Compilation of Rules and Regulations of the State of Georgia
Department 560 - RULES OF DEPARTMENT OF REVENUE
Chapter 560-7 - INCOME TAX DIVISION
Subject 560-7-8 - RETURNS AND COLLECTIONS
Rule 560-7-8-.37 - Manufacturer's and Telecommunications Investment Tax Credit

Universal Citation: GA Rules and Regs r 560-7-8-.37

Current through Rules and Regulations filed through September 23, 2024

(1) Definitions. As used in this regulation:

(a) Manufacturing. The term "manufacturing" means those establishments classified by the North American Industry Classification System (NAICS) Codes, published by the United States Office of Management and Budget, 2017 edition, that belong to Sectors 31-33.

(b) Manufacturing Facility. The term "manufacturing facility" means a single facility, including contiguous parcels of land, improvements to such land, buildings, building improvements, and any machinery or equipment used in manufacturing described by NAICS Sectors 31-33.

(c) Telecommunications. The term "telecommunications" means those establishments primarily engaged in providing telecommunications services described by NAICS Codes, 2017 edition, as:
1. NAICS Code 517312 for establishments primarily engaged in operating and maintaining switching and transmission facilities to provide communications via the airwaves. Establishments in this industry have spectrum licenses and provide services using that spectrum, such as cellular phone services, paging services, wireless Internet access, and wireless video services;

2. NAICS Code 517311 for establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using telecommunications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services; wired (cable) audio and video programming distribution; and wired broadband Internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry;

3. NAICS Code 517911 for establishments primarily engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. Mobile virtual network operators (MVNOs) are included in this industry; and

4. NAICS Code 517410 for establishments primarily engaged in providing telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications.

5. NAICS Code 517919 for establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing Internet services or voice over Internet protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry.

(d) Telecommunications Facility. The term "telecommunications facility" means a single facility, including contiguous parcels of land, improvements to such land, buildings, building improvements, and any machinery or equipment used in providing the telecommunications services described by NAICS Codes 517312, 517311, 517911, 517410, and 517919.

(e) Support Facility. The term "support facility" refers to any establishment involved in the performance of activities designed primarily to support a manufacturing facility or a telecommunications facility, such as corporate offices, sales offices, computer operations facilities, warehouses, distribution centers, storage facilities, research and development facilities, laboratories, repair and maintenance facilities, telecommunications centers, regional or district administrative offices, and other related manufacturing or telecommunications support activities.

(f) Qualified Investment Property. The term "qualified investment property" means all property described in O.C.G.A. Sections 48-7-40.2(a)(2), 48-7-40.3(a)(2), and 48-7-40.4(a)(2) which is reasonably related or necessary to the manufacturing process or to providing telecommunications services. Qualified investment property also includes recycling machinery or equipment, recycling manufacturing facility, pollution control or prevention machinery or equipment, pollution control or prevention facility, and conversion from defense to domestic production. The Commissioner reserves the right to review each purchase or acquisition of property by a taxpayer for which the taxpayer intends to claim a credit.

(g) Expansion of an Existing Manufacturing or Telecommunications Facility. The term "expansion of an existing manufacturing or telecommunications facility" means the capitalized purchase or acquisition of qualified investment property by a taxpayer for use in a manufacturing or telecommunications facility already existing in this state when the purchase or acquisition of such qualified investment property expands the taxpayer's asset base and is directly related to the taxpayer's manufacturing process or to providing telecommunications services. It does not mean the purchase or acquisition of qualified investment property for the purpose of repairing existing property.

(h) Project. The term "project" means a planned undertaking involving the capitalized purchase or acquisition of qualified investment property for the construction of an additional manufacturing or telecommunications facility or the expansion of an existing manufacturing or telecommunications facility. A project which is a planned expansion of an existing manufacturing or telecommunications facility must result in an expansion of the taxpayer's asset base and be directly related to the taxpayer's manufacturing process or to providing telecommunications services. For purposes of qualifying for this credit in conjunction with either the job tax credit, the headquarters job tax credit, the quality jobs tax credit, or the optional investment tax credit, a taxpayer may not undertake more than one project at the same time within a single facility, and each project must be confined to a single facility. Generally it is the same project if it is in the same building, provided that there can be separate projects in the same building if the employees that will be using the equipment that is the subject of the investment tax credit will not be or have not been claimed or included in any calculations for the jobs tax credit; the headquarters jobs tax credit, or the quality jobs tax credit.

(i) Pollution Control or Prevention Machinery or Equipment. The term "pollution control or prevention machinery or equipment" means all tangible personal property, used in whole or in part, to reduce or eliminate air and water pollution by removing, altering, disposing, or storing pollutants, contaminants, waste or heat.

(j) Pollution Control or Prevention Facility. The term "pollution control or prevention facility" means any facility, including land, improvements to land, buildings, building improvements, and any pollution control or prevention machinery or equipment whose primary purpose is to reduce air and water pollution, provided that such facility is in furtherance of applicable federal, state, or local standards for the abatement and control of air and water pollution and contamination.

(k) Conversion from Defense to Domestic Production. The term "conversion from defense to domestic production" means the conversion of a manufacturing or telecommunications facility's production capabilities from those which are substantially dependent upon Department of Defense expenditures to those which have a commercial application in the private sector.

(l) Cost of Qualified Investment Property. The term "cost of qualified investment property" means the taxpayer's basis in the property in the taxable year in which the credit is created.

(m) Rural county. The term "rural county" means a county that has a population of less than 50,000 with 10 percent or more of such population living in poverty based upon the most recent, reliable, and applicable data published by the United States Bureau of the Census. On or before December 31 of each year, the Commissioner of the Department of Community Affairs shall publish a list of such counties.

(2) Calculation of Credit.

(a) Basic Rate of Credit. The basic rate of credit allowed against the taxes imposed under Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia varies according to whether the facility for which the qualified investment property is purchased or acquired is located in a county designated as a tier 1, tier 2, or tier 3 or 4 less developed area under O.C.G.A. Section 48-7-40:
1. Tier 1 County. If the manufacturing or telecommunications facility is located in a county designated as tier 1, then the amount of the credit is equal to 5 percent of the cost of all qualified investment property purchased or acquired by the taxpayer for that facility in that taxable year.

2. Tier 2 County. If the manufacturing or telecommunications facility is located in a county designated as tier 2, then the amount of the credit is equal to 3 percent of the cost of all qualified investment property purchased or acquired by the taxpayer for that facility in that taxable year.

3. Tier 3 or 4 County. If the manufacturing or telecommunications facility is located in a county designated as tier 3 or 4, then the amount of the credit is equal to 1 percent of the cost of all qualified investment property purchased or acquired by the taxpayer for that facility in that taxable year.

(b) Higher Rate of Credit. In the event that the qualified investment property purchased or acquired by taxpayers consists of recycling machinery or equipment, a recycling manufacturing facility, pollution control or prevention machinery and equipment, a pollution control or prevention facility, or is used in the conversion from defense to domestic production, then the qualified investment property will be subject to a higher rate of credit. The amount of the higher rate of credit varies according to whether the qualified investment property is purchased or acquired for a facility located in a county designated as a tier 1, tier 2, or tier 3 or 4 less developed area under O.C.G.A. Section 48-7-40:
1. Tier 1 County. If the qualified investment property subject to the higher rate of credit is purchased or acquired for a facility located in a county designated as tier 1, then the amount of the credit is equal to 8 percent of the cost of such property purchased or acquired by the taxpayer in that taxable year.

2. Tier 2 County. If the qualified investment property subject to the higher rate of credit is purchased or acquired for a facility located in a county designated as tier 2, then the amount of the credit is equal to 5 percent of the cost of such property purchased or acquired by the taxpayer in that taxable year.

3. Tier 3 or 4 County. If the qualified investment property subject to the higher rate of credit is purchased or acquired for a facility located in a county designated as tier 3 or 4, then the amount of the credit is equal to 3 percent of the cost of such property purchased or acquired by the taxpayer in that taxable year.

(c) Office Space Cap in Recycling Manufacturing Facility. Where the office space used to house support staff in a building that is part of a recycling manufacturing facility exceeds 10 percent of the building's total space, then the building will not be considered a component of the recycling manufacturing facility. The building and any improvements to the building will be subject to the basic rate of credit for qualified investment property. Only recycling machinery or equipment located in the building will be subject to the higher rate of credit for qualified investment property.

(3) Establishing Eligibility for the Credit.

(a) Three-Year Threshold. Taxpayers must have operated an existing manufacturing or telecommunications facility or related support facility in this state for three years (thirty-six months) and must have previously filed any required state tax returns in order to become eligible for the tax credit. Only qualified investment property which is purchased or acquired by taxpayers after the thirty-six month eligibility requirement is met may be used to compute the tax credit. Qualified investment property purchased or acquired by taxpayers in taxable years prior to establishing the thirty-six month eligibility may not be claimed for those years by filing an amended tax return.

(b) Eligible Taxpayer. For the purpose of establishing eligibility, the "taxpayer" referenced is the entity that is required by law to file a return or pay tax. A partnership or business joint venture must have operated within the state for the immediately preceding thirty-six months to qualify for the credit. For example, the previous activity in Georgia of a parent, in the case of a corporation, a partner, in the case of a partnership or a business joint venture will not create eligibility for a new entity for the purposes of the thirty-six month threshold.

(c) Approval of Project Plan.
1. Eligibility and Application Procedure; General Rule. To be eligible for the credit provided for in O.C.G.A. Sections 48-7-40.2, 48-7-40.3, and 48-7-40.4, a taxpayer must purchase or acquire qualified investment property pursuant to a project plan. The taxpayer must submit Form IT-APP, which is a written application requesting approval of the project plan within thirty (30) days of the completion of the project. Form IT-APP must include a written narrative describing the project and a listing of the type, quantity, and cost of all qualified investment property purchased or acquired pursuant to the project plan and for which tax credits will be claimed.

2. Procedure for Claiming Credit Before Completion of Project. In the event a taxpayer elects to claim the credit before the completion of the project, but after the purchase or acquisition of qualified investment property in excess of the minimum threshold amount, the taxpayer may submit Form IT-APP for approval of the project plan along with the tax return on which the credit will be claimed. This preliminary Form IT-APP must be amended within thirty (30) days of the completion of the project.

3. Amendment of Application for Approval of Project Plan. If necessary, a taxpayer may amend any Form IT-APP for approval of the project plan by submitting additional project information.

4. Permission to File Late Application. In the event a taxpayer is unable to submit Form IT-APP for approval of the project plan within thirty (30) days of the completion of a project, the taxpayer shall submit the Form IT-APP as soon as practical thereafter.

5. Duration of Project. The duration of a project shall not exceed three years unless expressly approved in writing by the Commissioner.

6. Electronic Submission Required for Form IT-APP. Form IT-APP must be submitted electronically through the Georgia Tax Center. The Department will not approve any Form IT-APP that is submitted or filed in any other manner.

6. Minimum Threshold Amount.
(i) For Projects Beginning On or After January 1, 1995 and Beginning in a Taxable Year Beginning Before January 1, 2020. Before the credit may be claimed, the cost of all qualified investment property purchased or acquired by the taxpayer pursuant to the project plan must exceed a minimum threshold amount of $50,000.

(ii) For Projects Beginning in Taxable Years Beginning On or After January 1, 2020. Before the credit may be claimed, the cost of all qualified investment property purchased or acquired by the taxpayer pursuant to the project plan must exceed a minimum threshold amount of $100,000.

7. Certificate of Approval. If the project plan satisfies the requirements of this paragraph, the Commissioner shall issue to the taxpayer a certificate of approval.

8. Timing. The taxpayer shall claim the credit for qualified investment property purchased or acquired pursuant to the project plan in the year immediately following the taxable year in which the requisite minimum threshold amount is purchased or acquired by the taxpayer.

9. Documentation. At the time the credit is claimed, the taxpayer must submit to the Commissioner certification of the total cost of all qualified investment property purchased or acquired pursuant to the project plan. Such certification shall be done by attaching Form IT-IC and an approved Form IT-APP and any other information the Commissioner may request to the taxpayer's state tax return. A software program's Form IT-IC that is electronically filed with the Georgia income tax return in the manner specified by the Department satisfies this requirement.

(d) Earliest Date of Eligibility. In order to count towards establishing the minimum threshold amount or to qualify as a basis for claiming the credit, the purchase or acquisition of qualified investment property must have occurred no sooner than January 1, 1994. Qualified investment property purchased or acquired by taxpayers on or after January 1, 1994, will only be eligible as a basis for the credit if all of the other requirements of these regulations are met.

(e) Establishing New Eligibility. The sale, merger, acquisition, reorganization or transfer in liquidation or bankruptcy of a taxpayer does not create new eligibility for any succeeding taxpayer, but any unused credits may be transferred and continued by any transferee of the taxpayer as long as the transferee meets other applicable requirements in law and regulation. If the taxpayer which earned the credits elects to transfer unused credits, such taxpayer must provide the transferee with a copy of the original approval of the credits it received from the Department, and a written statement indicating the assets transferred and the unused credit available at the time of transfer. When a taxpayer merely changes its name, recapitalizes, or liquidates subsidiaries not related to the manufacturing or telecommunications facility, however, no new eligibility need be established.

(4) Maximum Amount of Credit. The investment tax credit taken by a taxpayer in any taxable year shall not exceed 50 percent of the taxpayer's Georgia state income tax liability derived from operations within this state.

(5) Withholding Tax for Taxpayers in Rural Counties located in Tier 1 Counties or Tier 2 Counties. For a taxpayer with a manufacturing or telecommunications facility in a rural county located in a tier 1 county or tier 2 county that has purchased or acquired qualified investment property in a taxable year beginning on or after January 1, 2020 (which is then claimed on an income tax return in the taxable year after the purchased or acquired taxable year), the investment tax credit shall first be applied to such taxpayer's state income tax liability which is attributable to income derived from operations within this state for that taxable year, limited to 50 percent of such liability before the application of such credit. If the amount of the credit exceeds 50 percent of the taxpayer's liability or estimated tax liability before the application of the credit, the excess may be taken as provided in this regulation as a credit against such taxpayer's quarterly or monthly withholding payments under O.C.G.A. § 48-7-103. The taxpayer shall not be subject to any adverse consequences including penalties from the failure to estimate their tax liability correctly.

(6) Per Taxpayer Credit Limitation for Withholding Tax. The amount preapproved for a taxable year for a taxpayer to be used against withholding under paragraphs (5) and (9) together shall not exceed $1 million. This per taxpayer per taxable year $1 million credit limitation applies to all facilities that a taxpayer has in rural counties located in both tier 1 and tier 2 counties.

(7) Credit Cap. The total amount of tax credits preapproved to be used against withholding tax for taxpayers in rural counties located in tier 1 and tier 2 counties under paragraphs (5) and (9) together shall not exceed $10 million for all taxpayers per calendar year.

(8) Preapproval for Withholding Tax for Taxpayers in Rural Counties located in Tier 1 Counties or Tier 2 Counties. A taxpayer with a manufacturing or telecommunications facility in a rural county located in a tier 1 county or tier 2 county that has received an approved Form IT-APP from the Department for qualified investment property purchased or acquired in a taxable year beginning on or after January 1, 2020 (which is then claimed on an income tax return in the taxable year after the purchased or acquired taxable year), may request preapproval to use their excess credit against withholding tax by submitting the appropriate forms to the Department as provided in this paragraph.

(a) Mandatory Electronic Preapproval Application for Withholding Tax For Taxpayers in Rural Counties located in Tier 1 Counties or Tier 2 Counties. To claim any excess investment tax credit not used on the income tax return against the taxpayer's withholding tax liability, a taxpayer that has received an approved Form IT-APP from the Department shall electronically submit Form IT-WHRZ-APP through the Georgia Tax Center between April 1 and May 31 of the calendar year in which the taxable year for which they will claim the investment tax credit ends. Provided preapproval is granted as provided in paragraph (8)(b) of this regulation, the credit is then eligible to be claimed against withholding in the second month after the month the tax return claiming the investment tax credit is filed and the taxpayer reports using Form IT-WHRZ-RPT through the Georgia Tax Center that they have filed their return.
(i) Example. Taxpayer purchases qualified investment property in a year that begins on January 1, 2020 and ends on December 31, 2020; and taxpayer submits Form IT-APP and receives an approved Form IT-APP. Taxpayer applies for preapproval to use their excess credit against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2021 and May 31, 2021. Taxpayer files their 2021 Georgia income tax return and claims the investment tax credit as provided in paragraph (3)(c)9. of this regulation on October 15, 2022 and Taxpayer submits Form IT-WHRZ-RPT through the Georgia Tax Center to report that the return has been filed on such date. The investment tax credit is eligible to be claimed against withholding beginning on December 1, 2022. Alternatively, if the Taxpayer files their 2021 Georgia income tax return and claims the investment tax credit as provided in paragraph (3)(c)9. of this regulation on September 30, 2022 and Taxpayer submits Form IT-WHRZ-RPT through the Georgia Tax Center to report that the return has been filed on such date, the investment tax credit is eligible to be claimed against withholding beginning on November 1, 2022.

(ii) Example. Taxpayer purchases qualified investment property in a year that begins on December 1, 2020 and ends on November 30, 2021; and taxpayer submits Form IT-APP and receives an approved Form IT-APP. Taxpayer applies for preapproval to use their excess credit against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2022 and May 31, 2022. Taxpayer files their 2022 Georgia income tax return and claims the investment tax credit as provided in paragraph (3)(c)9. of this regulation on September 15, 2023 and Taxpayer submits Form IT-WHRZ-RPT through the Georgia Tax Center to report that the return has been filed on such date. The investment tax credit is eligible to be claimed against withholding beginning on November 1, 2023.

(iii) If the taxpayer is a disregarded entity, then Form IT-WHRZ-APP should be electronically submitted in the name of the owner of the disregarded entity.

(iv) The Department will not preapprove any use of the investment tax credit against withholding where the Form IT-WHRZ-APP is submitted or filed in any other manner. The filing of Form IT-WHRZ-APP is an irrevocable election and as such the amount approved by the Department for use against withholding tax can only be used against withholding tax it can never be used against income tax liability. The amount approved by the Department for use against withholding tax will not pass through to the shareholders, partners, or members of the taxpayer if the taxpayer is a pass-through entity. The Department shall treat the amount approved for use against withholding tax as a credit against future withholding tax payments and will not refund any previous withholding payments.

(b) Notification. The Department will notify each taxpayer of the tax credits preapproved and allocated to such taxpayer by June 30 of the calendar year in which the application was submitted.

(c) Allocation of Withholding Tax Credit. In the event the with holding tax credit amounts on applications filed with the Commissioner under paragraphs (8) and (10) of this regulation exceed the maximum aggregate withholding tax credits under paragraph (7) of this regulation, then the withholding tax credits shall be allocated among the taxpayers who filed a timely Form IT-WHRZ-APP through the Georgia Tax Center on a pro rata basis based upon the amounts otherwise allowed under O.C.G.A. §§ 48-7-40.2 and 48-7-40.3 and this regulation.

(d) The withholding tax benefit may only be applied against the withholding tax account used by the taxpayer for payroll. In the event the taxpayer is a single member limited liability company that is disregarded for income tax purposes, the withholding tax benefit may only be applied against the withholding tax liability that is attributable to wages paid by the single member limited liability company.

(e) In the event it is determined that the taxpayer has not met all the requirements of O.C.G.A. §§ 48-7-40.2 or 48-7-40.3 and this regulation, then the amount of credits shall not be tentatively approved or the tentatively approved credits shall be retroactively denied. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been claimed, except as provided in paragraph (5) of this regulation.

(9) Eligibility for Investment Tax Credit Carry Forward to be used against Withholding Tax.

(a) A taxpayer that has investment tax credit carry forward for qualified investment property that was purchased or acquired in a taxable year beginning before January 1, 2020, may request preapproval to use such investment tax credit carry forward against withholding tax, if within a single taxable year beginning on or after January 1, 2020 and before January 1, 2025 such taxpayer:
(i) Maintains in rural counties located in Tier 1 Counties at least 100 full-time employee jobs as such term is defined in O.C.G.A. § 48-7-40.24 and purchases or acquires at least $5 million of qualified investment property for manufacturing or telecommunications facilities in rural counties located in Tier 1 Counties. The number of full-time employee jobs shall be the monthly average number of eligible full-time employees subject to Georgia income tax withholding for the taxable year; or

(ii) Maintains in rural counties located in Tier 2 Counties at least 100 full-time employee jobs as such term is defined in O.C.G.A. § 48-7-40.24 and purchases or acquires at least $10 million of qualified investment property for manufacturing or telecommunications facilities in rural counties located in Tier 2 Counties. The number of full-time employee jobs shall be the monthly average number of eligible full-time employees subject to Georgia income tax withholding for the taxable year.

(b) If when the qualified investment property was purchased or acquired the taxpayer was located in a Tier 1 County but that county is now designated as a Tier 2 County, the taxpayer shall be eligible to meet the requirements of subparagraph (9)(a)(i) provided in the year they meet the requirements of subparagraph (9)(a)(i) such county is a rural county located in a Tier 2 County.

(10) Preapproval for Investment Tax Credit Carry Forward to be used against Withholding Tax. A taxpayer that expects to meet the requirements in paragraph (9) of this regulation may request preapproval to use such investment tax credit carry forward against withholding tax as provided in this paragraph.

(a) Mandatory Electronic Preapproval Application for Investment Tax Credit Carry Forward to be used against Withholding Tax. To claim investment tax credit carry forward, that was properly claimed and not used or expected to be used, against the taxpayer's withholding tax liability for taxable years beginning on or after January 1, 2020 and before January 1, 2025, a taxpayer shall electronically submit Form IT-WHRZ-APP through the Georgia Tax Center between April 1 and May 31 of the applicable calendar year that begins on or after January 1, 2020 and before January 1, 2025. The applicable calendar year is the calendar year in which the taxable year that the taxpayer expects to meet the requirements specified in paragraph (9) of this regulation ends. Provided preapproval is granted, the investment tax credit carry forward is then eligible to be claimed against withholding when the taxpayer reports that the requirements of paragraph (9) have been met by submitting Form IT-WHRZ-RPT through the Georgia Tax Center.
(i) Example. Taxpayer claimed and does not use or expects not to use the investment tax credit in a taxable year which begins on January 1, 2019 and ends on December 31, 2019. Taxpayer expects to meet the requirements in paragraph (9)(a) or (9)(b) of this regulation in the taxable year which begins on January 1, 2020 and ends on December 31, 2020. Taxpayer applies for preapproval to use their investment tax credit carry forward against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2020 and May 31, 2020.

(ii) Example. Taxpayer claimed and does not use or expects not to use investment tax credit in a taxable year which begins on December 1, 2019 and ends on November 30, 2020. Taxpayer expects to meet the requirements in paragraph (9)(a) or ((9)(b) of this regulation in the taxable year which begins December 1, 2020 and ends on November 30, 2021. Taxpayer applies for preapproval to use their investment tax credit carry forward against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2021 and May 31, 2021.

(iii) Example. Taxpayer claimed and does not use or expects not to use investment tax credit in a taxable year which begins on December 1, 2019 and ends on November 30, 2020. Taxpayer expects to meet the requirements in paragraph (9)(a) or (9)(b) in the taxable year which begins December 1, 2024 and ends on November 30, 2025. Taxpayer applies for preapproval to use their investment tax credit carry forward against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2025 and May 31, 2025.

(iv) If the taxpayer is a disregarded entity, then Form IT-WHRZ-APP should be electronically submitted in the name of the owner of the disregarded entity.

(v) The Department will not preapprove any use of the investment tax credit carry forward against withholding tax where Form IT-WHRZ-APP is submitted or filed in any other manner. The amount approved by the Department for use against withholding tax will not pass through to the shareholders, partners, or members of the taxpayer if the taxpayer is a pass-through entity. The filing of Form IT-WHRZ-APP is an irrevocable election and as such the amount approved by the Department for use against withholding tax can only be used against withholding tax it can never be used against income tax liability. The Department shall treat the amount approved for use against withholding tax as a credit against future withholding tax payments and will not refund any previous withholding payments.

(b) Notification. The Department will notify each taxpayer of the tax credits approved and allocated to such taxpayer by June 30 of the calendar year in which the application was submitted.

(c) Allocation of Withholding Tax Credit. In the event the withholding tax credit amounts on applications filed with the Commissioner under paragraphs (8) and (10) of this regulation exceed the maximum aggregate withholding tax credits under paragraph (7) of this regulation, then the withholding tax credits shall be allocated among the taxpayers who filed a timely Form IT-WHRZ-APP through the Georgia Tax Center on a pro rata basis based upon the amounts otherwise allowed under O.C.G.A. §§ 48-7-40.2 and 48-7-40.3 and this regulation.

(d) The withholding tax benefit may only be applied against the withholding tax account used by the taxpayer for payroll. In the event the taxpayer is a single member limited liability company that is disregarded for income tax purposes, the withholding tax benefit may only be applied against the withholding tax liability that is attributable to wages paid by the single member limited liability company.

(e) In the event it is determined that the taxpayer has not met all the requirements of O.C.G.A. §§ 48-7-40.2 or 48-7-40.3 and this regulation, then the amount of credits shall not be tentatively approved or the tentatively approved credits shall be retroactively denied. With respect to such denied credits, tax, interest, and penalties shall be due if the credits have already been claimed.

(f) Qualified investment property purchased or acquired under paragraph (9) of this regulation may be eligible for the investment tax credit under O.C.G.A. § 48-7-40.2(b) or O.C.G.A. § 48-7-40.3(b), provided that the conditions for such credit are met independently of paragraphs (9) and (10) of this regulation.

(g) For the taxable years in which the jobs that are required to be maintained under subparagraph (9)(a) of this regulation are maintained, such jobs shall not be eligible to be used or claimed as the basis for any other tax credit or benefit allowed by state law.

(h) Paragraphs (9) and (10) of this regulation shall not extend the carry forward period for any credit.

(i) A taxpayer is only required to meet the requirements of paragraph (9) of this regulation one time. However, the taxpayer must apply for preapproval and report each year they qualify and may only reapply for amounts where the carry forward period has not yet expired. A taxpayer is only eligible to claim the credit for the year they meet the requirements and any eligible future years, not years before the year they meet the requirements.
1. Example. Taxpayer meets the requirements in 2020. They are eligible for years 2020 through 2024 but only need to meet the requirements one time in 2020.

2. Example. Taxpayer meets the requirements in 2022. They are eligible for years 2022 through 2024 but only need to meet the requirements one time in 2022.

(j) Required Reporting by Taxpayer.
1. Each taxpayer that receives preapproval for use of the credit under paragraph (10) of this regulation, must certify to the Department using Form IT-WHRZ-RPT that the Taxpayer:
(i) Maintained in rural counties located in Tier 1 Counties atleast 100 full-time employee jobs and actually purchased or acquired at least $5 million of qualified investment property for manufacturing or telecommunications facilities in rural counties located in Tier 1 Counties. For purposes of the full-time employee job requirement, the taxpayer may certify such requirement at the time it is certain the requirement will be fulfilled for the taxable year even though the taxable year has not yet been completed. For example, a taxpayer has 600 full-time employee jobs in January and 600 full-time employee jobs in February. Since the average number of jobs for the year at that time would be at least 100 (1,200/12) regardless of the number of jobs in the remaining months, the taxpayer will have met the requirement; or

(ii) Maintained in rural counties located in Tier 2 Counties at least 100 full-time employee jobs and actually purchased or acquired at least $10 million of qualified investment property for manufacturing or telecommunications facilities in rural counties located in Tier 2 Counties. For purposes of the full-time employee job requirement, the taxpayer may certify such requirement at the time it is certain the requirement will be fulfilled for the taxable year even though the taxable year has not yet been completed. For example, a taxpayer has 600 full-time employee jobs in January and 600 full-time employee jobs in February. Since the average number of jobs for the year at that time would be at least 100 (1,200/12) regardless of the number of jobs in the remaining months, the taxpayer will have met the requirement.

2. Such information shall be submitted electronically through the Georgia Tax Center using Form IT-WHRZ-RPT when the taxpayer completes such requirements. Until the taxpayer submit Form IT-WHRZ-RPT through the Georgia Tax Center, the credit cannot be utilized against withholding as provided in this regulation.

(11) Carry Forward.

(a) Income Tax Carry Forward. A credit which is claimed but not used in a taxable year may be carried forward for ten years from the close of the taxable year in which qualified investment property with an aggregate cost exceeding the minimum threshold amount is purchased or acquired, provided that such qualified investment property continues to be used in the manufacturing, recycling, or pollution control processes or in providing telecommunications services. As such the first year of the carry forward period is the year the credit is claimed since the credit is claimed in the year after the year the qualified investment property is purchased or acquired.

(b) Withholding Tax Carry Forward.
1. With respect to the use of the credit against withholding tax as allowed by paragraph (5) of this regulation, the remainder of the carry forward period begins at the beginning of the second month after the month the tax return claiming the credit is due (including extensions) and ends nine years from such date, provided that such qualified investment property continues to be used in the manufacturing, recycling, or pollution control processes or in providing telecommunications services.
(i) Example. Taxpayer purchases qualified investment property in a year that begins on January 1, 2020 and ends on December 31, 2020; taxpayer submits Form IT-APP and receives an approved Form IT-APP. The taxpayer applies for preapproval to use their excess credit against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2021 and May 31, 2021 and is granted preapproval on June 30, 2021. Taxpayer files their Georgia income tax return and claims the investment tax credit on the October 15, 2022 due date of the return and Taxpayer submits Form IT-WHRZ-RPT through the Georgia Tax Center to report that the return has been filed on such date. Taxpayer begins claiming the credit against withholding on December 1, 2022. The taxpayer's carry forward period expires on November 30, 2031.

2. With respect to the use of the credit against withholding tax as allowed by paragraph (9) of this regulation, the remainder of the carry forward period begins at the date the taxpayer meets the requirements of paragraph (9) of this regulation and ends based on the number of years that remain in the carry forward period, provided that such qualified investment property continues to be used in the manufacturing, recycling, or pollution control processes or in providing telecommunications services.
(i) Example. Taxpayer purchased qualified investment property in the taxable year that began on January 1, 2010 and ended on December 31, 2010. The credit was claimed on the taxable year that began on January 1, 2011 and ended on December 31, 2011. As such the taxable year that begins on January 1, 2020 and ends on December 31, 2020 is the last taxable year the credit can be claimed. For such taxable year, the taxpayer applies for preapproval to use their investment tax credit carry forward against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2020 and May 31, 2020 and is granted preapproval on June 30, 2020. Taxpayer meets the requirements of paragraph (9) of this regulation on July 1, 2020. The taxpayer's carry forward period expires on June 30, 2021.

(ii) Example. Taxpayer purchased qualified investment property in the taxable year that began on January 1, 2014 and ended on December 31, 2014. The credit was claimed on the taxable year that began on January 1, 2015 and ended on December 31, 2015. As such the taxable year that begins on January 1, 2024 and ends on December 31, 2024 is the last taxable year the credit can be claimed. For such taxable year, the taxpayer applies for preapproval to use their investment tax credit carry forward against withholding by submitting Form IT-WHRZ-APP through the Georgia Tax Center between April 1, 2024 and May 31, 2024 and is granted preapproval on June 30, 2024. Taxpayer meets the requirements of paragraph (9) of this regulation on July 1, 2024. The taxpayer's carry forward period expires on June 30, 2025.

(iii) If the taxpayer's carry forward amount includes multiple years, each year shall be given a separate carry forward period.

(12) Sunset for Paragraphs (9) and (10) of this regulation. Paragraphs (9) and (10) of this regulation shall be repealed on December 31, 2024; provided, however, such automatic repeal shall not impair or affect a taxpayer's ability or right to apply an unused credit for a taxable year after December 31, 2024, that such taxpayer accrued under such paragraphs under the conditions of such paragraphs prior to its automatic repeal.

(13) Coordination with Job, Quality Jobs, Headquarters Job and Optional Investment Tax Credits. A taxpayer may not claim or carry forward the investment tax credit for a given project in any year in which either a job tax credit is claimed or carried forward under O.C.G.A. Sections 48-7-40 or 48-7-40.1, a quality jobs tax credit or headquarters job tax credit is claimed under O.C.G.A. Section 48-7-40.17, or an optional investment tax credit is claimed under O.C.G.A. Sections 48-7-40.7, 48-7-40.8, or 48-7-40.9. Neither may a taxpayer alternately claim the investment tax credit in one year and either the job, quality jobs, headquarters job, or optional investment tax credit in the next year for a given project. The job, investment, and optional investment tax credits are not interchangeable. Taxpayers may elect to claim only one of the job, investment, or optional investment credits for a given project.

(14) Leases of Qualified Investment Property. Any lease for a period of five years or more of any real or personal property used in the construction or expansion of a manufacturing or telecommunications facility which would otherwise constitute qualified investment property will be treated as the purchase or acquisition of qualified investment property by the lessee. Such property will be treated as having been purchased or acquired by the taxpayer in the taxable year in which the lease becomes binding on the taxpayer and the lessor. In establishing eligibility and calculating the investment credit based on such property, the taxpayer will use the fair market value of the leased property as the cost of qualified investment property.

(15) Schedule of Additional Information. In addition to the information required under paragraph (c)(1) of O.C.G.A. Sections 48-7-40.2, 48-7-40.3, and 48-7-40.4, taxpayers must include for every year in which they claim the credit the following information:

(a) The taxpayer's basis in all qualified investment property purchased or acquired by the taxpayer in the taxable year;

(b) The fair market value of all leased property which may be treated as qualified investment property for the taxable year;

(c) A list of which recoverable materials are being recycled, and to what extent they are components of manufactured products;

(d) A certification from the Department of Natural Resources that all pollution control or prevention machinery or equipment that is a basis for a credit is necessary and adequate for the purposes intended; and

(e) Any other information that the Commissioner may reasonably require.

(16) Pass-Through Entities. When the taxpayer is a pass-through entity, and has no income tax liability of its own, the tax credits will pass to its members, shareholders, or partners based on the year ending profit/loss percentage. The credit forms will initially be filed with the tax return of the taxpayer to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example: A partnership earns the credit for its tax year ending January 31, 2020. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2020 tax year.

(17) Specific Applications.

(a) Examples of some common items that do not qualify as an expansion for the investment tax credit include, but are not limited to, items used for safety, items and materials used in the repair, refurbishing, or reconditioning of machinery, hand tools, research and development expenditures, materials used in the repair of existing buildings, legal fees, consulting fees, expenditures for office, or office furniture, computer hardware or software which does not control manufacturing machinery or equipment, and automobiles.

(18) Effective Date. Except as specifically provided in this regulation, this regulation as amended shall be applicable to qualified investment property purchased or acquired in taxable years beginning on or after January 1, 2020. Qualified investment property purchased or acquired in taxable years beginning before January 1, 2020 will be governed by the regulations of Chapter 560-7 as they exist before January 1, 2020 in the same manner as if the amendments set forth in this regulation had not been promulgated.

O.C.G.A. §§ 48-2-12, 48-7-40.2, 48-7-40.3, 48-7-40.4.

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