account used by the taxpayer for payroll purposes. Unless an election is made pursuant to subparagraph (2)(h) of this regulation, in the event the entity that earned the credit is a single member limited liability company that is disregarded for income tax purposes, the withholding tax benefit may only be applied against the withholding tax liability that is attributable to wages paid by the single member limited liability company. A taxpayer must notify the commissioner each year of their irrevocable election to take all or a part of the credit against the quarterly or monthly withholding tax payments for such taxpayer. When this election is made, the excess quality jobs tax credit will not pass through to the shareholders, partners, or members of the taxpayer if the taxpayer is a pass-through entity.
1. Notice of Intent. To claim any excess tax credit not used on the income tax return against the taxpayer's withholding tax liability, the taxpayer must file Revenue Form IT-WH through the Georgia Tax Center within thirty (30) days after the due date of the Georgia income tax return (including extensions) or within thirty (30) days after the filing of a timely filed Georgia income tax return, whichever occurs first. Failure to file this form as provided in this subparagraph will result in disallowance of the withholding tax benefit. However, in the case of a credit which is earned in more than one taxable year, the election to claim the withholding credit will be available for the credit earned in such subsequent year. If an election is made pursuant to subparagraph (2)(h) of this regulation, the taxpayer shall each year include an attachment showing the amounts they want to use against the withholding liabilities of the taxpayer and each of its qualifying disregarded entities.
2. Review Period. The Department of Revenue has one hundred twenty (120) days from the date the applicable Form IT-WH under subparagraph (7)(b)1. of this regulation is received to review the credit and make a determination of the amount eligible to be used against withholding tax.
3. Letter of Eligibility. Once the review is completed, a letter will be sent to the taxpayer stating the tax credit amount which may be applied against withholding and when the taxpayer may begin to claim the tax credit against withholding tax. The Department of Revenue shall treat this amount as a credit against future withholding tax payments and will not refund any previous withholding payments.
(8) Subsequent seven-year job creation period. For taxable years beginning on or after January 1, 2017, a taxpayer may create a subsequent seven-year job creation period for a new qualified project in Georgia. In order to create the subsequent seven-year job creation period, the taxpayer must complete the creation of a qualified project in a taxable year beginning on or after January 1, 2017 and create 50 or more new quality jobs above its single previous high yearly average number of new quality jobs during any prior seven-year job creation period, at the site or sites of the qualified project or the facility or facilities resulting therefrom. A subsequent seven-year job creation period is subject to all the requirements of O.C.G.A. § 48-7-40.17 and this regulation.
(a) A taxpayer that begins a subsequent seven-year job creation period must notify the Department by completing the applicable sections regarding a subsequent seven-year job creation period on Form IT-QJ.
(b) If a taxpayer begins a subsequent seven-year job creation period, existing new quality jobs generated under previous seven-year job creation periods shall continue to be eligible for the quality jobs tax credit. New quality jobs created under a subsequent seven-year job creation period shall count toward the subsequent period. No new quality jobs may be created under previous periods of eligibility after a subsequent seven-year job creation period of eligibility has begun. New quality jobs created in a subsequent seven-year job creation period shall not be counted as additional new quality jobs under a previous seven-year job creation period. A taxpayer must maintain the number of new quality jobs created in previous seven-year job creation periods in order to claim new quality jobs in subsequent seven-year job creation periods. Therefore, to determine the number of new quality jobs in a particular year that are attributable to each seven-year job creation period, the taxpayer shall begin with the first seven-year job creation period and attribute to it new quality jobs up to the single high yearly average number of new quality jobs for that seven-year job creation period. Continue in that manner by attributing the remainder of new quality jobs to each subsequent seven-year job creation period from the oldest to the newest seven-year job creation period, up to the single high yearly average number of new quality jobs for each seven-year job creation period. The remainder of new quality jobs after all previous seven-year creation periods have been thus attributed shall be attributed to the most recent seven-year job creation period.
(c) A taxpayer may create more than one subsequent seven-year job creation period.
(d) If at the time a taxpayer begins a subsequent seven-year job creation period, the taxpayer had a year or years in the prior seven-year job creation period where the number of new quality jobs were below the single high yearly average number of new quality jobs, the taxpayer shall be allowed to make an irrevocable election to use the average number of new quality jobs for the completed years in the prior seven-year job creation period instead of the single high yearly average number of new quality jobs for all purposes under paragraph (8) of this regulation. Such election must be made on the initial qualifying return (on Form IT-QJ) or within one year of the earlier of the date the initial qualifying return was filed or the date such return was due, including extensions. If such election is made, the number of new quality jobs in the years subsequent to the completed years for the prior seven-year job creation period shall be deemed to not exceed the average number of new quality jobs for the completed years in the prior seven-year job creation period. New quality jobs over such average number shall be attributed to the subsequent seven-year job creation period as provided in paragraph (8) of this regulation.
(e) For purposes of computing the credit amount per new quality job as provided in paragraph (5) of this regulation, the taxpayer shall compute the average weekly wage for all new quality jobs including those in any prior seven-year job creation period.
(f) Form IT-QJ includes an example of how to attribute new quality jobs when a taxpayer begins a subsequent seven-year job creation period.
(9) Carry forward. Any quality jobs tax credit which is claimed but not used in a taxable year may be carried forward for 10 years from the close of the taxable year in which the new quality jobs were created. For example, quality job tax credits created by an employment increase in year one, but not used in year one, may be carried forward to years two through eleven.
(10) Pass-through entities. When the taxpayer is a pass-through entity, and has no income tax liability of its own, the tax credits will pass to its members, shareholders, or partners based on the year ending profit/loss percentage and the limitations of this regulation. The credit forms will initially be filed with the tax return of the taxpayer to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The shareholders, members, or partners may not claim any excess quality jobs tax credit against their withholding tax liabilities. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2010. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2010 tax year.
(11) No waiver for a job already located in Georgia. Since the definition of new quality job in O.C.G.A. § 48-7-40.17 requires that the job not be a job that is or was already located in Georgia, regardless of which taxpayer the individual performed services for, the Commissioner has no authority to grant a waiver of this requirement.

Rule 560-7-8-.52 Qualified Investor Tax Credit

(1) Purpose. This regulation provides guidance concerning the implementation and administration of the tax credit under O.C.G.A. § 48-7-40.30.
(2) Definitions. As used in this regulation:
(a) Headquarters. The term "headquarters" means the principal central administrative office of a business located in this state which conducts significant operations of such business.
(b) Pass-Through Entity. The term "pass-through entity" means a partnership, an S-corporation, or a limited liability company taxed as a partnership.
(c) Professional Services. The term "professional services" means those services specified in paragraph (2) of O.C.G.A. § 14-7-2 or any service which requires as a condition precedent to the rendering of such service the obtaining of a license from a state licensing board under Title 43 of the O.C.G.A.
(d) Qualified Business. The term "qualified business" means a business that:
1. Is either a corporation, limited liability company, or a general or limited partnership located in this state;
2. Was organized no more than three years before the qualified investment was made;
3. Has its headquarters located in this state at the time the investment was made and has maintained such headquarters for the entire time the qualified business benefited from the tax credit under O.C.G.A. § 48-7-40.30.
4. Employs 20 or fewer people in this state at the time it is registered as a qualified business;
5. Has had in any complete fiscal year before registration gross annual revenue as determined in accordance with the Internal Revenue Code of $500,000.00 or less on a consolidated basis;
6. Has not obtained during its existence more than $1 million in aggregate gross cash proceeds from the issuance of its equity or debt investments, not including commercial loans from chartered banking or savings and loan institutions;
7. Has not utilized the tax credit under O.C.G.A. § 48-7-40.26;
8. Is primarily engaged in manufacturing, processing, online and digital warehousing, online and digital wholesaling, software development, information technology services, or research and development or is a business providing services other than those described in subparagraph (2)(d)9. of this regulation; and
9. Does not substantially engage in any of the following:
(i) Retail sales;
(ii) Real estate or construction;
(iii) Professional services;
(iv) Gambling;
(v) Natural resource extraction;
(vi) Financial, brokerage, or investment activities or insurance; or
(vii) Entertainment, amusement, recreation, or athletic or fitness activity for which an admission or membership is charged.
(viii) A business shall be substantially engaged in one of the above activities if its gross revenue from such activity exceeds 25 percent of its gross revenues in any fiscal year or it is established pursuant to its articles of incorporation, articles of organization, operating agreement or similar organizational documents to engage in such activity as one of its primary purposes.
(e) Qualified Investment. The term "qualified investment" means an investment by a qualified investor of cash in a qualified business for common or preferred stock or an equity interest or a purchase for cash of qualified subordinated debt in a qualified business; provided, however, that funds constituting a qualified investment cannot have been raised or be raised as a result of other tax incentive programs. Furthermore, no investment of common or preferred stock or an equity interest or purchase of subordinated debt shall qualify as a qualified investment if a broker fee or commission or a similar remuneration is paid or given directly or indirectly for soliciting such investment or purchase.
(f) Qualified Investor. The term "qualified investor" means an accredited investor as that term is defined by the United States Securities and Exchange Commission who is:
1. An individual person who is a resident of this state or a nonresident who is obligated to pay taxes imposed by O.C.G.A. § 48-7-20; or
2. A pass-through entity, owned by individual persons, which is formed for investment purposes, has no business operations, has committed capital under management of equal to or less than $5 million, and is not capitalized with funds raised or pooled through private placement memoranda directed to institutional investors. A venture capital fund or commodity fund with institutional investors or a hedge fund shall not qualify as a qualified investor.
(g) Qualified Subordinated Debt. The term "qualified subordinated debt" means indebtedness that is not secured, that may or may not be convertible into common or preferred stock or other equity interest, and that is subordinated in payment to all other indebtedness of the qualified business issued or to be issued for money borrowed and no part of which has a maturity date less than five years after the date such indebtedness was purchased.
(3) Registration. A qualified business must electronically register with the Commissioner by electronically submitting Form IT-QBR through the Georgia Tax Center; registration shall constitute certification by the Commissioner for 12 months beginning on the date of the Commissioner's approval. The Department will not process any Form IT-QBR for registration that is submitted or filed in any other manner. A business shall be permitted to renew its registration with the Commissioner so long as at the time of renewal, the business remains a qualified business. In order to be certified, the qualified business shall provide the Commissioner any information required by the Commissioner.
(a) Registration Conditions and Limitations. The registration of a business as a qualified business shall be subject to the following:
1. If the Commissioner finds that any of the information contained in Form IT-QBR is false, the Commissioner shall revoke the registration of such business. The Commissioner shall not revoke the registration of a business solely because it ceases business operations for an indefinite period of time, as long as the business renews its registration;
2. Registration as a qualified business may not be sold or otherwise transferred, except that, if a qualified business enters into a merger, conversion, consolidation or other similar transaction with another business and the surviving company would otherwise meet the criteria for being a qualified business, the surviving company retains the registration for the 12 month registration period without further application to the Commissioner. In such a case, the surviving company which constitutes the qualified business must provide the Commissioner with written notice of the merger, conversion, consolidation, or similar transaction and such other information as required by the Commissioner.
(4) Credit Amount. A qualified investor that makes a qualified investment directly in a qualified business in calendar year 2011, 2012, 2013, 2014, 2015, 2016, 2017, or 2018 shall be allowed a tax credit of 35 percent of the amount invested commencing on January 1 of the second year following the year in which the qualified investment was made.
(5) Per Individual Credit Limitation. The credit amount allowed under paragraph (4) of this regulation shall be further limited for each individual, for one or more qualified investments whether made directly or by a pass-through entity, for a taxable year and shall not exceed $50,000.00.
(6) Credit Cap. In no event shall the total amount of tax credits allowed under O.C.G.A. § 48-7-40.30 exceed the following amounts:
(a) For investments made in calendar year 2011 and claimed and allowed in taxable year 2013, $10 million;
(b) For investments made in calendar year 2012 and claimed and allowed in taxable year 2014, $10 million;
(c) For investments made in calendar year 2013 and claimed and allowed in taxable year 2015, $10 million;
(d) For investments made in calendar year 2014 and claimed and allowed in taxable year 2016, $5 million;
(e) For investments made in calendar year 2015 and claimed and allowed in taxable year 2017, $5 million;
(f) For investments made in calendar year 2016 and claimed and allowed in taxable year 2018, $5 million;
(g) For investments made in calendar year 2017 and claimed and allowed in taxable year 2019, $5 million; and
(h) For investments made in calendar year 2018 and claimed and allowed in taxable year 2020, $5 million.
(7) Claiming the Credit. Any qualified investor seeking to claim the tax credit under O.C.G.A. § 48-7-40.30, must submit the appropriate forms to the Department as provided in this paragraph.
(a) Application. A qualified investor seeking to claim the tax credit under O.C.G.A. § 48-7-40.30 shall electronically submit Form IT-QI-AP for tentative approval through the Georgia Tax Center between September 1 and October 31 of the year for which the tax credit is claimed and allowed. The Department will not preapprove any qualified investor tax credit where Form IT-QI-AP is submitted or filed in any other manner.
(b) Notification. The Department will notify each qualified investor of the tax credits, tentatively approved and allocated to such qualified investor by December 31 of the year in which the application was submitted.
(c) Allocation of Tax Credit. In the event the credit amounts on applications filed with the Commissioner exceed the maximum aggregate limit of tax credits under paragraph (6) of this regulation, then the tax credits shall be allocated among the qualified investors who filed a timely application through the Georgia Tax Center on a pro rata basis based upon the amounts otherwise allowed under O.C.G.A. § 48-7-40.30 and this regulation.
1. A qualified investor claiming the tax credit under O.C.G.A. § 48-7-40.30 must attach an approved Form IT-QI-AP and Form IT-QI to its Georgia income tax return for each year in which the credit is claimed.
2. In no event shall the amount of credit claimed by an individual for a taxable year exceed such individual's Georgia net income tax liability after all other credits have been applied.
3. In the event it is determined that the qualified investor has not met all the requirements of O.C.G.A. § 48-7-40.30 and this regulation, then the amount of credits shall not be tentatively approved or the tentatively approved credits shall be retroactively denied. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been claimed.
(8) E-Filing Attachment Requirements. If a taxpayer claiming the credit electronically files their tax return, the approved Form IT-QI-AP shall be required to be attached to the return only if the Internal Revenue Service allows such attachments when the data is transmitted to the Department. In the event the taxpayer files an electronic return and such information is not attached because the Internal Revenue Service does not, at the time of such electronic filing, allow electronic attachments to the Georgia return, such information shall be maintained by the taxpayer and made available upon request by the Commissioner.
(9) Carry Forward. Any credit which is claimed but not used in a taxable year shall be allowed to be carried forward for five years from the close of the taxable year in which the qualified investment was made. However, any amount in excess of the credit amount limits in paragraphs (4) and (5) of this regulation shall not be eligible for carryover to the qualified investor's succeeding years' tax liability nor shall such excess amount be claimed by or reallocated to any other taxpayer.
(10) Pass-Through Entities. When the qualified investor is a pass-through entity, and has no income tax liability of its own, the tax credit will pass to its individual members, shareholders, or partners in the same manner as they would account for their proportionate shares of income or loss from such entities. The credit forms will initially be filed with the tax return of the pass-through entity to establish the amount of the credit available for pass through. The credit will then pass through to its individual shareholders, members, or partners to be applied against the tax liability on their income tax returns. The credits are available for use as a credit by the individual shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2013. The partnership passes the credit to a calendar year partner. The credit is available for use by the individual partner beginning with the calendar 2013 tax year.
(11) Qualified Investor's Basis. The qualified investor's basis in the common or preferred stock, equity interest, or subordinated debt acquired as a result of the qualified investment shall be reduced by the amount of credit claimed by the qualified investor.
(12) Qualified Investor Tax Credit Not Transferrable. The tax credit under O.C.G.A. § 48-7-40.30 is not transferrable by the qualified investor except to the heirs and legatees of the qualified investor upon his or her death and to his or her spouse upon incident of divorce.
(13) Recapture. Any credit claimed under O.C.G.A. § 48-7-40.30 shall be recaptured if any of the following occur:
(a) Within two years after the qualified investment was made, the qualified investor transfers any of the securities or subordinated debt received in the qualified investment to another person or entity, other than a transfer resulting from one of the following:
1. The death of the qualified investor;
2. A transfer to the spouse of the qualified investor upon incident of divorce; or
3. A merger, conversion, consolidation, sale of the qualified business' assets, or similar transaction requiring approval by the owners of the qualified business under applicable law, to the extent the qualified investor does not receive cash or tangible property in such merger, conversion, consolidation, sale, or other similar transaction;
(b) Except as provided in subparagraph (13)(a) of this regulation, within five years after the qualified investment was made, the qualified business makes a redemption with respect to the securities received or pays any principal of the subordinated debt; or
(c) Within two years after the qualified investment was made, the qualified investor participates in the operation of a qualified business, or the qualified investor's spouse, parent, sibling, or child, or a business controlled by any of these individuals, provides services of any nature to the qualified business for compensation, whether as an employee, a contractor, or otherwise. However, a person who provides uncompensated professional advice to a qualified business whether as an officer, a member of the board of directors or managers or otherwise or participates in a stock or membership option or stock or membership plan, or both, shall be eligible for the credit;
(14) Recapture Amount. The amount of credit recaptured:
(a) Shall apply only to the qualified investment in the particular qualified business in which the investment was made; and
(b) Shall be added to the qualified investor's income tax liability for the taxable year in which the recapture occurs.
(15) Qualified Business Ceases Business Operations, Dissolves, or Liquidates. In the event the qualified business ceases business operations, dissolves, or liquidates, the qualified investor may claim either the credit authorized under O.C.G.A. § 48-7-40.30 or any capital loss the qualified investor otherwise would be able to claim regarding that qualified business, but shall not be authorized to claim and be allowed both. If the qualified investor claims a capital loss and has already utilized the credit, the credit shall be recaptured.

Rule 560-7-8-.53 Alternative Fuel Heavy-Duty Vehicle and Alternative Fuel Medium-Duty Vehicle Tax Credits

(1) Purpose. This regulation provides guidance concerning the implementation and administration of the tax credits under O.C.G.A. §§ 48-7-29.18 and 48-7-29.19.
(2) Coordination of Agencies. The Georgia Department of Natural Resources is the state agency responsible for certifying that a vehicle is an alternative fuel heavy-duty vehicle, or an alternative fuel medium-duty vehicle.
(3) Definitions. As used in this regulation, the terms "affiliated entity","alternative fuel","alternative fuel heavy-duty vehicle","alternative fuel medium-duty vehicle","new commercial vehicle", and "taxpayer" shall have the same meaning as in O.C.G.A. § 48-7-29.18.
(4) Credit Amount for Alternative Fuel Heavy-Duty Vehicle. A taxpayer shall be allowed a tax credit for the amount expended on or after July 1, 2015, and before June 30, 2017, to purchase an alternative fuel heavy-duty vehicle not to exceed $20,000.00 per vehicle.
(5) Credit Amount for Alternative Fuel Medium-Duty Vehicle. A taxpayer shall be allowed a tax credit for the amount expended on or after July 1, 2015, and before June 30, 2017, to purchase an alternative fuel medium-duty vehicle not to exceed $12,000.00 per vehicle.
(6) Per Taxpayer or Affiliated Entity of the Taxpayer Credit Limitation and No Carry Forward. The credit amounts allowed under paragraphs (4) and (5) of this regulation shall be further limited for each taxpayer or affiliated entity of the taxpayer for a taxable year and shall not exceed the taxpayer's or affiliated entity's income tax liability or $250,000.00, whichever is less. The amount preapproved for a taxable year for the taxpayer and all of its affiliated entities shall not exceed $250,000.00. No unused portion of the tax credits shall be allowed the taxpayer or an affiliated entity of the taxpayer against succeeding years' tax liability.
(7) Credit Cap. The total amount of tax credits preapproved under both paragraph (4) and (5) of this regulation are limited to the following amounts:
(a) For fiscal year 2016 (July 1, 2015 through June 30, 2016), $2.5 million; and
(b) For fiscal year 2017 (July 1, 2016 through June 30, 2017), $2.5 million.
(8) Preapproval and Claiming the Credit. Any taxpayer seeking preapproval to claim tax credits under paragraphs (4) and (5) of this regulation, must submit the appropriate forms to the Department through the Georgia Tax Center as provided in this paragraph. Before submitting an application to the Department of Revenue, the taxpayer shall have completed the purchase and shall have registered the qualified vehicle or vehicles in Georgia. The taxpayer must apply for preapproval for the fiscal year in which the purchase of the qualified vehicle is completed.
(a) Application. A taxpayer seeking preapproval to claim the tax credits under paragraphs (4) and (5) of this regulation must electronically submit Form IT-AFV-AP and certification from the Department of Natural Resources for approval through the Georgia Tax Center. The required sworn affidavit under O.C.G.A. § 48-7-29.19(a)(2) is a part of Form IT-AFV-AP and therefore is not submitted separately.
(b) Notification. The Department will notify each taxpayer of the tax credits preapproved and allocated to such taxpayer, within sixty (60) days from the date the Form IT-AFV-AP was submitted through the Georgia Tax Center.
(c) Allocation of Tax Credit. The Commissioner shall allow the tax credits under paragraphs (4) and (5) of this regulation on a first-come, first-served basis. The date the Form IT-AFV-AP is electronically submitted shall be used to determine such first-come, first-served basis.
(d) Applications received on the day the maximum credit amount is reached. In the event that the credit amounts on applications received by the Commissioner exceed the maximum aggregate limits in paragraph (7) of this regulation, then the tax credits shall be allocated among the taxpayers who submitted Form IT-AFV-AP on the day the maximum aggregate limit was exceeded on a pro rata basis based upon amounts otherwise allowed under O.C.G.A. §§ 48-7-29.18, 48-7-29.19, and this regulation. Only credit amounts on applications received on the day the maximum aggregate limits were exceeded will be allocated on a pro rata basis.
(e) Once the fiscal year preapproval limit is reached for a fiscal year, taxpayers shall no longer be eligible for a credit under O.C.G.A. §§ 48-7-29.18 and 48-7-29.19, for any qualified vehicle(s) for which the purchase was completed during such fiscal year. If any Form IT-AFV-AP is received after the fiscal year limit has been reached, then it shall be denied and not be reconsidered for preapproval at any later date.
(f) Example. A taxpayer makes a payment in April of 2015 on an alternative fuel heavy-duty vehicle or an alternative fuel medium-duty vehicle. On July 3, 2015, the taxpayer makes the final payment and completes the purchase of the vehicle. The taxpayer registers the vehicle in Georgia and receives a certification from the Georgia Department of Natural Resources. The taxpayer can apply for preapproval for this qualified vehicle for fiscal year 2016 and the entire cost of the vehicle is eligible for the tax credit for fiscal year 2016. This vehicle is not eligible for the tax credit for fiscal year 2017.
(g) A taxpayer claiming the tax credits under paragraphs (4) and (5) of this regulation must attach an approved Form IT-AFV-AP and Form IT-AFV to its Georgia income tax return for each year in which the credit is claimed.
(h) The tax credits under paragraphs (4) and (5) of this regulation shall not apply to any vehicle for which the taxpayer or an affiliated entity of the taxpayer has applied for and received a tax credit under O.C.G.A. § 48-7-40.16.
(i) In the event it is determined that the taxpayer has not met all the requirements of O.C.G.A. §§ 48-7-29.18 and 48-7-29.19 and this regulation, then the amount of credits shall not be approved or the approved credits shall be retroactively denied. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been claimed.
(9) E-Filing Attachment Requirements. If a taxpayer claiming the credit electronically files their tax return, the Form IT-AFV-AP shall be required to be attached to the return only if the Internal Revenue Service allows such attachments when the data is transmitted to the Department. In the event the taxpayer files an electronic return and such information is not attached because the Internal Revenue Service does not, at the time of such electronic filing, allow electronic attachments to the Georgia return, such information shall be maintained by the taxpayer and made available upon request by the Commissioner.
(10) Pass-Through Entities. When the taxpayer is a pass-through entity, and has no income tax liability of its own, the tax credit will pass to its individual members, shareholders, or partners based on their year ending profit/loss percentage. The credit forms will initially be filed with the tax return of the pass-through entity to establish the amount of the credit available for pass through. The credit will then pass through to its individual shareholders, members, or partners to be applied against the tax liability on their income tax returns. The credits are available for use as a credit by the individual shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2016. The partnership passes the credit to a calendar year partner. The credit is available for use by the individual partner beginning with the calendar 2016 tax year.
(11) Recapture. Any credit claimed under O.C.G.A. §§ 48-7-29.18 and 48-7-29.19 shall be recaptured if any of the following occur during the five-year period following the application date of Form IT-AFV-AP:
(a) Within each year of the five-year period, the vehicle does not accumulate at least 75 percent of its mileage in Georgia; or
(b) The vehicle does not remain registered in Georgia during the five-year period.
(12) Recapture Amount. The amount of credit recaptured shall be added to the taxpayer's income tax liability for the taxable year in which the recapture event occurs even if the statute of limitations of O.C.G.A. § 48-7-82 has expired for the year the credit was claimed.
(13) Effective Date. This regulation shall be applicable to taxable years beginning on or after January 1, 2015.

Rule 560-7-8-.54 Income Tax Credit Cap Approval or Preapproval Periods

(1) Purpose. This regulation provides guidance concerning the approval or preapproval periods for income tax credits under Chapter 7 of Title 48 of the Georgia Code.
(2) Beginning of an Approval or Preapproval Period. Pursuant to O.C.G.A. § 48-2-39, when the approval or preapproval period for an income tax credit under Chapter 7 of Title 48 of the Georgia Code begins on a Saturday, Sunday, legal holiday, or day on which the Federal Reserve Bank is closed, such beginning date shall be postponed until the first day following which is not a Saturday, Sunday, legal holiday, or day on which the Federal Reserve Bank is closed. When an approval or preapproval is requested through the Department's Georgia Tax Center, the request may be submitted beginning at 8:00AM on such following day.
(3) First-Come, First-Served Basis. When an income tax credit statute or regulation provides that an income tax credit shall be allowed on a first-come, first-served basis, any returns or applications submitted on a Saturday, Sunday, legal holiday, or day on which the Federal Reserve Bank is closed, shall be considered to have been submitted on the first day following which is not a Saturday, Sunday, legal holiday, or day on which the Federal Reserve Bank is closed. This paragraph shall only apply to a return or application submitted on a day following the beginning date of the approval or preapproval period as provided by paragraph (2) of this regulation.
(4) Proration on the Day the Credit Cap is Reached. When an income tax credit statute or regulation provides that returns or applications received on the day that an income tax credit cap is reached shall be prorated based on the returns or applications received on such day, any returns or applications submitted on a Saturday, Sunday, legal holiday, or day on which the Federal Reserve Bank is closed, shall be considered to have been submitted on the first day following which is not a Saturday, Sunday, legal holiday, or day on which the Federal Reserve Bank is closed. This paragraph shall only apply to a return or application submitted on a day following the beginning date of the approval or preapproval period as provided by paragraph (2) of this regulation.
(5) Effective Date. This regulation shall be applicable to any income tax credit approval or preapproval period beginning after October 31, 2015.

Rule 560-7-8-.55 Basic Skills Education Tax Credit

(1) Purpose. This regulation provides guidance concerning the implementation and administration of the tax credit under O.C.G.A. § 48-7-41.
(2) Coordination of Agencies. The Technical College System of Georgia, Office of Adult Education is the state agency responsible for certifying that the employer has met the requirements of O.C.G.A. § 48-7-41.
(3) Definitions. As used in this regulation, the terms "adult basic skills education","approved adult basic skills education program","basic skills education test","employee", "employer","employer provided", and "employer sponsored" shall have the same meaning as in O.C.G.A. § 48-7-41.
(4) Credit Amount. An employer who provides or sponsors an approved adult basic skills education program shall be allowed a tax credit in the amount of:
(a) Four hundred dollars for each employee who passes the basic skills education test that was paid for by the employer in a taxable year; or
(b) Twelve hundred dollars for each employee who successfully completes an approved adult basic skills education program consisting of at least 40 hours of training while the employee is being compensated at his or her normal rate of pay, and passes the basic skills education test that was paid for by the employer in a taxable year.
(c) An employee can only be included in subparagraph (a) or subparagraph (b); the same employee cannot be included in both subparagraphs.
(5) Per Employer Credit Limitation and No Carry Forward. The credit amounts allowed under paragraph(4) of this regulation shall be further limited for each employer and shall not exceed $100,000.00 per calendar year. No unused portion of the tax credits shall be allowed the employer against succeeding years' tax liability.
(6) Credit Cap. The total amount of tax credits preapproved under paragraph (7) of this regulation shall not exceed $1 million per calendar year.
(7) Preapproval and Claiming the Credit. Before requesting preapproval from the Department, the employer should apply for pre-certification of the employer's program from the Technical College System of Georgia, Office of Adult Education to ensure that the employer's program meets the requirements of O.C.G.A. § 48-7-41. Any employer seeking preapproval to claim tax credits under paragraph (4) of this regulation, must submit the appropriate forms to the Department through the Georgia Tax Center as provided in this paragraph.
(a) Application. An employer seeking preapproval to claim the tax credits under paragraph (4) of this regulation must electronically submit Form IT-BE-AP through the Georgia Tax Center. An employer may request preapproval from the Department before meeting the requirements of paragraph (4) of this regulation, such employer must estimate their credit amounts on Form IT-BE-AP. The amount of tax credit claimed by the employer on the employer's applicable Georgia income tax return must be based on the actual number of employees that pass the adult basic skills education test or the actual number of employees that complete an approved adult basic skills education program and pass the basic skills education test and cannot exceed the amount preapproved. If the employer is preapproved for an amount that exceeds the amount that is calculated using the actual numbers when the return is filed, the excess preapproved amount cannot be claimed by the employer or utilized in any manner.
(b) Notification. The Department will notify each employer and the Office of Adult Education of the tax credits preapproved or denied to such employer, within forty-five (45) days from the date the Form IT-BE-AP was submitted through the Georgia Tax Center.
(c) Allocation of Tax Credit. The Commissioner shall allow the tax credits under paragraph (4) of this regulation on a first-come, first-served basis. The date the Form IT-BE-AP is electronically submitted shall be used to determine such first-come, first-served basis.
(d) Applications received on the day the maximum credit amount is reached. In the event that the credit amounts on applications received by the Commissioner exceed the maximum aggregate limit in paragraph (6) of this regulation, then the tax credits shall be allocated among the employers who submitted Form IT-BE-AP on the day the maximum aggregate limit was exceeded on a pro rata basis based upon amounts otherwise allowed under O.C.G.A. § 48-7-41, and this regulation. Only credit amounts on applications received on the day the maximum aggregate limit was exceeded will be allocated on a pro rata basis.
(e) Once the credit cap is reached for a calendar year, employers who meet the requirements of paragraph (4) of this regulation during such calendar year shall no longer be eligible for a credit under O.C.G.A. § 48-7-41. If any Form IT-BE-AP is received after the calendar year preapproval limit has been reached, then it shall be denied and not be reconsidered for preapproval at any later date.
(f) After receiving preapproval from the Department and after the requirements of paragraph (4) of this regulation are complete, the employer must receive final certification from the Technical College System of Georgia, Office of Adult Education. An employer claiming the tax credits under paragraph (4) of this regulation must attach an approved Form IT-BE-AP, Form IT-BE, and final certification from the Technical College System of Georgia, Office of Adult Education to its Georgia income tax return for each year in which the credit is claimed.
(g) In the event it is determined that the employer has not met all the requirements of O.C.G.A. § 48-7-41 and this regulation, then the amount of credits shall not be approved or the approved credits shall be retroactively denied. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been claimed.
(h) No employer shall receive a credit if the employer requires that the employee reimburse or pay the employer for the cost of attending the adult basic skills education program or taking the basic skills education test.
(8) E-Filing Attachment Requirements. If an employer claiming the credit electronically files their tax return, the Form IT-BE-AP and final certification from the Technical College System of Georgia shall be required to be attached to the return only if the Internal Revenue Service allows such attachments when the data is transmitted to the Department. In the event the employer files an electronic return and such information is not attached because the Internal Revenue Service does not, at the time of such electronic filing, allow electronic attachments to the Georgia return, such information shall be maintained by the employer and made available upon request by the Commissioner.
(9) Pass-Through Entities. When the employer is a pass-through entity, and has no income tax liability of its own, the tax credit will pass to its individual members, shareholders, or partners based on their year ending profit/loss percentage. The credit forms will initially be filed with the tax return of the pass-through entity to establish the amount of the credit available for pass through. The credit will then pass through to its individual shareholders, members, or partners to be applied against the tax liability on their income tax returns. The credits are available for use as a credit by the individual shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2016. The partnership passes the credit to a calendar year partner. The credit is available for use by the individual partner beginning with the calendar 2016 tax year.
(10) Sunset Date. O.C.G.A. § 48-7-41, the basic skills education tax credit, shall be repealed on January 1, 2020.
(11) Effective Date. This regulation shall be applicable to taxable years beginning on or after January 1, 2016.

Rule 560-7-8-.56 Historic Rehabilitation Tax Credit

(1) Purpose. This regulation provides guidance concerning the implementation and administration of the tax credits under O.C.G.A. § 48-7-29.8.
(2) Coordination of Agencies. The Georgia Department of Community Affairs is the state agency responsible for certifying that the rehabilitation meets the requirements of O.C.G.A. § 48-7-29.8.
(3) Definitions. As used in this regulation, the terms "certified rehabilitation", "certified structure", "historic home", "qualified rehabilitation expenditure", "substantial rehabilitation", and "target area" shall have the same meaning as in O.C.G.A. § 48-7-29.8. As used in this regulation, the terms "full-time employee" and "full-time permanent job" means a person who works a job that requires 30 or more hours per week.
(4) Historic Rehabilitation Tax Credit for a Historic Home. A taxpayer shall be allowed a tax credit equal to 25 percent of the qualified rehabilitation expenditures for the certified rehabilitation of a historic home in the taxable year in which the certified rehabilitation is placed in service; except that in the case of a historic home located within a target area, an additional credit equal to 5 percent of the qualified rehabilitation expenditures shall be allowed.
(a) Credit limitation. The amount of historic rehabilitation tax credit for a historic home shall not exceed $100,000.00 in any 120 month period.
(b) Claiming the Historic Rehabilitation Tax Credit for a Historic Home. For a taxpayer to claim the historic rehabilitation tax credit for a historic home, the taxpayer must submit with the taxpayer's Georgia income tax return Form IT-RHC, the property tax bill for the year immediately before the beginning of the 24 month (or 60 month) period, the property tax bill for the year immediately after the beginning of the 24 month (or 60 month) period, and their completed final certification from the Georgia Department of Community Affairs.
(c) Carry Forward. Any unused historic rehabilitation tax credit for a historic home may be carried forward for ten years after the close of the taxable year in which the certified rehabilitation was completed.
(d) Sale of the Historic Home. Except as provided in subparagraph (4)(e) of this regulation, in the event a historic rehabilitation tax credit for a historic home is claimed and allowed the taxpayer, upon the sale or transfer of the historic home, the taxpayer shall be authorized to transfer the remaining unused amount of such historic rehabilitation tax credit for a historic home to the purchaser of such historic home. If a historic home for which a certified rehabilitation has been completed by a nonprofit corporation is sold or transferred, the full amount of the credit to which the nonprofit corporation would be entitled if taxable shall be transferred to the purchaser or transferee at the time of the sale or transfer.
1. Such purchaser shall be subject to the limitations of this paragraph and O.C.G.A. § 48-7-29.8, and shall file with the purchaser's tax return a copy of the final certification from the Georgia Department of Community Affairs and a copy of the form evidencing the transfer of the tax credit.
2. Such purchaser shall be entitled to rely in good faith on the information contained in and used in connection with obtaining the final certification of the credit including without limitation, the amount of the qualified rehabilitation expenditures.
(e) Recapture of the Historic Rehabilitation Tax Credit for a Historic Home. If an owner other than a nonprofit corporation sells a historic home within three years of receiving the credit, the seller shall recapture the credit to the Department as follows:
1. If the property is sold within one year of receiving the credit, the recapture amount will equal the lesser of the credit or the net profit of the sale;
2. If the property is sold within two years of receiving the credit, the recapture amount will equal the lesser of two-thirds of the credit or the net profit of the sale; or
3. If the property is sold within three years of receiving the credit, the recapture amount will equal the lesser of one-third of the credit or the net profit of the sale.
(f) Exception to Recapture Provision. The recapture provisions in subparagraph (4)(e) of this regulation shall not apply to a sale resulting from the death of the owner.
(5) Historic Rehabilitation Tax Credit for Any Other Certified Structure. A taxpayer shall be allowed a tax credit equal to 25 percent of the qualified rehabilitation expenditures for the certified rehabilitation of any other certified structure, other than a historic home, in the taxable year in which the certified rehabilitation is placed in service, except as provided in subparagraph (5)(j) of this regulation and paragraph (6) of this regulation.
(a) Credit limitations. For certified rehabilitations completed before January 1, 2017, the historic rehabilitation tax credit for any other certified structure shall not exceed $300,000 in any 120 month period.
(b) For certified rehabilitations completed on or after January 1, 2017, the maximum credit for any other individual certified structure shall be $5 million per taxable year; except that in the case of a project that creates 200 or more full-time permanent jobs or $5 million in annual payroll within two years of the placed in service date, the maximum credit amount is $10 million for any other individual certified structure. For purposes of this regulation, a full-time permanent job means a person who works a job that requires 30 or more hours per week.
(c) For certified rehabilitations completed on or after January 1, 2017, in no event shall more than one application for any individual certified structure be approved in any 120 month period.
(d) Credit Carry Forward. For certified rehabilitations completed before January 1, 2017, any unused historic rehabilitation tax credit for any other certified structure may be carried forward for ten years after the close of the taxable year in which the certified rehabilitation was completed. For certified rehabilitations completed on or after January 1, 2017, no unused historic rehabilitation tax credit for any other certified structure shall be allowed the taxpayer or the transferee against succeeding years' tax liability.
(e) Credit cap for any other certified structure. For certified rehabilitations completed on or after January 1, 2017, in no event shall historic rehabilitation tax credits for any other certified structure earning more than $300,000 in historic rehabilitation tax credits under subparagraph (5)(b) of this regulation, exceed $25 million per calendar year.
(f) Preapproval. For certified rehabilitations completed on or after January 1, 2017, any taxpayer seeking preapproval to claim the tax credits under subparagraph (5)(b) of this regulation must electronically submit Form IT-RHC-AP, including the information required by subparagraph (5)(f)1. of this regulation, and their precertification from the Georgia Department of Community Affairs through the Georgia Tax Center. The taxpayer must estimate their credit amounts on Form IT-RHC-AP if the certified rehabilitation has not been completed. The amount of tax credit claimed on the taxpayer's applicable Georgia income tax return must be based on the actual amount of the qualified rehabilitation expenditures. If the taxpayer is preapproved for an amount that exceeds the amount that is calculated using the actual amount of the qualified rehabilitation expenditures when the return is filed, the excess preapproved amount cannot be claimed by the taxpayer, nor shall the excess preapproved amount be claimed by, reallocated to, assigned to, or transferred or sold to any other taxpayer. If the taxpayer is a disregarded entity then such information should be submitted in the name of the owner of the disregarded entity.
1. The following information must be submitted with Form IT-RHC-AP:
(i) Documentation to show one of the following:
(I) If the certified structure was purchased by the applicant, a copy of the warranty deed indicating the applicant as the owner of the property; or
(II) If the certified structure is leased by the applicant, documentation showing that the applicant leases the property and showing that the qualified rehabilitation expenditures would not be disqualified by Internal Revenue Code Section 47(c)(2)(B), which disallows expenditures if on the date the rehabilitation is completed, the remaining term of the lease is less than the building's recovery period. This documentation must include a copy of the lease and documentation showing whether the property is residential rental property with a recovery period of 27.5 years or nonresidential real property with a recovery period of 39 years;
(ii) The ownership and or membership of the applicant entity. This documentation must include information regarding each owner or member of the applicant, and, if any owner or member is itself a pass-through entity, information regarding its ownership and or membership. Such information must include the name, federal identification number, ownership percentage, whether or not they are a tax exempt entity, and whether they control the applicant entity;
(iii) Which entities or members of a pass-through entity intend to claim the credit and in what percentage(s);
(iv) The percentage of the subject property that will be used for non-profit purposes, if any;
(v) Whether the applicant or another entity intends to sublease the property to other entities and which entities they intend to sublease to and if such entities are tax exempt entities;
(vi) If the property is being leased, whether or not the owner of the property is a tax exempt entity;
(vii) Whether or not the project qualifies for the Federal Rehabilitation Credit allowed under Internal Revenue Code Section 47; and
(viii) Any other information requested by the Department.
(g) Notification. The Department will notify each taxpayer of the tax credits preapproved and allocated to such taxpayer, within thirty (30) days from the date the fully completed Form IT-RHC-AP and all required supporting documentation was submitted through the Georgia Tax Center.
(h) Allocation of Tax Credit. The Commissioner shall allow the tax credit under subparagraph (5)(b) of this regulation on a first-come, first-served basis. The date the fully completed Form IT-RHC-AP is electronically submitted shall be used to determine such first-come, first-served basis.
(i) Applications received on the day the maximum credit amount is reached. In the event that the credit amounts on applications received by the Commissioner exceed the maximum aggregate limit in subparagraph (5)(e) of this regulation, then the tax credits shall be allocated among the taxpayers who submitted Form IT-RHC-AP on the day the maximum aggregate limit was exceeded on a pro rata basis based upon amounts otherwise allowed under O.C.G.A. § 48-7-29.8 and this regulation. Only credit amounts on applications received on the day the maximum aggregate limit was exceeded will be allocated on a pro rata basis.
(j) Priority for pro-rated applications and applications submitted after a calendar year cap is reached. Any application that is prorated because a calendar year credit cap is reached and any application that is submitted after a calendar year credit cap is reached shall be approved for a subsequent calendar year whose credit cap has not been reached, and shall have priority over any applications with a latter submission date. In such case, the taxpayer shall claim the credit in the taxable year that begins in such subsequent preapproved calendar year or as provided in paragraph (6) of this regulation. If the calendar year credit cap for all subsequent calendar years has been reached then the application shall be denied.
(k) Claiming the Historic Rehabilitation Tax Credit for Any Other Certified Structure. A taxpayer claiming the tax credits under subparagraph (5)(a) of this regulation shall attach to its Georgia income tax return for each year the credit is claimed Form IT-RHC, the property tax bill for the year immediately before the beginning of the 24 month (or 60 month) period, the property tax bill for the year immediately after the beginning of the 24 month (or 60 month) period, and their completed final certification from the Georgia Department of Community Affairs. A taxpayer claiming the tax credits under subparagraph (5)(b) of this regulation must attach to its Georgia income tax return for each year the credit is claimed an approved Form IT-RHC-AP, Form IT-RHC, the property tax bill for the year immediately before the beginning of the 24 month (or 60 month) period, the property tax bill for the year immediately after the beginning of the 24 month (or 60 month) period, and their completed final certification from the Georgia Department of Community Affairs.
(l) In the event it is determined that the taxpayer has not met all the requirements of O.C.G.A. § 48-7-29.8 and this regulation then the amount of credits shall not be approved or the approved credits shall be retroactively denied. The taxpayer shall file amended returns for the taxable year the credit was claimed reducing the credit. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been used by the taxpayer or have been sold or transferred regardless of whether the transferee has used the credit or not.
(m) Pass-through entities. When the taxpayer is a pass-through entity, and has no income tax liability of its own, the historic rehabilitation tax credit for any other certified structure, shall be allocated to the partners, members, or shareholders of that entity in accordance with the provisions of any agreement among the partners, members, or shareholders of that entity and without regard to the ownership interest of the partners, members, or shareholders in the rehabilitated certified structure, provided that the entity or person that claims the credit must be subject to Georgia tax. The credit forms will initially be filed with the tax return of the pass-through entity to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2017. The partnership passes the credit to a calendar year partner. The credit is available for use by the individual partner beginning with the calendar 2017 tax year.
(n) Selling or Transferring the Historic Rehabilitation Tax Credit for Any Other Certified Structure. The taxpayer may sell or transfer in whole or in part any historic rehabilitation tax credit for any other certified structure earned under subparagraph (5)(b) of this regulation that was previously claimed but not used by such taxpayer against its income tax, to another Georgia taxpayer subject to the following conditions:
1. The taxpayer may only make a one-time sale or transfer of historic rehabilitation tax credits for any other certified structure earned in each taxable year. However, the sale or transfer may involve more than one transferee. For example, taxpayer 1 earns a $100,000 credit in year 1. In year 2 they sell $75,000 of the credit to taxpayer 2. In year 3 they are allowed to sell the remaining $25,000 of the credit to taxpayer 3. However, both taxpayer 2 and taxpayer 3 are not allowed to resell the credit since the credit can only be sold one-time.
2. The historic rehabilitation tax credits for any other certified structure may be transferred before the tax return is filed by the taxpayer provided the historic rehabilitation tax credits have been earned. However, the amount transferred cannot exceed the amount of the credit which will be claimed and not used on the income tax return of the transferor. The credit is considered earned when the credit has been preapproved by the Department, the certified rehabilitation has been completed, and the taxpayer has received their completed final certification from the Georgia Department of Community Affairs. Preapproval of the credits by itself does not qualify as earning the credit.
3. The taxpayer and transferee must jointly file Form IT-TRANS "Notice of Tax Credit Transfer" with the Department of Revenue within 30 days of the transfer or sale of the historic rehabilitation tax credit for any other certified structure. Form IT-TRANS must be submitted electronically to the Department of Revenue through the Georgia Tax Center or alternatively as provided in subparagraph (5)(n)3(i) of this regulation. The Department of Revenue will not process any Form IT-TRANS submitted or filed in any other manner. If the taxpayer is a disregarded entity then Form IT-TRANS should be filed in the name of the owner of the disregarded entity but the Form IT-RHC should be in the name of the disregarded entity and attached to the owner's Georgia income tax return.
(i) The web-based portal on the Georgia Tax Center. The taxpayer may provide selective information to a representative for the purpose of allowing the representative to submit Form IT-TRANS on their behalf on the Georgia Tax Center outside of a login. The provision of such information shall authorize the representative to submit such Form IT-TRANS. The representative must provide all information required by the web-based portal on the Georgia Tax Center to submit Form IT-TRANS.
4. The taxpayer must provide all required historic rehabilitation tax credit for any other certified structure detail and transfer information to the Department of Revenue. Failure to do so will result in the historic rehabilitation tax credit for any other certified structure being disallowed until the taxpayer complies with such requirements.
5. The carry forward period of the historic rehabilitation tax credit for any other certified structure for the transferee will be the same as it was for the taxpayer. For certified rehabilitations completed on or after January 1, 2017 no unused historic rehabilitation tax credit for any other certified structure shall be allowed to be carried forward.
(i) Example: Taxpayer sells the historic rehabilitation tax credit for any other certified structure on March 15, 2018. This credit is from a certified rehabilitation that received preapproval from the Department for calendar year 2017 and was placed in service in the taxpayer's calendar 2017 tax year. The transferee is a calendar year taxpayer. The credit may be claimed by the transferee on the calendar 2017 tax year return. This credit cannot be carried forward by the taxpayer or the transferee. This credit can only be utilized in tax year 2017.
6.