Georgia’s 2022 legislative session ends with important tax legislation | Eversheds Sutherland (USA) LLP

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During the 2022 legislative session, the Georgia General Assembly passed significant tax legislation, including allowing affiliated groups to file consolidated tax returns without prior approval from the Department of Revenue, expanding and changing eligibility sales tax exemptions on advanced technologies and data centers. , extending and increasing several income tax credits and changing the procedures for appealing certain tax cases to the superior court.

Monday, April 1, 2022 was “Sine Die” or the 40th and final legislative day of the 2022 legislative session. Prior to the last day of the session, Governor Kemp signed into law two tax bills: one providing for a refund of single tax for taxpayers who filed income tax returns for the 2020 and 2021 tax years of $250 to $500, and a bill eliminating the fuel tax until May 31, 2022. See the cover extra here.

The bills below have been passed by both houses of the General Assembly and are forwarded to the governor, who can sign or veto the legislation within 40 days of the end of the legislative session. If the governor takes no action, the legislation will become law when the 40-day period expires (May 14).

Sales tax

HB 1291 – High Tech Exemption and Data Center Sales Tax Exemption. This bill extends the expiration of the exemption for purchases of qualified computer equipment within OCGA § 48-8-3(68) for a high-tech company from June 30, 2023 to December 31, 2028. However , beginning in 2024, qualifying purchases (required to meet the $15 million threshold) will only include taxable purchases and rentals, specifically excluding pre-written computer software (electronically delivered or otherwise) as purchases eligible. Additionally, beginning in 2024, the exemption would not apply to 10% of the first $15 million of qualifying purchases, with full exemption on qualifying purchases above that threshold.

HB 1291 also extends the data center exemption expiration in OCGA § 48-8-3 (68.1) from 2028 to 2033 and changes the job creation and investment requirements as follows: (i) increases the job creation requirement of 20 to 25 jobs in counties with populations over 50,000; (ii) lowers the job creation requirement from 20 to 10 quality jobs and lowers the minimum investment from $150 million to $75 million in counties with populations between 30,000 and 50,000; and (iii) lowers the job creation requirement from 20 to 5 quality jobs and lowers the minimum investment from $100 million to $25 million in counties with fewer than 30,000 residents.

HB 586 – Georgia Economic Recovery Act. This bill extends from December 31, 2022 to December 31, 2027 the exemption from sales tax for ticket sales, fees, or admission fees to certain fine arts performances or exhibitions. This bill also extends the period during which the Department of Natural Resources can accept new claims for conservation easement tax credits from December 31, 2021 to December 31, 2026, but reduces the total amount of conservation easement tax credits. conservation granted per year from $30 million to $4 million starting June 1, 2022.

HB 1034 – Sales tax exemption for non-recurring major sporting events. This bill extends the existing sales tax exemption for major non-recurring sporting events expected to generate more than $50 million in the host community (such as a Super Bowl, professional sports all-star game, half -final or a championship match of a national collegiate tournament) by 2031. The bill also adds “any FIFA World Cup match” to the definition of exempt “major sporting events”.

Income tax

HB 1058 – Consolidated statement election. This bill allows affiliated groups that file a consolidated federal return to elect 5 years to file consolidated corporate income tax returns in Georgia. Under current law, taxpayers filing a federal consolidated return who wish to file a Georgia consolidated return must seek prior approval from the Department of Revenue to do so. The Department often prescribes conditions for consolidated filing through this licensing process. The legislation does not make any changes to the post-distribution nexus consolidated filing methodology or the Department’s ability to audit consolidated returns.

HB 1320 – Annual IRC compliance. This is Georgia’s annual income tax compliance bill, which will bring Georgia’s income tax code into compliance with the federal tax code beginning January 1, 2022. The bill also clarifies that the Department’s emergency relief authority is based on declared federal (rather than presidential) disasters, as defined in the Internal Revenue Code. This bill should be read in conjunction with HB 7EX, which was passed in a special session by both houses and signed by the Governor on December 8, 2021. HB 1320 was passed by both houses in March, but is awaiting always the signature of the Governor.

HB 1437 – Tax Reduction and Reform Act 2022. This bill provides for a phased reduction in the personal income tax rate from 5.75% to 4.99% by the 2029 tax year. The phase-in would begin with a reduction to 5, 49% starting in 2024. The gradual reduction is based on the State meeting certain economic thresholds, including the estimate of future income and tax collections from the previous year. Rate reductions do not apply to corporate tax rates.

The bill eliminates graduated marginal tax rates and combines the personal exemption and standard deduction into one larger personal exemption, although itemized deductions are retained for those itemizing for federal purposes. For detailed filers, the bill makes the federal SALT cap permanent by limiting the SALT deduction (including Georgia taxes) to $10,000 (except for separately married filers which is $5,000) of amounts deducted pursuant to IRC § 164.

In addition, the bill directs the House Ways and Means and Senate Finance Committees to “jointly undertake a review of all state tax credits, deductions, and exemptions” and submit their findings. no later than December 1, 2023.

New and revised tax credits:

HB 469 – Tax credit for the rehabilitation of historic buildings. This bill amends the historic rehabilitation tax credit by applying caps to historic homes and certified structures. It also extends the expiration date of these credits to December 31, 2027 (or 2025 for historic homes).

HB 517 – Student scholarship organization credit. This bill increases the individual and aggregate tax credit (from $100 million to $120 million) for donations of money to nonprofit scholarship organizations that enable students to attend a private school from 2023. In addition, it allows insurance companies to use the credit against tax on insurance premiums. up to an aggregate amount of $6 million for one year. The bill also adds additional reporting and auditing requirements for scholarship organizations.

HB 1041– Rural Hospital Credit. This bill increases the overall state tax credit limit for contributions to rural hospital organizations from $60 million to $75 million beginning in 2023.

HB 1053 – Tax credit for post-production and cinema. The bill extends the end of the post-production tax credit from January 1, 2023 to December 31, 2025. The bill also requires entities claiming the film tax credit and the tax credit for post-production consent to taxation in Georgia on income from these projects. In addition, the bill taxes nonresidents on future residual payments from work performed in Georgia with respect to state-certified production, regardless of where those residuals are earned. The bill also reduces the carry-forward of the post-production tax credit from 5 years to 3 years.

SB 361Law enforcement donation credits. This law provides a new income tax credit for individuals, LLC members, partnership partners and shareholders of S corporations ranging from $5,000 to $10,000 for donations to the law”, defined as national not-for-profit corporations whose sole function is to support local law enforcement units. The credit is capped for all taxpayers at $75 million per year.

Other

HB 916- Appeals to procedural changes from the Superior Court. This new law provides a unified procedure for appealing decisions of a lower body, such as the Georgia Tax Tribunal or other administrative tribunal, to higher or state courts. All such appeals will be “requests for review” and will be subject to the same procedural requirements. In addition, the law affects local property tax appeals to superior courts. Under the new law, superior courts would be required to hear property tax appeals within 120 days. The law will only apply to cases filed in superior court after July 1, 2023.

HB 997 – Property tax exemption for wood producers. This bill provides for a constitutional referendum in November to provide a statewide exemption from all ad valorem taxes for certain equipment used by timber producers to produce or harvest timber.

HB 1044 – Regional development authorities. This bill allows counties and local government authorities to form regional development authorities, where it is not possible for a county or local government authorities to have their own development authority. These development authorities are often the vehicles for private investment projects and property tax abatements. The bill also changes the definitions of “video service” and “cable service,” respectively, to prevent local jurisdictions from charging franchise fees on gross revenue from video streaming services or direct-to-home services. by satellite.

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