Current through Rules and Regulations filed through September 23, 2024
(1)
Eligibility for Job Tax Credit for New Jobs Created in Year One. Provided that all the provisions of these regulations are met, business enterprises in counties currently designated as tier 1 counties or less developed census tract areas shall be allowed a job tax credit for taxes imposed under O.C.G.A. §
48-7-2 equal to $3,500 annually, business enterprises in counties currently designated as tier 2 counties shall be allowed a job tax credit for taxes imposed under O.C.G.A. §
48-7-2 equal to $2,500 annually, business enterprises in counties designated as tier 3 counties shall be allowed a job tax credit for taxes imposed under O.C.G.A. §
48-7-2 equal to $1,250 annually, and business enterprises in counties currently designated as tier 4 counties shall be allowed a job tax credit for taxes imposed under O.C.G.A. §
48-7-2 equal to $750 annually. The credit amount allowed for each tier shall apply to each new full-time employee job created for five (5) years, beginning with years one through five upon the creation of the job.
(a) A business enterprise will receive job tax credits in year one for new full-time employee jobs created in year one. Similarly, a business enterprise will receive job tax credits in year two for new full-time employee jobs created in year one and maintained in year two. This method of calculating job tax credits also applies in years three through five. The number of new full-time employee jobs created and maintained during years one through five will be calculated in the same manner as described in Department Rule 110-9-1-.03(1)(c), i.e., using a comparison of average monthly employment from taxable year to taxable year.
(b) Only those business enterprises that increase employment by two or more in a tier 1 county, a Military Zone or an Opportunity Zone shall be eligible for the credit. Only those business enterprises that increase employment by five or more in a less developed census tract, not including a Military Zone or an Opportunity Zone, shall be eligible for the credit. Only those business enterprises that increase employment by 10 or more in a tier 2 county shall be eligible for the credit. Only those business enterprises that increase employment by 15 or more in a tier 3 county shall be eligible for the credit. Only those business enterprises that increase employment by 25 or more in a tier 4 county shall be eligible for the credit. The credit shall not be allowed during a year if the net employment increase falls below the number required in such tier. Any credit received for years prior to the year in which the net employment increase falls below the number required in such tier shall not be affected.
(c) The number of new full-time employee jobs increase shall be determined by comparing the monthly average number of full-time employees subject to Georgia income tax withholding for the taxable year with the corresponding number of the prior taxable year. The monthly average number of new full-time employee jobs in a taxable year shall be determined by the following method:
1) for each month of the taxable year, count the total number of full-time employees of the business enterprise that are subject to Georgia income tax withholding as of the last payroll period of the month or as of the payroll period during each month used for the purpose of reports to the Georgia Department of Labor;
2) add the monthly totals of full-time employees; and
3) divide the result by the number of months the business enterprise was in operation during the taxable year. Note that only an initial start-up year may be calculated at less than twelve months - see Department Rule 110-9-1-.03(6) for further clarification. Transferred jobs and replacement jobs may not be included in the monthly totals.
(d) For business enterprises that made the election authorized by O.C.G.A. 48-7-40.23 in 2001 to use a calendar year for reporting the job tax credit, or for those businesses which had a change in the taxable period after initially filing for the job tax credit, then those businesses will continue to utilize the same reporting period as previously used in claiming the job tax credit regardless of the actual period covered by the tax return. The calculation of the credit will be in the same manner described in Department Rule 110-9-1-.03(1)(c) above, but will use the applicable twelve-month period for the job tax credit calculation in lieu of the taxable year. See Department Rule 110-9-1-.03(6) for further clarification on the twelve-month period.
(e) Job tax credits for new full-time employee jobs created in year one and maintained during a portion of or all of the following four years will not be affected even if the county/census tract area, during years two through five, is no longer designated as less developed or is reclassified.
(2)
Eligibility for Job Tax Credit for Additional New Jobs (Jobs Created During Years Two Through Five). Tax credits for the taxes imposed under O.C.G.A. § shall be awarded for additional new full-time employee jobs created by business enterprises qualified under subsection (b) or (c) of O.C.G.A. §§
48-7-40 and 48-7-40.1 for the four years immediately following an eligible Year One. Additional credits are allowed for additional new full-time employee jobs if the business enterprise already qualifies for the job tax credit based on new job increases in year one and if the county/census tract area retains the year one status in the current year. Additional credits are also allowed for additional new jobs if the business enterprise already qualifies for the job tax credit based on new job increases in year one and the additional new full-time employee jobs are created within the timeframe of a current and accepted notice of intent. Additional new full-time employee jobs shall mean those new jobs created in year two that increase an employer's monthly average of full-time employees above the number of monthly average of full-time employees in year one; and those new jobs created in year three that increase an employer's monthly average of full-time employees above the highest number of monthly average of full-time employees achieved by a business enterprise in previous years beginning with year one, etc. Additional new full-time employee jobs may only be created in years two through five, including all subsequent years two through five initiated by a qualifying increase of new jobs.
(a) The number of additional new full-time employee jobs shall be determined by comparing the monthly average number of full-time employees subject to Georgia income tax withholding for the taxable year, with the corresponding number of the prior taxable year. The monthly average number of full-time employees in a taxable year shall be determined by the following method:
1) for each month of the taxable year, count the total number of full-time employees of the business enterprise that are subject to Georgia income tax withholding as of the last payroll period of the month or as of the payroll period during each month used for the purpose of reports to the Georgia Department of Labor;
2) add the monthly totals of full-time employees; and
3) divide the result by the number of months the business enterprise was in operation during the taxable year. Note that only an initial start-up year may be calculated at less than twelve months - see Department Rule 110-9-1-.03(6) for further clarification. Transferred jobs and replacement jobs may not be included in the monthly totals.
(b) A business enterprise will receive job tax credits in year two for additional new full- time employee jobs created in year two. Similarly, a business enterprise will receive job tax credits in year three for additional new full-time employee jobs created in year two and maintained in year three. This method of calculating job tax credits also applies to the remaining three years that an enterprise may receive tax credits for additional jobs created in year two. This same process applies to additional new jobs created in years three through five. The number of additional jobs maintained during years two through five after their creation will be calculated in the same manner as described in Department Rule 110-9-1-.03(2)(a), i.e., using a comparison of average monthly employment from taxable year to taxable year.
(c) Job tax credits for additional jobs created in years two through five and maintained during a portion of or all of the following four years after the creation of the additional jobs will not be affected even if the county/census tract area, at some point during the years the additional jobs are being maintained, is reclassified to another tier or is no longer designated as less developed.
(d) Additional job tax credit amounts shall be based on the current tier or census tract status of the area or on the current accepted notice of intent. In addition, job tax credits for additional jobs shall only be allowed if the business enterprise has met, in Year One, the net employment increase required by the current status of the area. If, however, a company has filed a notice of intent that has been accepted by the commissioner of community affairs and if additional jobs are created within the time-frame of the notice of intent, credits for these additional jobs will be allowed if the business enterprise has met, in Year One, the net employment increase required by the status of the area as temporarily preserved by the notice of intent filed with the Georgia Department of Community Affairs.
(e) Credits for net new jobs may only be claimed in the year the net new job is created. The only exception is that a job may be counted if a prior part-time position becomes a full-time position where all other requirements for eligibility are satisfied. If the credit is not claimed in the year created, those credits are lost.
(f) The Job Tax Credit for jobs created in prior years may not be claimed unless the business took the Job Tax Credit in the year the net new jobs were created. For example, net new full-time employee jobs were created in a given year. The business creating the jobs did not claim the job tax credit on said jobs on the tax filing for that year. The opportunity to claim those credits is lost.
In a subsequent year, the business created additional net new jobs. The business may only claim the jobs tax credit on the additional net new jobs created in the year corresponding with that filing. Jobs created in prior years, without credits having been claimed for the year in which the jobs were created, are ineligible to be counted as new jobs or for any year in the five-year window allowed.
(3)
Additional Job Tax Credit Program Requirements for All New and Additional Jobs Starting with Taxable Years Beginning on or After January 1, 2001. These provisions apply to all counties, as well as to less developed census tract areas.
(a) To qualify for any job tax credits, business enterprises must make health insurance coverage available to all employees filling the new or additional new full-time employee jobs; provided, however, that nothing in these regulations shall be construed to require business enterprises to pay for all or any part of health insurance coverage for such employees in order to claim job tax credits if such business enterprises do not pay for all or any part of health insurance coverage for other employees. That is, new and additional employees must receive the same health insurance benefit as existing employees, and, at a minimum, must have health insurance coverage made available to them. Examples of non-qualifying coverages include, but are not limited to a stipend paid to the employee, Health Insurance Exchange / Marketplace coverage, or Affordable Care Act coverage.
(b) In order for a business enterprise to demonstrate compliance with this provision, the business enterprise must maintain written documentation of the employee's health insurance coverage as offered upon employment. Upon audit, business enterprises must document the availability of health insurance coverage with insurance plan documents and other relevant information. For all counties and for less developed census tract areas, the wage of each new job created must be above the average wage of the county that has the lowest average wage of any county in the state as reported in the most recently available annual issue of the
Georgia Employment and Wages Averages Report of the Department of Labor.
1) The average wage of the county means the average wage as reported in the most recently available annual issue of the Georgia Employment and Wages Averages Report of the Georgia Department of Labor, which is the issue that is available as of the last day of the tax year in which the jobs are created.
2) The average wage is reported by the Georgia Department of Labor as a weekly wage. To convert the weekly wage to an annual wage, multiply the reported weekly wage by 52 weeks.
3) Determination of the wage of each of the new and additional jobs will be determined based on each new full-time employee job. Upon audit, business enterprises must document that wage standards as described herein have been met.
(4)
Initiation of Subsequent Periods of Eligibility for Job Tax Credits Based on Required Net Employment Increases for Counties and Less Developed Census Tract Areas. A subsequent year one and years two through five are created when a business enterprise creates the required threshold number of new full-time employee jobs or more above its previous high employment (based on monthly average of full-time employees for each year) beginning with employment during the business enterprise's first year of eligibility for the job tax credit (initial year one).
(a) Subsequent periods of eligibility are subject to all the provisions of these regulations and O.C.G.A. §§
48-7-40, 48-7-40.1, and 36-62-5.1.
(b) Job tax credits generated under previous periods of eligibility will not be affected as long as the new jobs are maintained. But no new job tax credits may be generated under previous periods of eligibility after a subsequent period of eligibility has begun.
(c) If a business enterprise creates the required number of new jobs to establish a subsequent period of eligibility but does not meet other requirements in law or regulation pertaining to health insurance and average wage, no subsequent period of eligibility is established. In addition, such new jobs may not be counted as additional jobs under a previous period of eligibility.
(5)
Computation of Job Tax Credit for Business Enterprises By County/Census Tract Area. If a business enterprise has multiple locations, each location must calculate the job tax credit separately based on the county or census tract in which it is located. However, if locations are in the same county or census tract, they may combine those locations into one calculation.
(a) When a single physical location includes both business enterprise activities and other activities, only employment directly associated with the business enterprise may be counted toward the number of new full-time employee jobs needed to generate credits, unless the single physical location is primarily engaged in eligible activities as defined by these regulations.
(6)
Computation of Job Tax Credit for Business Enterprises Based On 12 Month Periods Only. Business enterprises must compute increases and decreases in full-time employee jobs on the basis of 12-month periods only, even when business enterprises have taxable years that are not equal to 12 months. The exception to this rule is a business enterprise which begins operations in mid-year. Initial eligibility for a start-up operation may be based on less than twelve months. All subsequent job tax credit calculations must be made on twelve-month periods regardless of short period returns or changes in tax periods. This may cause the job tax credit calculation period to be different from the tax year of the business enterprise.
(7)
Carryforward of Job Tax Credit and Limitation on Amount of Tax Credit In Any One Taxable Year. Any credit claimed under O.C.G.A. §§
48-7-40, 48-7-40.1, or 36-62-5.1 but not used in any taxable year may be carried forward for ten years from the close of the taxable year in which the qualified jobs were established. In tiers 3 and 4, the credit established by O.C.G.A. §§
48-7-40, 48-7-40.1, and 36-62-5.1 taken in any one taxable year shall be limited to an amount not greater than 50 percent of the taxpayer's state income tax liability which is attributable to income derived from operations in this state for that taxable year. In tiers 1 and 2 and in less developed census tract areas, the credit allowed under O.C.G.A. §§
48-7-40, 48-7-40.1, and 36-62-5.1 against taxes imposed under this article in any taxable year shall be limited to an amount not greater than 100 percent of the taxpayer's state income tax liability attributable to income derived from operations in this state for such taxable year, unless otherwise provided by law and regulation.
(8)
Use of Job Tax Credits Against Income Tax Withholding. This provision allows for business enterprises which have excess income tax credit to claim such excess credit against withholding taxes if the business enterprise is located within a tier 1 county or a less developed census tract, or for projects certified by the commissioner of economic development.
(a) Business enterprises in tier 1 counties and in less developed census tract areas shall be allowed job tax credits as provided in law and regulation. Any lawful business located within areas specified under O.C.G.A. §§
48-7-40(i), 48-7-40.1(c)(2) and 48-7-40.1(c)(4) shall also be allowed job tax credits as provided in law and regulation. When the amount of such credits exceed income tax liability, the excess may be taken as a credit against quarterly or monthly payments under O.C.G.A. §
48-7-103 but not to exceed in any one taxable year $3,500 for each new full- time employee job when aggregated with the credit applied against income tax liability.
(b) Business enterprises that have a location or expansion project in this state which has been certified as a competitive project by the commissioner of economic development under O.C.G.A. §
48-7-40(a)(3) shall be allowed job tax credits as allowed by law and regulation. When the amount of such credit exceeds income tax liability credit limitations, the excess may be taken as a credit against quarterly or monthly payments under O.C.G.A. §
48-7-103 but not to exceed in any one taxable year $2,500 for each new full-time employee job in a tier 2 county, $1,250 for each new full-time employee job in a tier 3 county, and $750 for each new full-time employee job in a tier 4 county.
(c) Note that DCA will not further regulate or administer this provision. Refer to the Georgia Department of Revenue Regulation 560-7-8-.36, Job Tax Credit Rules, for specific information on utilizing the income tax withholding benefit of the Job Tax Credit.
(9)
Change of Ownership or Control. The sale, merger, acquisition, reorganization, or bankruptcy of any business enterprise shall not create new eligibility in any succeeding business entity. Any unused job tax credit may be transferred by a business enterprise to any transferee of that business enterprise. Provided the operations of the business enterprise are essentially continued by the new entity, new tax credits may be earned by any transferee of a business enterprise for new full-time employee jobs created by the original business enterprise as long as those new full-time employee jobs are maintained by the transferee of the business enterprise and as long as the transferee meets other applicable requirements in law and regulation.
(a) In the event that business assets have not been out of service for six (6) months or twelve (12) months for a seasonal business enterprise, the transferee may petition the commissioner of community affairs to establish a base level of employment in order to be eligible for credits of newly created full-time employee jobs. Such application should include payroll and job-related information from the preceding company, along with other relevant information that may be useful and/or requested.
(b) In the event that full-time employee jobs are preserved by the transferee for a substantially different process than their immediate prior use (i.e., the creation of an essentially different business enterprise), the transferee (succeeding enterprise) shall consider any preserved full-time employee jobs or any net new full-time employee jobs added to the new entity, as net new employee jobs. No approval is required from the commissioner of community affairs under this scenario.
(c) Any time a business is uncertain whether or not new jobs have been created based on this paragraph, the business must seek a ruling from the commissioner of community affairs before claiming any credits.
(10)
Time Limit for Claiming Tax Credits. Any tax credit claimed under O.C.G.A. §
48-7-40 and 48-7-40.1 must be claimed within one year of the earlier of the date the original tax return was filed or the date such return was due, including extensions.
(11)
Request for Determination. In the event that a business believes it should qualify for the Job Tax Credit program, but does not clearly meet the eligibility requirements outlined in the Code and regulation, a Request for Determination may be requested from the Department of Community Affairs. The business should provide a detailed explanation of the activity being conducted at the business location for which the Job Tax Credits are being requested, along with any documentation to support the request. Once all information necessary to make a determination has been received, the Department shall have 30 days to complete the review and issue a determination regarding the eligibility of the business for the job tax credit program.
(12)
Authority of the Commissioner of Community Affairs. The commissioner of community affairs shall determine which businesses are engaged in qualifying activities and whether or not qualifying net increases or decreases have occurred and may require reports, promulgate regulations, and hold hearings as needed for substantiation and qualification.
(13) Special Provisions.
(a) In counties recognized and designated as the first through fortieth least developed counties in the tier 1 designation, job tax credits shall be allowed as provided in these regulations, in addition to business enterprises, to any business of any nature as provided in O.C.G.A. §
48-7-40(i).
(b) Beginning with taxable years that begin on or after January 1, 2004, in areas recognized and designated as Opportunity Zones under O.C.G.A. §
48-7-40.1(c)(4) or Military Zones under O.C.G.A. §
48-7-40.1(c)(2), job tax credits shall be allowed as provided in these regulations, in addition to business enterprises, to any business of any nature.
(c) The generation of tax credits for jobs created under an eligible Year One during taxable years beginning prior to January 1, 2009 will not be affected by changes in these regulations. Such tax credits will be based on law and regulation in effect at the time the Year One jobs were created, as well as any additional jobs created in the subsequent Years Two through Six which do not generate a new Year One.
(d) The amount of any tax credit will be based on the status of the county/less developed census tract area in the year in which qualifying new full-time employee jobs are created and not on the status of the county/less developed census tract area in subsequent years when qualifying jobs are being maintained.
(e) When a less developed census tract area and a less developed county overlap, the following rules shall apply unless otherwise changed by the commissioner of community affairs based on a petition from a business enterprise:
1) If a business enterprise locates in the area of overlap between a tier 1 county and a less developed census tract area, rules governing the tax credit shall be based on the portions of these regulations governing tier 1 counties;
2) If a business enterprise locates or expands in the area of overlap between a tier 2 county, a tier 3 county or a tier 4 county and a less developed census tract area, the business enterprise may choose to claim the credit authorized by O.C.G.A. §
48-7-40 or the credit authorized by O.C.G.A. §
48-7-40.1 each applicable tax year, provided all requirements of the applicable O.C.G.A. § are met; and
3) Under no circumstances shall tax credits based on less developed counties and less developed census tract areas be added.
(f) A business enterprise claiming the tax credit under O.C.G.A. §
48-7-40, the county tier program, and located within the jurisdiction of a joint authority established by two or more contiguous counties will qualify for an additional $500 tax credit for each new full-time employee job created. A business enterprise located within the jurisdiction of a joint authority, however, must create the number of new jobs required by the tier status of the county in which the business enterprise is located before any tax credits will be allowed. The $500 job tax credit authorized by this subparagraph shall be subject to all the conditions and limitations specified under these regulations. The benefits of the job tax credit authorized by the election provided for in this subparagraph shall be subject to all the conditions and limitations specified under these regulations. The Georgia Department of Community Affairs will not regulate the creation or operation of joint development authorities nor will the department define bona fide authorities for the purposes of the job tax credit program.
(g) No taxpayer shall be authorized to claim on a tax return for a given project the credit provided for in these regulations if such taxpayer claims on such tax return any of the credits authorized under 48-7-40.2, 48-7-40.3, or 48-7-40.4, unless otherwise specifically allowed under these O.C.G.A. §.
(h) The census tract designation provisions authorized under O.C.G.A. §§
48-7-40.1(c)(1), (3) and (4) shall be applicable to all requests for designation filed on or after July 1, 2013.
O.C.G.A. §§
48-7-40; 48-7-40.1; 36-62-5.1.
