Summary of Notable Georgia Tax Legislation from the 2016 Legislative Session

Georgia Governor Nathan Deal signed four notable tax bills that establish a new income tax credit, extend a tax exemption and more.

By Jeff Glickman, SALT partner

The Georgia General Assembly adjourned the 2016 legislative session on March 24, 2016. In addition to the income tax conformity bill that was the subject of an article in our March 2016 issue of the Aprio SALT Newsletter, Governor Deal signed several other notable state tax bills. They are summarized below.

TEMPORARY INCOME TAX CREDIT FOR HIRING PAROLEES

House Bill 936, Section 3, applicable for calendar tax years 2017-2019, establishes a new income tax credit for certain employers that hire qualified parolees. A “qualified parolee” is an individual who has been granted parole within 12 months preceding being hired by the employer. The credit amount is $2,500 for each qualified parolee that is employed in a full-time job for at least 40 weeks during a 12-month period. A “full-time job” means employment that is (i) located in Georgia, (ii) involves a regular work week of at least 30 hours, (iii) has no predetermined end date and (iv) pays at or about the average wage of the county with the lowest average wage in the state (as most recently reported by the Georgia Department of Labor). Parolees who were employed in a full-time job prior to Jan. 1, 2017 do not qualify. The maximum credit for an employer is $50,000 per tax year.

INTEREST RATES ON REFUNDS AND UNDERPAYMENTS

House Bill 960, Sections 2 and 3, changes the interest rate the state charges on refunds and underpayments, respectively, and is effective on July 1, 2016. Currently, Georgia charges/pays interest at the rate of one percent per month. Beginning July 1, 2016, the new annual rate will be bank prime loan rate (as posted by the Federal Reserve) plus three percent. The annual rate will be determined based on the first weekly posting of the bank prime loan rate after Jan. 1 of each year.

INCREASE IN GEORGIA 529 PLAN DEDUCTIONS FOR JOINT FILERS

House Bill 802 increases the maximum deduction for Georgia 529 plan contributions for joint filers from $2,000 per beneficiary to $4,000 per beneficiary. This increase is applicable for tax years beginning on or after Jan. 1, 2016. Please note that the deduction is available only to those that establish a Georgia 529 plan and not a 529 plan sponsored by another state.

“LEVEL ONE” FREEPORT EXEMPTION EXTENDED TO E-COMMERCE FULFILLMENT CENTERS

House Bill 935 extends the local property tax freeport exemption to inventory held in a fulfillment center that is stored in the center on Jan. 1 and that is available to remote purchasers who make purchases by remote means (e.g., the Internet, or other electronic or telephonic means). The exemption for any particular item of property is good for a period not exceeding 12 months from the date the property is stored in the state (based on the first-in, first-out method of inventory accounting). A “fulfillment center” means a business location in Georgia which is used to pack, ship, store or otherwise process tangible personal property sold by remote means, provided that customers are not allowed to purchase or receive goods at the location.

Aprio’s SALT team continually monitors state tax legislation around the country in order to provide taxpayers with information about state tax changes that could affect them. As significant state tax changes occur in other states, we will include those developments in future issues of the Aprio SALT Newsletter, and we are available to assist you in determining how those changes may affect your business.

Contact Jeff Glickman, partner-in-charge of Aprio’s SALT practice, at jeff.glickman@aprio.com for more information.

This article was featured in the May 2016 SALT Newsletter. To view the newsletter, click here.

Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.

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