Tax Credits for Business Enterprises in Less Developed Areas

  1. Law
  2. Georgia Code
  3. Revenue and Taxation
  4. Income Taxes
  5. Imposition, Rate, and Computation; Exemptions
  6. Tax Credits for Business Enterprises in Less Developed Areas

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  1. As used in this Code section, the term:
    1. "Broadcasting" means the transmission or licensing of audio, video, text, or other programming content to the general public, subscribers, or to third parties via radio, television, cable, satellite, or the Internet or Internet Protocol and includes motion picture and sound recording, editing, production, postproduction, and distribution. "Broadcasting" is limited to establishments classified under the 2007 North American Industry Classification System Codes 515, broadcasting; 519, Internet publishing and broadcasting; 517, telecommunications; and 512, motion picture and sound recording industries.
    2. "Business enterprise" means any business or the headquarters of any such business which is engaged in manufacturing, including, but not limited to, the manufacturing of alternative energy products for use in solar, wind, battery, bioenergy, biofuel, and electric vehicle enterprises, warehousing and distribution, processing, telecommunications, broadcasting, tourism, biomedical manufacturing, and research and development industries. Such term shall not include retail businesses. Businesses are eligible for the tax credit provided by this Code section at an individual establishment of the business based on the classification of the individual establishment under the North American Industry Classification System. For purposes of this Code section, the term "establishment" means an economic unit at a single physical location where business is conducted or where services or industrial operations are performed. If more than one business activity is conducted at the establishment, then only those jobs engaged in the qualifying activity will be eligible for the tax credit provided by this Code section.
    3. "New full-time employee job" means a newly created position of employment that was not previously located in this state, requires a minimum of 35 hours a week, and pays at or above the average wage earned in the county with the lowest average wage earned in this state, as reported in the most recently available annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor.
  2. Not later than December 31 of each year, using the most current data available from the Department of Labor and the United States Department of Commerce, the commissioner of community affairs shall rank and designate as less developed areas the areas composed of ten or more contiguous census tracts in this state using a combination of the following equally weighted factors:
    1. Highest unemployment rate for the most recent 36 month period;
    2. Lowest per capita income for the most recent 36 month period; and
    3. Highest percentage of residents whose income is below the poverty level according to the most recent data available.
  3. The commissioner of community affairs, and the commissioner of economic development in areas qualifying under the provisions of paragraphs (1), (3), and (4) of this subsection, also shall be authorized to include in the designation provided for in subsection (b) of this Code section:
    1. Any area composed of ten or more contiguous census tracts which, in the opinion of the commissioner of community affairs and the commissioner of economic development, undergoes a sudden and severe period of economic distress caused by the closing of one or more business enterprises located in such area;
    2. Any area composed of one or more census tracts adjacent to a federal military installation where pervasive poverty is evidenced by a 15 percent poverty rate or greater as reflected in the most recent decennial census; provided, however, that the subsequent redrawing or alteration of census tracts in a manner which results in an area no longer being in a census tract adjacent to a federal military installation shall not disqualify an area which has previously qualified under this paragraph if the area continues to have pervasive poverty as described in this paragraph;

      (2.1) Any census tract in a county that contains a federal military installation with a garrison of at least 5,000 federal or military personnel combined and also contains an industrial park that is owned and operated by a governmental entity;

    3. Any area composed of one or more contiguous census tracts which, in the opinion of the commissioner of community affairs and the commissioner of economic development, is or will be adversely impacted by the loss of one or more jobs, businesses, or residences as a result of an airport expansion, including noise buy-outs, or the closing of a business enterprise which, in the opinion of the commissioner of community affairs and the commissioner of economic development, results or will result in a sudden and severe period of economic distress; or
    4. Any area which is within or adjacent to one or more contiguous census block groups with a poverty rate of 15 percent or greater as determined from data in the most current United States decennial census, where the area is also included within a state enterprise zone pursuant to Chapter 88 of Title 36 or where a redevelopment plan has been adopted pursuant to Chapter 61 of Title 36 and which, in the opinion of the commissioner of community affairs and the commissioner of economic development, displays pervasive poverty, underdevelopment, general distress, and blight.

      No designation made pursuant to this subsection shall operate to displace or remove any other area previously designated as a less developed area. Notwithstanding any provision of this Code section to the contrary, in areas designated as suffering from pervasive poverty under this subsection, job tax credits shall be allowed as provided in this Code section, in addition to business enterprises, to any lawful business.

  4. For business enterprises which plan a significant expansion in their labor forces, the commissioner of community affairs shall prescribe redesignation procedures to ensure that the business enterprises can claim credits in future years without regard to whether or not a particular area is removed from the list of less developed areas.
  5. Business enterprises in areas designated by the commissioner of community affairs as less developed areas shall be allowed a job tax credit for taxes imposed under this article equal to $3,500.00 annually per eligible new full-time employee job for five years beginning with the first taxable year in which the new full-time employee job is created and for the four immediately succeeding taxable years; provided, however, that where the amount of such credit exceeds a business enterprise's liability for such taxes in a taxable year, the excess may be taken as a credit against such business enterprise's quarterly or monthly payment under Code Section 48-7-103 but not to exceed in any one taxable year $3,500.00 for each new full-time employee job when aggregated with the credit applied against taxes under this article. Each employee whose employer receives credit against such business enterprise's quarterly or monthly payment under Code Section 48-7-103 shall receive credit against his or her income tax liability under Code Section 48-7-20 for the corresponding taxable year for the full amount which would be credited against such liability prior to the application of the credit provided for in this subsection. Credits against quarterly or monthly payments under Code Section 48-7-103 and credits against liability under Code Section 48-7-20 established by this subsection shall not constitute income to the taxpayer. The number of 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 period of the prior taxable year. Only those business enterprises that increase employment by five or more in a less developed area shall be eligible for the credit; provided, however, that within areas of pervasive poverty as designated under paragraphs (2) and (4) of subsection (c) of this Code section businesses shall only have to increase employment by two or more jobs in order to be eligible for the credit, provided that, if a business only increases employment by two jobs, the persons hired for such jobs shall not be married to one another. The wage of each new job created must be above the average wage of the county that has the lowest wage of any county in the state to qualify as reported in the most recently available annual issue of the Georgia Employment and Wages Averages Report of the Department of Labor. To qualify for a credit under this subsection, the employer must make health insurance coverage available to the employee filling the new full-time employee job; provided, however, that nothing in this subsection shall be construed to require the employer to pay for all or any part of health insurance coverage for such an employee in order to claim the credit provided for in this subsection if such employer does not pay for all or any part of health insurance coverage for other employees. Credit shall not be allowed during a year if the net employment increase falls below five or two, as applicable. The state revenue commissioner shall adjust the credit allowed each year for net new employment fluctuations above the minimum level of five or two.
  6. Tax credits for five years for the taxes imposed under this article shall be awarded for additional new full-time employee jobs created by business enterprises qualified under subsection (b) or (c) of this Code section. Additional new full-time employee jobs shall be determined by subtracting the highest total employment of the business enterprise during years two through five, or whatever portion of years two through five which has been completed, from the total increased employment. The state revenue commissioner shall adjust the credit allowed in the event of employment fluctuations during the additional five years of credit.
  7. The sale, merger, acquisition, or bankruptcy of any business enterprise shall not create new eligibility in any succeeding business entity, but any unused job tax credit may be transferred and continued by any transferee of the business enterprise. The commissioner of community affairs shall determine 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.
  8. Any credit claimed under this Code section 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, subject to forfeiture as provided in subsection (e) of this Code section, but the credit established by this Code section taken in any one taxable year shall be limited to an amount not greater than 100 percent of the taxpayer's state income tax liability which is attributable to income derived from operations in this state for that taxable year.
  9. Notwithstanding Code Section 48-2-35, any tax credit claimed under this Code section shall be claimed within one year of the earlier of the date the original tax return was filed or the date such return was due as prescribed in subsection (a) of Code Section 48-7-56, including any approved extensions.
  10. Taxpayers that initially claimed the credit under this Code section for any taxable year beginning before January 1, 2012, shall be governed, for purposes of all such credits claimed as well as any credits claimed in subsequent taxable years related to such initial claim, by this Code section as it was in effect for the taxable year in which the taxpayer made such initial claim.
  11. For the taxable years beginning in 2020 and 2021, a taxpayer with a business enterprise that in the taxable year beginning on or after January 1, 2019, and before December 31, 2019, was claiming a tax credit under this Code section shall have the option to utilize the number of new full-time employee jobs that the taxpayer claimed in such taxable year or calculate the number of new full-time employee jobs based upon subsection (e) of this Code section.

(Code 1981, §48-7-40.1, enacted by Ga. L. 1993, p. 1649, § 2; Ga. L. 1994, p. 928, § 3; Ga. L. 1996, p. 220, §§ 3, 4; Ga. L. 1997, p. 461, § 2; Ga. L. 2000, p. 605, § 2; Ga. L. 2001, p. 984, § 8; Ga. L. 2004, p. 939, § 1; Ga. L. 2008, p. 874, § 2/HB 1246; Ga. L. 2008, p. 1152, § 1/HB 1273; Ga. L. 2009, p. 654, § 2/HB 439; Ga. L. 2012, p. 1309, § 2/HB 868; Ga. L. 2013, p. 141, § 48/HB 79; Ga. L. 2013, p. 677, § 2/SB 137; Ga. L. 2014, p. 204, § 1/HB 791; Ga. L. 2016, p. 553, § 2/HB 936; Ga. L. 2018, p. 318, § 1/HB 843; Ga. L. 2020, p. 184, § 3-2/HB 846.)

The 2016 amendment, effective July 1, 2016, added paragraph (a)(3); in subsection (e), inserted "employee" following "full-time" near the beginning of the fourth sentence and in the seventh sentence, and substituted "The wage of each new job created" for "The average wage of the new jobs created" in the sixth sentence.

The 2018 amendment, effective July 1, 2018, added paragraph (c)(2.1).

The 2020 amendment, effective June 30, 2020, added subsection (k).

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 2004, "this subsection" was substituted for "this paragraph" in the second sentence of the undesignated paragraph at the end of subsection (c).

Editor's notes.

- Ga. L. 1994, p. 928, § 1, not codified by the General Assembly, provides: "This Act shall be known and may be cited as the 'Georgia Business Expansion Support Act of 1994'."

Ga. L. 1994, p. 928, § 8, not codified by the General Assembly, provides that the 1994 amendment shall be "applicable to all taxable years beginning on or after January 1, 1994."

Ga. L. 1996, p. 220, § 11, not codified by the General Assembly, provides that the 1996 amendment shall be "applicable to all taxable years beginning on or after January 1, 1996."

Ga. L. 1997, p. 461, § 10, not codified by the General Assembly, provides that the 1997 amendment shall be "applicable to all taxable years beginning on or after January 1, 1997."

Ga. L. 2000, p. 605, § 7, not codified by the General Assembly, provides that the 2000 amendment shall be "applicable to all taxable years beginning on or after January 1, 2000."

Ga. L. 2001, p. 984, § 20, not codified by the General Assembly, provides that the 2001 amendment "shall be applicable to all taxable years beginning on or after January 1, 2001."

Ga. L. 2004, p. 939, § 6, not codified by the General Assembly, provides that this Act shall be applicable to all taxable years beginning on or after January 1, 2004.

Ga. L. 2008, p. 874, § 9/HB 1246, not codified by the General Assembly, provides, in part, that the amendment to this Code section shall be applicable to all taxable years beginning on or after January 1, 2008.

Ga. L. 2008, p. 1152, § 2/HB 1273, not codified by the General Assembly, provides, in part, that the amendment to this Code section shall be applicable to all taxable years beginning on or after January 1, 2008.

Ga. L. 2009, p. 654, § 7/HB 439, not codified by the General Assembly, provides, in part, that the amendment to this Code section shall be applicable for all taxable years beginning on or after January 1, 2009.

Ga. L. 2012, p. 1309, § 7/HB 868, not codified by the General Assembly, provides, in part, that the 2012 amendment shall be applicable to all taxable years beginning on or after January 1, 2013.

Administrative Rules and Regulations.

- Job tax credit program regulations, Official Compilation of the Rules and Regulations of the State of Georgia, Georgia Department of Community Affairs, Job Tax Credit Program, Chapter 110-9-1.

Opportunity zone tax credit program regulations, Official Compilation of the Rules and Regulations of the State of Georgia, Georgia Department of Community Affairs, Opportunity Zone Tax Credit Program, Chapter 110-24-1.

Law reviews.

- For note on the 1993 enactment of this Code section, see 10 Georgia St. U.L. Rev. 218 (1993). For note on the 2001 amendment to this Code section, see 18 Georgia St. U.L. Rev. 294 (2001).

RESEARCH REFERENCES

ALR.

- Validity, construction, and application of state taxes on revenues and income from communications satellite services, 51 A.L.R.6th 257.


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