Significant state tax legislation will move forward through the Georgia General Assembly. “Crossover Day” was Thursday, March 11 -- the 28th legislative day of 40 total legislative days – the day by which all bills must have passed one legislative chamber in order to cross over and be considered by the other chamber. Bills that have not passed one chamber prior to crossover are generally dead for the year. Georgia’s Constitution requires that all revenue related bills originate in the House, so the vast majority of bills still alive for the year now go over to the Senate. However, after a brief session on Friday, March 12, the General Assembly has suspended its session until further notice. So it is unknown when the remaining 11 legislative days will occur, although the General Assembly is still constitutionally required to meet and pass a budget for the upcoming fiscal year.
Bills crossing over
HB 105 – Rideshare. The Senate’s revised bill contains provisions related to the taxation of for-hire transportation (rideshares, taxis). The bill would impose a new 50¢ fee on each for-hire ground transport trip and 25¢ upon any shared for-hire ground transport trip, and exempts taxable transportation services from state sales and use taxes. This bill will now go back to the House to agree or disagree to the Senate’s new bill. As drafted, these changes would be applicable to transactions beginning April 1, 2020 in conjunction with the timing of HB 276 described below. However, the suspended legislative session complicates this intention.
HB 538 – Taxpayer Fairness. This bill provides that all questions of law decided by any court or the Georgia Tax Tribunal, including interpretations of constitutional, statutory, and regulatory provisions shall be made without deference to any rule, determination, or interpretation made by the Department of Revenue. The elimination of judicially adopted deference doctrines would allow judges, including the judge of the Georgia Tax Tribunal, additional discretion in interpreting legislative intent when analyzing ambiguous statutory provisions. This is similar to legislation passed in recent years in Arizona and Wisconsin.
HB 846 - Statutory Interest. The bill requires that statutory interest be paid on refunds of sales and use tax to direct pay permit holders, thereby statutorily invalidating the portion of the Direct Pay Permit Regulation (Ga. Comp. Regs. & R. 560-12-1-.16) that currently requires direct pay permit holders to waive interest on refunds. However, such interest would begin to accrue from the date of the filing of the refund claim, rather than the date of the payment of tax. HB 846 also allows local governments to elect for certain large sales and use tax refunds to be paid back in installments. Lastly, the bill would change the statutory interest rate on all under and overpayments from the current Prime + 3% rate to only the Prime rate. The Senate Finance committee is currently considering the fiscal impact of this decrease to the interest rate.
HB 949 – IRS Conformity. HB 949 is Georgia’s annual income tax conformity bill, which will conform Georgia’s revenue code to the federal Internal Revenue Code as of January 1, 2020. The bill also reduces individual tax rates, by eliminating the marginal rates and setting a single flat rate of 5.375%, eliminates the state deduction for individual Georgia income taxes paid, and creates a credit mechanism attempting to account for the impact of the elimination of the marginal rates to be effective beginning January 1, 2021.
| Eversheds Sutherland Observation: The 2018 conformity bill lowered the state’s top marginal rate from 6.00% to 5.75% for 2019 by amending both O.C.G.A. § 48-7-20 (individual rates) and O.C.G.A. § 48-7-21 (corporate rates). The measure was in conjunction with the state’s response to federal tax reform as a result of the Tax Cuts and Jobs Act, and the rate reduction was intended to offset the potential state revenue windfall. The 2018 legislation also included provisions to further lower the top individual marginal rate and the corporate rate to 5.50% in 2020 upon approval by the General Assembly and the Governor. HB 949 would fulfill part of the legislative promise for future rate reductions but applies only to the individual rate and not the corporate rate. Given the economic upheaval surrounding the COVID-19 uncertainty, it will be interesting to see if additional tax relief is proposed in 2020, whether such relief will apply to corporations, and whether it will become effective during 2020. See additional coverage here and here. |
HB 1037 – Georgia Film Tax Credit Amendments. HB 1037 mandates audits of every production that receives the film tax credit. It responds to the Georgia Department of Audits and Accounts’ published report on Georgia’s film tax credits which found that the “generous tax credit and insufficient controls incentivize misuse.” HB 1037 permits the Department of Revenue to certify outside auditors—certified public accountants meeting specified conditions—to perform the required audits. The bill also changes the carryforward period to three years from the date of the production’s film tax credit certification.
SB 480 - Contingency Fees. After enacting legislation in 2018 enabling third parties to perform sales and use tax data analytics services and be compensated on a contingent basis (see prior coverage on HB 811), SB 480 would provide that such contingent fees would be deducted from such sales and use tax collections prior to the deposit of such funds into the general fund.
| Eversheds Sutherland Observation: Georgia’s Constitution requires revenues collected from taxes, fees, and assessments for state purposes be paid into the general fund of the state treasury. Ga. Const. Art. VII, § III, ¶ II(a). Therefore, contingency payments to private third parties may violate this constitutional provision. A special allocation to contingency auditors would likely require a voter referendum. |
Bills already enacted
HB 276 – Marketplace. Governor Kemp signed Georgia’s marketplace facilitator law into law on January 30, 2020 to become effective on April 1, 2020. This legislation requires “marketplace facilitators” to collect and remit sales tax on behalf of their marketplace sellers. However, franchisors with annual nationwide sales in excess of $500 million are excluded from being a marketplace facilitator. Also excluded are facilitated sales of dealers (generally retailers) with annual Georgia sales in excess of $500 million. See additional coverage here.
Relevant bills that failed to pass. These bills did not crossover, but are notable tax bills that were proposed this year.
HB 1056 - Taxation of Digital Goods. This bill would impose sales and use tax on certain digital goods and services. The bill did not get a committee hearing this year.
SB 410 – Property Tax Attorney’s Fees. This bill would have amended the property tax appeal process to allow taxpayers to recover attorney’s fees when a county appeals the Board of Equalization (or other administrative) determination to court but the county loses the appeal. Currently, the law only allows the taxpayer to recover attorney and court fees when the taxpayer appeals the administrative determination to court and wins the appeal. The bill passed out of committee, but did not make it to a Senate floor vote.
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