During the 2022 legislative session, the Georgia General Assembly passed significant tax legislation, including authorizing related groups to file consolidated corporate income tax returns without prior Treasury Department approval, expanding and amending the qualification for the high technology and data center sales tax exemptions, extending and increasing several income tax credits, and the amendment the procedures for appealing some tax cases to a higher court.
Monday, April 1, 2022 was “Sine Die,” or the 40th and final session of the 2022 legislative session. Before the final day of the session, Governor Kemp signed two tax bills — one providing a one-time tax refund for taxpayers who file income taxes for have filed tax years 2020 and 2021 of $250 to $500 and a law eliminating the motor fuel tax by May 31, 2022. Additional coverage can be found here.
The following bills have been passed by both chambers of the General Assembly and will be submitted to the Governor, who may sign or veto the bill within 40 days of the end of the legislative session. If the governor does nothing, the law will go into effect after the 40-day deadline (May 14).
VAT
HB 1291 – High-Tech Exemption and Sales Tax Exemption for Data Centers. This bill extends the expiration of the exemption for the purchase of qualifying computer equipment under OCGA Section 48-8-3(68) for a high-tech company from June 30, 2023 to December 31, 2028. Beginning in 2024, however, qualifying purchases (required, to reach the $15 million threshold) includes only taxable purchases and leases, specifically without prepackaged computer software (electronically delivered or otherwise) as a qualifying purchase. Additionally, beginning in 2024, the exemption would not apply to 10% of the first $15 million in qualifying purchases, with a full exemption for qualifying purchases beyond that threshold.
HB 1291 also extends the expiration of the data center exemption in OCGA §48-8-3(68.1) from 2028 to 2033 and changes the job creation and investment requirements as follows: (i) Increase the job creation requirements from 20 to 25 quality jobs in counties with more than 50,000 residents; (ii) reduced the job creation requirement from 20 to 10 high-quality jobs and the minimum investment from $150 million to $75 million in counties with populations between 30,000 and 50,000; and (iii) reducing the job creation requirement from 20 to 5 high-quality jobs and 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 the sales tax exemption for the sale of tickets, fees, or fees for admission to certain art performances or exhibitions from December 31, 2022 to December 31, 2027. This bill also extends the period for which the Department of Natural Resources can date December 31, 2021 through December 31, 2026 will accept new applications for maintenance easement tax credits, but will reduce the total amount of maintenance tax credits allowed per year from $30 million to $4 million beginning June 1, 2022.
HB 1034 – Sales tax exemption for one-off major sporting events. This bill expands the existing sales tax exemption for one-off major sporting events that are expected to generate over $50 million in the host community (e.g., a Super Bowl, a pro sports all-star game, or a semifinal game or a championship game of a national college tournament). 2031. The bill also adds “any match of a FIFA World Cup” to the definition of exempted “major sporting events”.
income tax
HB 1058 – Choice for consolidated reporting. This bill authorizes affiliated groups that file consolidated federal returns to have a five-year election to file consolidated corporate income tax returns in Georgia. Under current law, taxpayers who wish to file a federal consolidated tax return and file a Georgia consolidated tax return must obtain prior approval from the Department of Treasury to do so. The Department often imposes conditions on the consolidated filing as part of this approval process. The legislation does not change the post-split Nexus consolidated filing methodology or the Department’s ability to audit consolidated statements.
HB 1320 – Annual IRC compliance. This is Georgia’s annual Income Tax Compliance Bill aligning the Georgian Tax Code with the Federal Tax Code effective January 1, 2022. The bill also clarifies that the department’s emergency response powers are based on federal (rather than presidential) declarations of disasters, as defined in the Internal Revenue Code. This bill should be read in conjunction with HB 7EX, which was passed by both chambers during a special session and signed by the governor on December 8, 2021. HB 1320 was passed by both Houses in March but awaits the Governor’s signature.
HB 1437 – Tax Reduction and Reform Act of 2022. This bill gradually introduces a reduced income tax rate from 5.75% to 4.99% by tax year 2029. The phase-in would begin with a reduction to 5.49% from 2024. The incremental reduction is based on the state meeting certain economic thresholds, including future revenue estimates and prior-year tax collections. The rate reductions do not apply to corporate tax rates.
The bill eliminates the progressive marginal tax rates and combines the personal exemption and standard deduction into a single, larger personal exemption, although individual deductions would be retained for those listed for federal purposes. For single filers, the bill makes the state SALT cap permanent by increasing the SALT deduction (including Georgia taxes) to $10,000 (excluding the separate filing of spouses, which is $5,000) of that deducted under IRC §164 amounts is limited.
In addition, the bill requires the House Ways and Means and Senate Finance Committees to jointly “conduct a review of all state tax credits, deductions and exemptions” and submit their findings no later than December 1, 2023.
New and revised income 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 for such credits to December 31, 2027 (or 2025 for historic homes).
HB 517 – Student Scholarship Organization Credit. This bill will increase the individual and aggregate (from $100 million to $120 million) tax credit for cash donations to nonprofit student scholarship organizations that enable students to attend private school beginning in 2023. In addition, it allows insurance companies to take advantage of the insurance premium tax credit up to a total of $6 million for each year. The bill also adds additional reporting and auditing requirements for the student grant organizations.
HB 1041– Rural Hospital Loan. This bill increases the total limit for state tax credits for contributions to rural hospital organizations from $60 million to $75 million beginning in 2023.
HB 1053 – Post-production and film tax credit. The bill extends the expiration of the post-production tax credit from January 1, 2023 to December 31, 2025. The bill also requires that companies claiming the film tax credit and the post-production tax credit agree to tax in Georgia the income derived from their projects. In addition, the law taxes non-residents on future balance payments from work performed in Georgia related to state-certified production, regardless of where those balance payments are earned. The bill also reduces the carry-forward of the post-production tax credit from 5 years to 3 years.
SB361 – Donation Credits to Law Enforcement Agencies. This law provides a new income tax credit for individuals, LLC members, partnership partners, and S Corporation shareholders of $5,000 to $10,000 for donations to “law enforcement foundations,” which operate as domestic non-profit corporations with the sole function of supporting local law enforcement units are defined. The credit is capped at $75 million per year for all taxpayers.
Miscellaneous
HB 916- Appeals to Superior Court procedural amendments. This new law provides a uniform process for appealing decisions made by a lower court – such as the Georgia Tax Tribunal or other administrative court – to the higher or state courts. All of these complaints are “requests for review” and are subject to the same procedural requirements. In addition, the law affects local property tax appeals to higher courts. Under the new law, higher courts would have 120 days to hear property tax appeals. The law applies only to cases filed in a higher court after July 1, 2023.
HB 997 – Property tax exemption for wood producers. This bill calls for a constitutional referendum this November to provide a statewide exemption from all ad valorem taxes on certain equipment used by timber producers to produce or harvest timber.
HB 1044 – Regional Development Authorities. This bill allows counties and local authorities to form regional development agencies when it may not be possible for a county or local authority to have its own development agency. Such development agencies are often the vehicles for private investment projects and property tax reductions. The bill also changes the definitions of “video service” and “cable service,” respectively, to prevent local jurisdictions from imposing franchise fees on gross revenues from streaming video services or direct-to-home satellite services.
[View source.]
