Georgia State and Local Tax (SALT) Alerts
State and Local Tax Insights
Georgia State and Local Tax Alerts – July 2020
- The Georgia Dept. of Revenue has issued a ruling on the sales tax application relating to a taxpayer’s custom sign business. The retail sale of signs and other advertising displays is subject to sales and use tax. In general, sales are sourced to the location where the buyer takes delivery. Sales of tangible personal property delivered to a buyer in Georgia are subject to Georgia sales tax regardless of any subsequent removal of the property from Georgia. When the taxpayer sells a freestanding sign to a purchaser in Georgia, the taxpayer must collect and remit sales tax on the retail sale of the sign. (Georgia Letter Ruling No. LR SUT-2019-05)
- The Georgia Dept. of Revenue has ruled that a taxpayer’s aircraft stripping, sanding and painting service company isn’t subject to Georgia sales and use tax under state regulations because providers of painting services are considered primarily rendering nontaxable personal services. However, service providers are deemed to be the end users of tangible personal properties that are used or consumed to perform their services, and must pay the tax on such properties. (Georgia Letter Ruling No. LR SUT-2019-03)
- Georgia state law decouples from net operating loss (NOL) and excess loss provisions of the CARES Act. Among other things, the new law, effective June 30, 2020, decouples from NOL amendments and amendments that apply to the limitation on using excess business loss rules that are contained in the CARES Act. In addition, the new law creates, as of Jan. 1, 2020, an additional $1,250 job tax credit for manufacturers that make personal protective equipment due to the COVID-19 pandemic. It also requires the establishment of a direct pay permit program that allows a taxpayer to accrue and pay directly to the Dept. of Revenue certain state and local sales and use taxes.
- The Georgia Dept. of Revenue has issued a policy bulletin that details fundraising activities conducted by 501(c)(3) tax exempt organizations. Among the issues discussed include how sales and use tax applies to purchases and sales made by tax exempt organizations; items donated to tax exempt organizations; and items sold by a religious institution, qualifying nonprofit child caring institution, nonprofit parent-teacher organization or nonprofit private or public schools. For more information: https://bit.ly/3iLBf8z
- The Georgia Dept. of Revenue has updated its guidance on federal tax changes to reflect the annual Internal Revenue Code (IRC) update. For taxable years beginning Jan. 1, 2019, except as discussed below, GA has adopted the provisions of all federal tax acts (as they relate to the computation of federal adjusted gross income or federal taxable income for corporations) enacted on or before March 27, 2020. For taxable years beginning on Jan. 1, 2018 and before Jan. 1, 2019, GA hasn’t adopted any of the 2019 or 2020 federal changes, including the CARES Act. If an amended federal return is filed, an amended GA return isn’t required. For additional information: https://bit.ly/3gShom8
- The Georgia Dept. of Revenue has ruled on the sales taxability of leased equipment that had been lost in a casualty event. In this case, a taxpayer’s contract stipulated that in the event of a total loss, the lessee must pay the total amount due under the contract, and in exchange for such payment the lessor will convey all rights, title and interest in the property. The department ruled that a sale occurs if such a loss event happens because there’s an exchange of tangible personal property for a consideration. The lessor under the terms of the contract conveys the property to the lessee in exchange for payments. The seller must charge tax on the sale price. (LR SUT-2019-06)
- The Georgia Dept. of Revenue has reported that June 2020 tax revenues were down 8.8%. As of June 30, 2020, the State of Georgia’s June net tax collections approached $1.94 billion, a decrease of $187 million, or 8.8%, compared to June 2019 when net tax collections totaled roughly $2.12 billion. Net tax collections for fiscal year 2020 currently total almost $22.75 billion, which reflects a decrease of nearly $1.04 billion, compared to fiscal year 2019 when net tax revenues totaled more than $23.79 billion. Note that because of the Georgia income tax filing deadline extension related to tax year 2019, total net collections for fiscal year 2020 aren’t final.
- Georgia reported an overall June 2020 net tax revenue decline. Specifically, the gross sales and use tax collection fell 2.7%, a decrease of $28.8 million compared to fiscal year 2019. Furthermore, the adjusted sales tax distribution to local governments decreased by $20.1 million, or 3.8%, for a total of $513.7 million.
- A Georgia state law has changed the allocation of Title and Ad Valorem Tax (TAVT) funds among local government entities within a county. If there’s an independent school district in the municipality, the allocation will be 23% to the county, 34% to the municipality and 43% to the independent school district. If there’s no independent school district in the municipality, the allocation will be 23% to the county, 28% to the municipality and 49% to the county school district.
- The Motor Vehicle Division (MVD) of the Georgia Dept. of Revenue has issued a notice to tag offices and local governments that all Title and Ad Valorem Tax (TAVT) collected during July will be subject to distribution under a new methodology. Accordingly, the first distribution takes place in August, no later than Aug. 20, 2020. To be sure that DRIVES, the department’s title and registration system, can properly handle the new allocation calculations, the MVD is asking county tag offices to delay TAVT distributions until August 15. County tag offices will, therefore, distribute July collections of local TAVT funds to local governments between Aug. 15 and Aug. 20, 2020.