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S.A.L.T. Select Developments: Georgia

Baker Donelson's S.A.L.T. Select Developments will identify important state and local tax developments from Georgia.

Overview

State and local taxes impact almost every taxpayer. S.A.L.T developments in any one jurisdiction can be frequent and sometimes confusing. Where multiple jurisdictions are involved, staying current with state and local tax developments can be overwhelming for any taxpayer.

To assist you with staying current on a periodic basis, Baker Donelson's S.A.L.T. Select Developments will identify one or more recent state and local tax developments from Georgia.

October 2020

Updates Reported – On October 7, 2020, and so as to provide additional economic assistance during this pandemic, the Georgia Department of Revenue has issued Notice IT-2020-1. That Notice announced a proposal to adopt Rule 560-7-8-.66 which, if promulgated, would provide an additional $1,250 personal protective equipment manufacturer jobs tax credit for qualifying jobs engaged in manufacturing personal protective equipment in Georgia during the taxable year. The credit appears to be applicable to personal protective equipment manufacturers that qualify for the jobs tax credit under O.C.G.A. Section 48-7-40 or 48-7-40.1 and the applicable regulations associated with that credit. This additional jobs tax credit can be used to offset 100 percent of the manufacturer's Georgia income tax liability derived from operations within Georgia. The qualifying activity of manufacturing personal protective equipment shall be determined on a monthly basis, and that manufacturer must compute a monthly average number of jobs engaged in the qualifying activity in this State. Any job that is included in the jobs tax credit calculation where 50 percent or more of the time is spent on such qualifying activities shall be eligible to be included in the total for the month. Examples are given in the proposed Rule with respect to such computations.

If eligible for this additional jobs tax credit, the manufacturer would claim the additional credit by submitting a Form IT-CA with the manufacturer's Georgia income tax return each year the credit is claimed. Any excess credit may be applied against the manufacturer's withholding tax liability under certain circumstances. A carry-forward of unused credit is available for ten years. Special provisions are provided in the Rule for pass-through entities. This proposed Rule, if promulgated, shall be applicable to tax years beginning on or after January 1, 2020, but shall not be allowed for any jobs created on or after January 1, 2025. A hearing on this proposed Rule is scheduled for November 17, 2020. Written comments on this proposed Rule must be sent to the Department as set forth in the Notice. More information can be found here.

September 2020

Coronavirus Tax Payment and Return Filing Responsibilities (September 30) - Updates Reported: For some years, Georgia has encouraged film production in that State by allowing a credit against Georgia income taxes of 20 percent of certain expenses incurred in film production within Georgia. If the production company could not use the credit, the credit could be sold to a Georgia taxpayer who could use the credit. This sale typically occurs at a discount from face value. Due to perceived abuses, the Georgia Legislature this year passed, and Governor Kemp signed on August 4, 2020, House Bill 1037, which will narrow the types of expenditures for which credits are available and limit the expenses to those incurred in Georgia. In addition, the Bill will require that all expenses for which a credit is available be audited. The audit requirement would be phased in starting in 2021. For 2021, the audit requirement will apply to projects for which the credit sought exceeds $2.5 million. The threshold is reduced to $1.25 million in 2022. The threshold drops to zero in 2023. The audit can be performed either by the Department of Revenue or by a certified public accountant who has met the requirements set by the Department. More information can be found here.

August 2020

Coronavirus Tax Payment and Return Filing Responsibilities (August 20) - Updates Reported: On August 17, 2020, the Georgia Department of Revenue issued an Informational Bulletin entitled Property Tax Appeal Deadline and COVID-19. This Bulletin referenced that the Chief Justice of the Georgia Supreme Court has issued an Order Declaring Statewide Judicial Emergency, which has been extended several times, that modifies various deadlines or other time schedules including an extension of the deadline for filing certain ad valorem tax appeals. The most recent of these extension orders, according to the Bulletin, provided that, for notices of assessment issued between March 14, 2020 and July 13, 2020, the 45-day appeal period began running on July 14, 2020, making the new appeal deadline August 27, 2020. Further, the Bulletin noted that pursuant to Georgia law the Department issues Orders Authorizing Collection after receiving required certifications from County Boards of Assessors; and, in view of this recent Extension Order affecting filing of property tax appeals, the certification regarding properties under appeal and values in dispute should be made after the new appeal deadline of August 27, 2020. More information can be found here.

July 2020

Coronavirus Tax Payment and Return Filing Responsibilities (July 27) - Updates Reported: Georgia, like most states, allows local governmental entities to piggy-back their local sales taxes onto the State tax. When this is done, the State collects both portions and remits to the local government entity its respective portion. When there is an occasion for a taxpayer to claim a refund, the State Department of Revenue determines the validity of the claim for refund and notifies the local government entity that the refund has been approved. In such instances, the State Department of Revenue deducts the refund from future payments otherwise due the local government entity. In some instances, the local government entity may experience a shortfall in budgeted revenue sufficient to cause disruption.

Georgia House Bill 846, recently passed by the Georgia Legislature and signed by the Governor on June 29, 2020, provides that if an approved refund exceeds a certain amount, the Department of Revenue is required to notify the local government, which then has the option to pay its share, with interest, over a period of time equal to the period covered by the refund. More information can be found here.

June 2020

Coronavirus Tax Payment and Return Filing Responsibilities (June 25) - Developments Discussed: Many Georgia counties exempt from property taxes "inventory of finished goods" destined for shipment out of state. Most people would construe the term "inventory" as meaning something the taxpayer holds for sale to others. In a surprising decision, the Georgia Court of Appeals upheld a trial court's decision that self-checkout components that Wal-Mart agreed to purchase from NCR qualified for freeport exemption as constituting "inventory of finished goods."

NCR had gathered the component parts at its facility in Fayette County, Georgia and held them for up to 90 days before shipping them to out-of-state Wal-Mart stores for installation in those stores. By contrast, the same equipment which was destined for installation in Georgia stores was conceded to not qualify for freeport exemption.

The court, relying on the Merriam-Webster Dictionary, held that the self-checkout component parts constituted inventory.

The decision does not discuss why the equipment was considered to be the property of Wal-Mart as it had apparently not left the possession of NCR on January 1 of the year in question. More information can be found here.

Coronavirus Tax Payment and Return Filing Responsibilities (June 2) - Updates Reported: The Georgia Department of Revenue has continued to update its Coronavirus Tax Relief FAQ's with a policy statement on the effect of employees' relocation due to the COVID-19 pandemic.

When employees work from temporary locations, the issue of what state has the jurisdiction to tax earnings associated with that location frequently arises.

The Georgia Department of Revenue has announced that it will not use an employee's relocation that is the direct result of temporary remote work requirements due to the COVID-19 pandemic to establish Georgia nexus or for exceeding the protections provided by PL 86-272 (the long-standing exemption for agents with no authority to bind the principal). The temporary protection extends for periods when: (a) there is an official work from home order issued by a government unit, or (b) pursuant to the order of a physician in relation to the pandemic or due to an actual diagnosis of COVID-19, the employee is working at home, including the subsequent 14-day period to allow for a return to normal work locations.

If an employee who normally works in another state remains in Georgia after the remote work requirements end, the normal rules for determining nexus apply.

In addition, wages paid to a nonresident employee who normally works in Georgia but who is temporarily working in another state due to the COVID-19 emergency are considered Georgia wages and the employer should continue to withhold Georgia income taxes. More information can be found here.

May 2020

Coronavirus Tax Payment and Return Filing Responsibilities (May 8) - Further Updates Reported: The Georgia Department of Revenue announced on April 16, 2020 that the state estimated income tax payments due on June 15, 2020 have been extended to July 15, 2020, as well as any other estimated income tax payments due after April 15, 2020 and before July 15, 2020. The Department had previously announced that the estimated income tax payments due on April 15, 2020 were extended to July 15, 2020. Further, any income tax return and payment due after April 15, 2020, and before July 15, 2020, is also due now on July 15, 2020. The Department stated that this extension adds additional corporate filers, as well as other fiscal year income tax filers, to the relief previously announced. It noted that the statute of limitations to file a refund claim for a previous tax year has been extended to July 15, 2020 with respect to refund claims that would have expired from April 15, 2020 and before July 15, 2020. Also, the Department stated that it has been given a 30-day extension within which it can perform certain time sensitive actions if the last date for the performance of the action is on or after April 15 and before July 15, 2020. More information can be found here.

April 2020

Coronavirus Tax Payment and Return Filing Responsibilities (April 16) - Further Updates Reported: On April 7, 2020, the Commissioner of the Georgia Department of Revenue certified an emergency rule which extends the application deadline for conservation use and forest land property tax breaks to the later of June 1, 2020 or 45 days after the date of the mailing of the notice of assessment. Georgia law allows for certain property tax relief where the property is used either for conservation purposes or forest land protection purposes. This deadline extension was initiated based on the Georgia Governor's March 31 Executive Order focused on providing broader relief for taxpayers impacted by the COVID-19 pandemic. More information can be found here.

Coronavirus Tax Payment and Return Filing Responsibilities (April 3) - Further Updates Reported: The Georgia Department of Revenue has included FAQs on their website which address a number of questions dealing with the extended 2019 filing deadline. That deadline has been extended from the original due date of April 15 to July 15 with respect to Georgia income tax payments and Georgia income tax returns that were due on April 15. The response to one of these questions involves whether the extension also applies to a fiscal year filer where the state income tax return is due on April 15; the response given is "Yes, if your state income tax return for your fiscal year ending during 2019 is due on April 15, your due date is postponed to July 15. This would apply regardless of whether that is the original due date or the due date on extension." More information can be found here.

March 2020

Coronavirus Tax Payment and Return Filing Responsibilities (March 25) - Due Date Changes Reported: On March 23, 2020, the Governor of the State of Georgia announced that the deadline for filing income tax returns in that state would be moved from April 15 to July 15 in accordance with the new federal tax filing deadline. Although anticipated, a formal Executive Order has not yet been published nor has the Georgia Department of Revenue issued as yet a formal notice of this deadline extension. Find more information here.

Coronavirus Tax Payment and Return Filing Responsibilities (March 19) - No Broad Changes Reported: The Georgia Department of Revenue (DOR) website has recently posted a notice stating that "Due to concerns regarding COVID-19, the DOR is encouraging all taxpayers to conduct their business with the DOR through online services. The DOR offers a number of motor vehicle and tax-related services online, without the need of in-person interactions." Find more information here. No further specifics at this time. 

Tax Incentives: The Georgia Senate has unanimously passed SB302, the "Tax Credit Return on Investment Act of 2020." This would allow the Chair of the House Ways & Means Committee and the Senate Finance Committee to request economic analyses detailing the return on investment of tax incentives offered by the State. The purpose of this is to periodically evaluate all state tax incentives in order to determine if the cost to the state is worth the benefit. On the same subject, HB 1037 would require that every film, television and media production that qualifies for the film tax credit be audited. This later bill is responsive to recent state audits that raise concern over whether some film credits used by Georgia taxpayers are proper. This bill would also expand the credit to major sporting events (i.e., the Super Bowl and World Cup).

Click here for the full bill.

February 2020

Sales and Use Tax: On January 30, 2020, Georgia Governor Brian Kemp signed into law an amendment to the state's sales tax laws requiring marketplace facilitators to collect and remit the tax, effective April 1, 2020. Under this new law, a marketplace facilitator must collect the tax if it makes at least $100,000 in Georgia taxable sales of property or services in the previous or current calendar year, calculating that $100,000 threshold using not only the facilitator's sales of its own property and services, but also sales it makes on behalf of all its marketplace sellers. Franchisors are not considered as marketplace facilitators if certain conditions are satisfied, including the conditions that such franchisor and all of its franchisees combined made annual gross sales in the U.S. of at least $500 million in the aggregate and the franchisee holds a valid certificate of registration with the Georgia Department of Revenue. In addition, large marketplace sellers are not subject to the facilitator requirements under certain conditions, including that gross sales in Georgia must be at least $500 million and the seller must hold a valid certificate of registration with the Department. More information regarding this new law can be found here.

November 2019

Income Tax Proposed Amendments to Rules for Quality Jobs and Manufacturer's and Telecommunications Investment Tax Credits: The Georgia Department of Revenue has published proposed amendments to Rule 560-7-8-.51, "Quality Jobs Tax Credit" and to Rule 560-7-8-.37, "Manufacturer's and Telecommunications Investment Tax Credit." Comments to the Department of Revenue on the proposed amendments to the Quality Jobs Tax Credit are due on or before 10:00 a.m., December 4, 2019, and comments on the proposed amendments to the Manufacturer's and Telecommunications Investment Tax Credit are due on or before 10:00 a.m., December 19, 2019.

October 2019

Taxation of Nonresident Trust Fiduciaries: The Georgia Department of Revenue released Policy Bulletin IT-2019-02 in August 2019 offering guidance on the Georgia income tax effect of the U.S. Supreme Court's decision in the case of North Carolina Dept. of Revenue v. Kimberly Rice Kaestner 1992 Family Trust on nonresident fiduciaries of trusts having Georgia resident beneficiaries. The Department announced in the Bulletin that it will follow the Kaestner decision, but only to the extent of the facts in that case, so "with respect to facts that are specifically like those in Kaestner, a nonresident trust fiduciary would not be subject to Georgia taxation. Otherwise, the fiduciary would be subject to taxation under O.C.G.A. §48-7-22 and must file a return." The Bulletin can be found here.

September 2019

Service on the Georgia Department of Revenue: The Georgia Department of Revenue released Policy Bulletin ADMIN-2019-04, effective August 28, 2019, setting forth specific procedures required for serving legal documents on the Department. Documents requiring personal service must be delivered in person at Window 1 of the Customer Service area of the Department's primary office during the Department's business hours. Legal documents not requiring personal service will not be considered to be accepted or valid unless sent by certified mail or any other method specifically authorized by law to a specified address and with receipt acknowledged by the Department. Electronic service is only accepted if required by law or if the Department has approved it.

August 2019

Tax Incentives/Sales Tax Exemptions: Rather than expiring June 30, 2019, Georgia enacted a two-year extension of its sales and use tax exemption for purchases made during the construction of a competitive project of regional significance, so the exemption will now expire on June 30, 2021. Please refer to this webpage for said extension.

July 2019

Freeport Exemption: An amendment to O.C.G.A. Section 48-5-48.2 took effect on July 1, 2019, expanding the Level 1 Freeport Exemption to include personal property of a taxpayer's affiliates as well as inventory held for the repair, modification, or remanufacture of goods manufactured, processed, or produced by the taxpayer. The text of amendment can be found in 2019 Georgia Act 250 (HB 405), which is available here.

June 2019

Sales Tax: On May 7, 2019, the Georgia Department of Revenue issued a Policy Bulletin alerting taxpayers that remote sellers meeting certain revenue or number of retail sales thresholds can no longer satisfy their Georgia sales tax obligations by meeting specified notice and reporting requirements, and on or before July 1, 2019, must start collecting and remitting Georgia sales tax on their taxable sales. Policy Bulletin SUT-2019-02, which discusses the elimination of the notice and reporting option for remote sellers pursuant to legislation enacted effective April 28, 2019, can be found here.

For more information about state and local tax developments in Georgia, please contact:

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