Recent Georgia Tax Legislation

By Kenneth H. Bridges, CPA, PFS     June 2012

In late March of this year, the Georgia General Assembly passed legislation which replaced the annual “car tag tax” and sales tax on purchase of vehicles with a new title tax, increased slightly the income tax personal exemptions, froze the retirement income exclusion at $65,000 per year, placed new restrictions on conservation easement credits, repealed the sales tax exemption for film productions, repealed most of the piecemeal sales tax exemptions for manufacturing and agriculture and replaced them with broader exemptions, and increased the number of Internet-based sellers required to collect sales tax.  We provided an e-mail summary of this legislation in late March, so we will not repeat that here.  However, there are a few additional noteworthy items which have been included in separate legislation since then.

Claiming R&D credit against withholding tax – Legislation passed in 2009 provided that companies in their first 5 years of existence in Georgia could elect to claim their research tax credit against their Georgia withholding tax. Effective for tax years beginning on or after January 1, 2012, the requirement that the company be in its first 5 years of existence is removed.  This election can be very valuable for companies with Georgia research tax credits which exceed their Georgia income tax liability.

Withholding on nonresidents – Georgia law has required for many years that pass-through entities with Georgia-source income withhold and remit (on a monthly basis) Georgia income tax at a 4% rate on distributions paid or credited to nonresident owners.  The new rules change this to 4% of the nonresident member’s allocated Georgia-source taxable income and provide for payment when the entity’s income tax return is due.

Georgia Tax Tribunal – Georgia will now have a tax tribunal, formed specifically to hear Georgia tax cases.

Kenneth H. Bridges, CPA, PFS is a partner with Bridges & Dunn-Rankin, LLP an Atlanta-based CPA firm.

This article is presented for educational and informational purposes only, and is not intended to constitute legal, tax or accounting advice.  The article provides only a very general summary of complex rules.  For advice on how these rules may apply to your specific situation, contact a professional tax advisor.