Rule 560-7-8-.62 - Rural Zone Tax Credits(1)Purpose. This regulation provides guidance concerning the implementation and administration of the tax credits under O.C.G.A. § 48-7-40.32.(2)Coordination of Agencies. Under O.C.G.A. § 48-7-40.32, the Department of Community Affairs and the Department of Economic Development are the state agencies responsible for designating zones for the tax credits and the Department of Community Affairs is the state agency responsible for certifying taxpayers for the tax credits.(3)Definitions. The terms "certified entity","certified investor", "eligible business","full-time equivalent","local government","maintained job","qualified rehabilitation expenditure","rural zone","year one", and "years one through five" as used in this regulation are defined in the Department of Community Affairs Regulation 110-34-1-.02.(4)Rural Zone Jobs Tax Credit. A certified entity that creates at least two new full-time equivalent jobs in a rural zone shall be allowed a tax credit in the amount of $2,000 for each new full-time equivalent job in year one. Such certified entity shall receive rural zone jobs tax credit in years two through five for each new full-time equivalent job created in year one, provided the new full-time equivalent jobs are maintained in each year, and provided the certified entity maintains at least two new full-time equivalent jobs. (a) Additional New Full-Time Equivalent Jobs Created in Years Two Through Five. For each additional new full-time equivalent job created in years two through five, a certified entity shall receive rural zone jobs tax credit, provided the new full-time equivalent jobs are maintained. Additional new full-time equivalent jobs means those new full-time equivalent jobs created in years two through five that increase the monthly full-time employment average for that year above the monthly full-time employment average for year one. The average full-time monthly employment for a year will be determined by the procedure in Department of Community Affairs Regulation 110-34-1-.06. (i) The credits for additional new full-time equivalent jobs may only be taken if the certified entity already qualifies for the rural zone jobs tax credit in year one.(b) Subsequent Year One. The certified entity may begin a subsequent year one and years two through five as provided in Department of Community Affairs Regulation 110-34-1-.06.(c) Per Certified Entity Credit Limitation. The credit amount allowed under paragraph(4) of this regulation shall be further limited for each certified entity and shall not exceed $40,000.00 per taxable year.(d) Number of Full-Time Equivalent Jobs. The number of new full-time equivalent jobs shall be determined by comparing the monthly average of full-time equivalent jobs subject to Georgia income tax withholding for a given taxable year with the corresponding period of the prior taxable year; provided a certified entity that begins operations during the taxable year may be certified by the Department of Community Affairs to base initial eligibility on a period of less than 12 months.(e) Computation of Rural Zone Jobs Tax Credit Based on Twelve Month Periods Only. Except as provided in subparagraph (4)(d) of this regulation, a certified entity must compute increases and decreases in full-time equivalent jobs on the basis of twelve month periods only, even when the certified entity has taxable years that are not equal to twelve months. This may cause the rural zone jobs tax credit calculation period to be different from the tax year of the certified entity.(5)Rural Zone Property Tax Credit. A certified investor that acquires and develops property in a rural zone shall be allowed a tax credit if an eligible business that claims the tax credit under paragraph (4) of this regulation is located in the investment property; or if an eligible business is located in the investment property and that eligible business maintains a minimum of two full-time equivalent jobs for each year the rural zone property tax credit is claimed. (a) Credit Amount. The credit amount for the rural zone property tax credit is 25 percent of the purchase price and shall not exceed $125,000; provided that the entire credit shall not be taken in the year in which the property is placed in commercial service but shall be prorated equally in five installments over five taxable years, beginning with the taxable year in which the property is placed in service.(b) Certified Investor May Preserve the Rural Zone Property Tax Credit. A certified investor shall be allowed to claim the rural zone property tax credit for up to seven years from the date of initial eligibility in the event the commercial requirement under paragraph (5) of this regulation is not satisfied in consecutive years.(6)Rural Zone Qualified Rehabilitation Expenditures Tax Credit. A certified entity or certified investor that meets the minimum historic preservation standards provided by the Department of Community Affairs, that has qualified rehabilitation expenditures, shall receive the rural zone qualified rehabilitation expenditures tax credit for three years beginning with the year the property is placed in service. The certified entity or certified investor shall maintain a minimum of two full-time equivalent jobs for each year the tax credit is claimed; or with respect to a certified investor, if an eligible business is located in the investment property, such eligible business must maintain a minimum of two full-time equivalent jobs for each year the tax credit is claimed. (a) Credit Amount. The credit amount for the rural zone qualified expenditures tax credit is 30 percent of the qualified rehabilitation expenditures and shall not exceed $150,000 per project; provided that the entire credit shall not be taken in the year in which the property is placed in service but shall be prorated equally in three installments over three taxable years, beginning with the taxable year in which the property is placed in service.(7)Claiming the Rural Zone Tax Credit(s). For a certified entity or certified investor to claim the rural zone jobs tax credit, rural zone property tax credit or the rural zone qualified rehabilitation expenditures tax credit, the certified entity or certified investor must submit Form IT-RZ and their Department of Community Affairs certification(s), and any other information that the Commissioner may request, with the certified entity's or certified investor's Georgia income tax return each year the credit is claimed.(8)Carry Forward. In no event shall the rural zone tax credit for a taxable year exceed the certified entity's or certified investor's income tax liability. Any unused credit in a taxable year may be carried forward for ten years from the close of the taxable year in which the credit was claimed.(9)Pass-Through Entities. When the certified entity or certified investor is a pass-through entity, and has no income tax liability of its own, the tax credit will pass to its individual members, shareholders, or partners based on their year ending profit/loss percentage. The credit forms will initially be filed with the tax return of the pass-through entity to establish the amount of the credit available for pass through. The credit will then pass through to its individual 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 individual 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, 2019. The partnership passes the credit to a calendar year partner. The credit is available for use by the individual partner beginning with the calendar 2019 tax year.(10)Coordination with Other Tax Credits. A certified entity or certified investor that claims the rural zone tax credit for a project shall not be allowed to use the same qualified rehabilitation expenditures to generate and claim any additional state income tax credits, including, but not limited to, the historic rehabilitation tax credit. Jobs created by, arising from, or connected in any way with a project claimed under the rural zone jobs tax credit are not eligible to be used toward other job related tax credits.(11)Sunset Date. O.C.G.A. § 48-7-40.32, the rural zone tax credits, shall be repealed on December 31, 2027.(12)Effective Date. This regulation shall be applicable to taxable years beginning on or after January 1, 2018.Ga. Comp. R. & Regs. R. 560-7-8-.62
O.C.G.A. §§ 48-2-12, 48-7-40.32.
Original Rule entitled "Rural Zone Tax Credits" adopted. F. May 18, 2018; eff. June 7, 2018.