Tax Credit for Qualified Donation of Real Property; Carryover of Credit; Appraisals; Transfer of Credit; Penalty

  1. Law
  2. Georgia Code
  3. Revenue and Taxation
  4. Income Taxes
  5. Imposition, Rate, and Computation; Exemptions
  6. Tax Credit for Qualified Donation of Real Property; Carryover of Credit; Appraisals; Transfer of Credit; Penalty

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  1. As used in this Code section, the term:
    1. "Conservation easement" means a nonpossessory interest in real property imposing limitations or affirmative obligations, the purposes of which are consistent with at least two conservation purposes.
    2. "Conservation purpose" means any of the following:
      1. Water quality protection for wetlands, rivers, streams, or lakes;
      2. Protection of wildlife habitat consistent with state wildlife conservation policies;
      3. Protection of outdoor recreation consistent with state outdoor recreation policies;
      4. Protection of prime agricultural or forestry lands; and
      5. Protection of cultural sites, heritage corridors, or archeological and historic resources.
    3. "Donated property" means the real property of which a qualified donation is made pursuant to this Code section.
    4. "Eligible donor" means any person who owns an interest in a qualified donation.
    5. "Fair market value" means the value of the donated property as determined pursuant to subsections (c.1) and (c.2) of this Code section.
    6. "Qualified donation" means the fee simple conveyance to the state; a county, a municipality, or a consolidated government of this state; the federal government; or a bona fide charitable nonprofit organization qualified under the Internal Revenue Code and, beginning on January 1, 2014, accredited by the Land Trust Accreditation Commission of 100 percent of all right, title, and interest in the entire parcel of donated real property, and the donation is accepted by such state, county, municipality, consolidated government, federal government, or bona fide charitable nonprofit organization for use in a manner consistent with at least two conservation purposes. Such term shall also include the donation to and acceptance by the state; a county, a municipality, or a consolidated government of this state; the federal government; or a bona fide charitable nonprofit organization qualified under the Internal Revenue Code and, beginning on January 1, 2014, accredited by the Land Trust Accreditation Commission of a conservation easement. Any real property which is otherwise required to be dedicated pursuant to local government regulations or ordinances or to increase building density levels shall not be eligible as a qualified donation under this Code section. Any real property which is used for or associated with the playing of golf or is planned to be so used or associated shall not be eligible as a qualified donation under this Code section.
    7. "Related person" has the meaning provided by Code Section 48-7-28.3.
    8. "Substantial valuation misstatement" means a valuation such that the claimed value of any property on the appraisal as submitted to the State Properties Commission is 150 percent or more of the amount determined to be the correct amount of such valuation pursuant to subsections (c.1) and (c.2) of this Code section.
    1. A taxpayer shall be allowed a state income tax credit against the tax imposed by Code Section 48-7-20 or 48-7-21 for each qualified donation under this Code section.
    2. Except as otherwise provided in paragraph (3) of this subsection and in subsection (d) of this Code section, such credit shall be limited to an amount not to exceed the lesser of $500,000.00, 25 percent of the fair market value of the donated real property as fair market value is established for the year in which the donation occurred, or 25 percent of the difference between the fair market value and the amount paid to the donor if the donation is effected by a sale of property for less than fair market value as established for the year in which the donation occurred.
    3. Except as otherwise provided in subsection (d) of this Code section, in the case of a taxpayer whose net income is determined under Code Section 48-7-23, the aggregate total credit allowed to all partners in a partnership shall be limited to an amount not to exceed the lesser of $500,000.00, 25 percent of the fair market value of the donated real property as fair market value is established for the year in which the donation occurred, or 25 percent of the difference between the fair market value and the amount paid to the donor if the donation is effected by a sale of property for less than fair market value as established for the year in which the donation occurred.
  3. No tax credit shall be allowed under this Code section unless the taxpayer files with the taxpayer's income tax return a copy of the State Property Commission's determination and a copy of a certification issued by the Department of Natural Resources that the donated property is suitable for conservation purposes and meets the following additional requirements, where applicable:
    1. Subdivision is prohibited for a donated property of less than 500 acres and limited to one subdivision for a donated property of 500 acres or more;
    2. New construction on donated property of structures, roads, impoundments, ditches, dumping, or any other activity that would harm the protected conservation values of such donation is prohibited on such property;
    3. New construction on donated property within 150 feet of any perennial or intermittent stream is prohibited;
    4. A buffer of at least 100 feet on each side of any perennial streams on donated property which ensures at least 75 percent tree canopy evenly distributed after harvest is maintained and a buffer of at least 50 feet on each side of any intermittent streams on donated property which ensures at least 75 percent tree canopy evenly distributed after harvest is maintained;
    5. Timber and agricultural activities undertaken on the donated property are prohibited unless in accordance with best management practices published by the State Forestry Commission or the Soil and Water Conservation Commission, as the case may be;
    6. New construction on donated property causing more than 1 percent of such property's total surface area to be covered by impervious surfaces is prohibited;
    7. Mining on the property is prohibited; and
    8. Planting on the donated property of non-native invasive species listed in Category 1, Category 1 Alert, or Category 2 of the "List of Non-Native Invasive Plants in Georgia" developed by the Georgia Exotic Pest Council is prohibited.
      1. The value of the unencumbered property, the total value of the qualified donation in gross, and an accompanying statement identifying the methods used to determine such values;
      2. Whether a subdivision analysis was used in the appraisal;
      3. Whether the landowner or related persons own any other property, the value of which is increased as a result of the donation; and
      4. That the appraiser is certified pursuant to Chapter 39A of Title 43.

        Appraisals received by the Department of Natural Resources shall be forwarded to the State Properties Commission for review. The State Properties Commission shall approve the appraisal amount submitted or recommend a lower amount based on its review and inform the Department of Natural Resources of its determination. The State Properties Commission shall be authorized to promulgate any rules and regulations necessary to administer the provisions of this subsection. Any appraisal deemed to contain a substantial valuation misstatement shall be submitted to the Georgia Real Estate Commission for further investigation and disciplinary action. Upon receipt of the State Properties Commission's determination, the Department of Natural Resources may proceed with the certification process.

        (c.2)The Board of Natural Resources shall promulgate any rules and regulations necessary to implement and administer subsections (c) and (c.1) of this Code section. A final determination by the Department of Natural Resources or the State Properties Commission shall be subject to review and appeal under Chapter 13 of Title 50, the "Georgia Administrative Procedure Act."

    1. In no event shall the total amount of any tax credit under this Code section for a taxable year exceed the taxpayer's income tax liability. In no event shall the total amount of the tax credit allowed to a taxpayer under subsection (b) of this Code section exceed $250,000.00 with respect to tax liability determined under Code Section 48-7-20 or $500,000.00 with respect to tax liability determined under Code Section 48-7-21. Any unused tax credit shall be allowed to be carried forward to apply to the taxpayer's succeeding ten years' tax liability. However, the amount in excess of such annual dollar limits shall not be eligible for carryover to the taxpayer's succeeding years' tax liability nor shall such excess amount be claimed by or reallocated to any other taxpayer. No such tax credit shall be allowed the taxpayer against prior years' tax liability.
    2. Only one qualified donation may be made with respect to any real property that was, in the five years prior to donation, within the same tax parcel of record, except that a subsequent donation may be made by a person who is not a related person with respect to any prior eligible donors of any portion of such tax parcel.
      1. Beginning on January 1, 2016, the aggregate amount of tax credits allowed under this Code section shall not exceed $30 million per calendar year. The Department of Natural Resources shall accept no new applications for the tax credits allowed under this Code section after December 31, 2021.
      2. Prior to any renewal of the exemption for donations of real property beyond the date authorized by subparagraph (A) of this paragraph, the Department of Natural Resources shall provide a report to the Governor, the President of the Senate, the Speaker of the House of Representatives, and the chairpersons of the House Committee on Ways and Means and the Senate Finance Committee on the activity of the program occurring during the preceding years. The report shall include, but not be limited to:
        1. The number of applications and the total number of acres donated;
        2. The value of the qualified donations accepted into the program and which two of the five conservation purposes contained in paragraph (2) of subsection (a) of this Code section were the basis for the qualification of the property;
        3. The aggregate amount of income tax credits granted pursuant to this Code section; and
        4. A listing of the direct and indirect benefits to the state due to the donation of land for conservation purposes.
    4. Any unused credit may be carried forward to subsequent taxable years provided that the transfer or sale of this tax credit does not extend the time in which such tax credit can be used. The carry-forward period for tax credit that is transferred or sold shall begin on the date on which the tax credit was originally earned; and
    5. A transferee shall have only such rights to claim and use the tax credit that were available to the transferor at the time of the transfer. To the extent that such transferor did not have rights to claim and use the tax credit at the time of the transfer, the department shall either disallow the tax credit claimed by the transferee or recapture the tax credit from the transferee. The transferee's recourse is against the transferor.
    1. Whenever:
      1. Any person prepares an appraisal of the value of property and knows, or reasonably should have known, that the appraisal would be used in connection with a return or a claim for refund claiming a tax credit under this Code section; and
      2. The claimed value of the property on such appraisal as submitted to the State Properties Commission results in a substantial valuation misstatement with respect to such property for purposes of claiming a tax credit under this Code section,

        then such person shall pay a penalty in the amount determined under paragraph (2) of this subsection.

    2. The amount of the penalty imposed under paragraph (1) of this subsection on any person with respect to an appraisal shall be equal to the lesser of:
      1. The greater of:
        1. Twenty-five percent of the difference between the amount of the tax credit claimed on the taxpayer's return or claim for refund and the amount of the tax credit to which the taxpayer is actually entitled, to the extent the difference is attributable to the misstatement described in paragraph (1) of this subsection; or
        2. Ten thousand dollars; or
      2. One hundred twenty-five percent of the gross income received by the person described in paragraph (1) of this subsection for the preparation of the appraisal.
    3. No penalty shall be imposed under paragraph (1) of this subsection if the person establishes to the satisfaction of the commissioner that the value established in the appraisal was more likely than not the proper value.
    4. Except as otherwise provided, the penalty provided by this subsection shall be in addition to any other penalties provided by law. The amount of any penalty under this subsection shall be assessed within three years after the return or claim for refund with respect to which the penalty is assessed was filed, and no proceeding in court without assessment for the collection of such penalty shall be begun after the expiration of such period. Any claim for refund of an overpayment of the penalty assessed under this subsection shall be filed within three years from the time the penalty was paid.
  6. No credit shall be allowed under this Code section with respect to any amount deducted from taxable net income by the taxpayer as a charitable contribution.
  7. The commissioner shall promulgate any rules and regulations necessary to implement and administer this Code section.

(c.1)For each application for certification, the Department of Natural Resources shall require submission of an appraisal of the qualified donation by the taxpayer along with a nonrefundable $5,000.00 application fee; provided, however, that the nonrefundable application fee for property donated to the state shall be 1 percent of the total value of the donation, unless such donation is being made to qualify the state for a federal or state grant. The appraisal required by this subsection shall be a full narrative appraisal and include:

A certification page, as established by the Uniform Standards of Professional Appraisal Practice, signed by the appraiser; and

An affidavit signed by the appraiser which includes a statement specifying:

(d.1)Any tax credits under this Code section earned by a taxpayer in the taxable years beginning on or after January 1, 2013, and previously claimed but not used by such taxpayer against such taxpayer's income tax may be transferred or sold in whole or in part by such taxpayer to another Georgia taxpayer, subject to the following conditions:

The transferor may make only a single transfer or sale of tax credits earned in a taxable year; however, the transfer or sale may involve one or more transferees;

The transferor shall submit to the department a written notification of any transfer or sale of tax credits within 30 days after the transfer or sale of such tax credits. The notification shall include such transferor's tax credit balance prior to transfer, the remaining balance after transfer, all tax identification numbers for each transferee, the date of transfer, the amount transferred, and any other information required by the department;

Failure to comply with this subsection shall result in the disallowance of the tax credit until the taxpayer is in full compliance;

(Code 1981, §48-7-29.12, enacted by Ga. L. 2006, p. 351, § 1/HB 1107; Ga. L. 2008, p. 101, § 1/HB 1274; Ga. L. 2011, p. 297, § 3/HB 346; Ga. L. 2012, p. 257, § 3-1/HB 386; Ga. L. 2013, p. 141, § 48/HB 79; Ga. L. 2015, p. 370, § 3/HB 464; Ga. L. 2016, p. 585, § 1/HB 1014.)

The 2015 amendment, effective July 1, 2015, added paragraph (d)(3).

The 2016 amendment, effective July 1, 2016, added the subparagraph (d)(3)(A) designation, substituted "2021" for "2016" in subparagraph (d)(3)(A), and added subparagraph (d)(3)(B).

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 2006, Code Section 48-7-29.10, as enacted by Ga. L. 2006, p. 351, § 1/HB 1107, was redesignated as Code Section 48-7-29.12.

Editor's notes.

- Ga. L. 2006, p. 351, § 2/HB 1107, not codified by the General Assembly, provides that this Code section shall be applicable to all taxable years beginning on or after January 1, 2006.

Ga. L. 2008, p. 101, § 2/HB 1274, not codified by the General Assembly, provides, in part, that the 2008 amendment to this Code section shall be applicable to all taxable years beginning on or after January 1, 2008.

Ga. L. 2011, p. 297, § 5(d)/HB 346, not codified by the General Assembly, provides that the amendment of this Code section by that Act shall become effective on January 1, 2012, and shall apply to all taxable years beginning on or after January 1, 2012.

Ga. L. 2012, p. 257, § 7-1(e)/HB 386, not codified by the General Assembly, provides that the 2012 amendment shall be applicable to all taxable years beginning on or after January 1, 2013.

Ga. L. 2012, p. 257, § 7-1(h)/HB 386, not codified by the General Assembly, provides: "Tax, penalty, and interest liabilities and refund eligibility for prior taxable years shall not be affected by the passage of this Act and shall continue to be governed by the provisions of general law as it existed immediately prior to the effective date of the relevant portion of this Act."

Ga. L. 2012, p. 257, § 7-1(i)/HB 386, not codified by the General Assembly, provides: "This Act shall not abate any prosecution, punishment, penalty, administrative proceedings or remedies, or civil action related to any violation of law committed prior to the effective date of the relevant portion of this Act."

Ga. L. 2012, p. 257, § 7-2/HB 386, not codified by the General Assembly, provides for severability.

Law reviews.

- For article on the 2012 amendment of this Code section, see 29 Georgia St. U.L. Rev. 112 (2012).

RESEARCH REFERENCES

Am. Jur. 2d.

- 71 Am. Jur. 2d, State and Local Taxation, §§ 390, 393, 397.


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