05 LC
18 4092S/AP
House
Bill 191 (AS PASSED HOUSE AND SENATE)
By:
Representatives O`Neal of the
146th
and Williams of the
4th
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia
Annotated, relating to imposition, rate, computation, and exemptions regarding
income taxes, so as to provide for adjustments to taxable net income with
respect to certain direct or indirect interest expenses and costs and intangible
expenses and costs; to provide for procedures, conditions, and limitations; to
change the manner and method of allocating and apportioning income with respect
to corporations; to provide for powers, duties, and authority of the state
revenue commissioner; to provide effective dates; to provide for applicability;
to repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Article
2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating
to imposition, rate, computation, and exemptions regarding income taxes, is
amended in Code Section 48-7-27, relating to computation of taxable net income,
by adding a new paragraph at the end of subsection (b), to be designated
paragraph (11), to read as follows:
"(11)
Georgia taxable income shall be adjusted as provided in Code Section
48-7-28.3."
SECTION
2.
Said
article is further amended in Code Section 48-7-21, relating to taxation of
corporations, by striking paragraph (10) of subsection (b) and inserting in its
place a new paragraph (10) to read as follows:
"(10)
Reserved.
Georgia
taxable income shall be adjusted as provided in Code Section
48-7-28.3."
SECTION
3.
Said
article is further amended by adding a new Code section immediately following
Code Section 48-7-28.2, to be designated Code Section 48-7-28.3, to read as
follows:
"48-7-28.3.
(a)
As used in this Code section, the term:
(1)
'Comprehensive income tax treaty' means a convention or agreement, entered into
by the United States and approved by Congress, with a foreign government for the
allocation of all categories of income subject to taxation or the withholding of
tax on interest, dividends, and royalties for the prevention of double taxation
of the respective nations
́
residents and the sharing of information.
(2)
'Corporation' means:
(A)
A corporation incorporated under the laws of this state or incorporated or
organized under the laws of any other state, territory, or nation;
or
(B)
A limited liability company treated as a corporation for federal income tax
purposes or any other person treated as a corporation for federal income tax
purposes. A limited liability company which is disregarded as a separate entity
for income tax purposes shall also be disregarded as a separate entity for
purposes of this Code section.
(3)
'Foreign nation' means an established sovereign government that is recognized as
such by the United States Department of State.
(4)
'Intangible expenses and costs' means expenses, losses, and costs directly or
indirectly for, related to, or in connection with the direct or indirect
acquisition, use, maintenance, management, ownership, sale, exchange, or
disposition of intangible property, to the extent such amounts are allowed as
deductions or costs in determining taxable income before net operating loss
deduction and special deductions for the taxable year under the Internal Revenue
Code of 1986. The term includes but is not limited to:
(A)
Royalty, patent, technical, and copyright fees;
(B)
Licensing fees; and
(C)
Other similar expenses and costs.
(5)
'Intangible property' includes but is not limited to patents, patent
applications, trade names, trademarks, service marks, copyrights, mask words,
trade secrets, and similar types of intangible assets.
(6)
'Interest expenses and costs' includes but is not limited to amounts directly or
indirectly allowed as deductions under Section 163 of the Internal Revenue Code
of 1986 for purposes of determining taxable income under the Internal Revenue
Code of 1986 to the extent such expenses and costs are directly or indirectly
for, related to, or in connection with the direct or indirect acquisition, use,
maintenance, management, ownership, sale, exchange, or disposition of
intangible property.
(7)
'Related person' means:
(A)
A stockholder who is an individual or a member of the
stockholdeŕs
family enumerated in Section 318 of the Internal Revenue Code of 1986 if the
stockholder and the members of the
stockholdeŕs
family own, directly or indirectly, beneficially or constructively, in the
aggregate at least 50 percent of the value of the
taxpayeŕs
outstanding stock;
(B)
A stockholder, or a
stockholdeŕs
partnerships, estate, trusts, or corporations, if the stockholder and the
stockholdeŕs
partnerships, estate, trusts, and corporations own, directly or indirectly,
beneficially or constructively, in the aggregate at least 50 percent of the
value of the
taxpayeŕs
outstanding stock; or
(C)
A corporation, or a person related to the corporation in a manner that would
require an attribution of stock from the corporation to the person or from the
person to the corporation under the attribution rules of Section 318 of the
Internal Revenue Code of 1986, if the taxpayer owns, directly or indirectly,
beneficially or constructively, at least 50 percent of the value of the
corporatiońs
outstanding stock.
(D)
The attribution rules of Section 318 of the Internal Revenue Code of 1986 apply
for purposes of determining whether the ownership requirements in subparagraphs
(A) through (C) of this paragraph have been met.
(E)
A limited liability company treated as a partnership for federal income tax
purposes shall be considered a partnership for purposes of this paragraph and
paragraph (8) of this subsection.
(8)
'Related member' means a person, with respect to the taxpayer during all or any
portion of the tax year:
(A)
That is a related person;
(B)
That is a component member as defined in Section 1563(b) of the Internal Revenue
Code of 1986;
(C)
To or from whom there would be required an attribution of stock ownership in
accordance with Section 1563(e) of the Internal Revenue Code of 1986;
or
(D)
That, notwithstanding its form of organization, bears the same relationship to
the taxpayer as a person described in subparagraphs (A) through (C) of this
paragraph.
(9)
'Valid business purpose' means one or more business purposes, other than the
avoidance or reduction of taxation, which alone or in combination constitute the
primary motivation for some business activity or transaction, which activity or
transaction changes in a meaningful way, apart from tax effects, the economic
position of the taxpayer. The economic position of the taxpayer includes an
increase in the market share of the taxpayer, or the entry by the taxpayer into
new business markets.
(b)
For purposes of computing its Georgia taxable net income under Code Sections
48-7-21 and 48-7-27, a taxpayer shall add back otherwise deductible interest
expenses and costs and intangible expenses and costs directly or indirectly
paid, accrued, or incurred to, or in connection directly or indirectly with one
or more direct or indirect transactions with, one or more related members. Such
expenses and costs shall be added before the income is apportioned or allocated
as provided by Code Section 48-7-31.
(c)
The commissioner shall have the authority to reverse in whole or in part the
adjustments required in subsection (b) of this Code section when the taxpayer
and the commissioner agree in writing to the application or use of an
alternative method of apportionment under subparagraph (d)(2)(E) of Code Section
48-7-31, Code Section 48-7-35, or Code Section 48-7-31.1. Nothing in this Code
section shall be construed to limit or negate the
commissioneŕs
authority otherwise to enter into agreements and compromises otherwise allowed
by law.
(d)(1)
For purposes of this subsection, the term:
(A)
'Allocated or apportioned, or both' does not mean the amount of income that is
subject to allocation or apportionment, or both. Rather it means the amount
that is arrived at after applying the allocation and apportionment rules of a
state as defined in subparagraph (B) of this paragraph. A tax or the portion of
a tax, which is or would be imposed regardless of the amount of the income,
shall not be considered to be a tax on or measured by the income of the related
member.
(B)
'State' means a state in the United States of America, including the District of
Columbia, but does not include those states under whose laws the taxpayer files
with the related member, or the related member files with another related
member, a combined income tax report or return, a consolidated income tax report
or return, or any other report or return where such report or return is due
because of the imposition of a tax on, or measured by, income and where such
combined income tax report or return, consolidated income tax report or return,
or other report or return results in the elimination of the tax effects from
transactions directly or indirectly between the taxpayer and the related
member.
(2)
The amount of the adjustment required by subsection (b) of this Code section
shall be reduced, but not below zero, to the extent the corresponding interest
expenses and costs and intangible expenses and costs:
(A)
Are received as income in an
arḿs
length transaction by the related member; and
(B)
Such income is allocated or apportioned, or both, to and taxed by Georgia or
another state that imposes a tax on or measured by the income of the related
member.
(3)
In claiming the exception allowed by this subsection, the taxpayer shall
disclose on its return, with respect to the related member, the name of the
related member, the federal identification number of the related member, the
name of each state, the amount of the interest expenses and costs and intangible
expenses and costs allocated or apportioned to and taxed by each state for such
related member, and such other information as the commissioner may
prescribe.
(e)(1)
The adjustment required by subsection (b) of this Code section shall be reduced,
but not below zero, if and to the extent:
(A)
The interest expenses and costs and intangible expenses and costs are paid,
accrued, or incurred to a related member domiciled in a foreign nation which has
in force a comprehensive income tax treaty with the United States;
(B)
The transaction giving rise to the interest expenses and costs and intangible
expenses and costs has a valid business purpose; and
(C)
The amounts of such interest expenses and costs and intangible expenses and
costs were determined at
arḿs
length rates.
(2)
In claiming the exception allowed by this subsection, the taxpayer shall
disclose on its return:
(A)
The name and federal identification number of the related member;
(B)
The amount of the interest expenses and costs and intangible expenses and
costs;
(C)
The country of domicile of the related member; and
(D)
Such other information as the commissioner may prescribe.
(f)
The adjustment required in subsection (b) of this Code section shall not apply
to the portion of interest expenses and costs and intangible expenses and costs
that the taxpayer establishes by a preponderance of the evidence that meets both
of the following:
(1)
The related member during the same taxable year directly or indirectly paid,
accrued, or incurred such portion to a person that is not a related member;
and
(2)
The transaction giving rise to the interest expenses and costs and intangible
expenses and costs has a valid business purpose.
(g)
Nothing in this Code section shall require a taxpayer to add to its Georgia
taxable net income more than once any amount of interest expenses and costs and
intangible expenses and costs that the taxpayer pays, accrues, or incurs to a
related member.
(h)
Nothing in this Code section shall be construed to limit or negate the
commissioneŕs
authority to make adjustments under Code Section 48-7-58.
(i)
The adjustment required by this Code section shall apply to a corporation that
files a separate return with Georgia and to the separate taxable income
computation of each member of a Georgia consolidated return.
(j)
In addition to other penalties imposed by this title, the penalty for failure to
make the adjustment required by this Code section shall be 10 percent of the
additional tax that results because of this Code section. The commissioner may
waive this penalty pursuant to the provisions of Code Section
48-2-43.
(k)
The commissioner is authorized to prescribe forms and promulgate rules and
regulations deemed necessary in order to effectuate this Code
section."
SECTION
4.
Said
article is further amended by striking paragraphs (1) and (2) of subsection (d)
of Code Section 48-7-31, relating to the allocation and apportionment formula
with respect to corporate income, and inserting in their places new paragraphs
(1) and (2) to read as follows:
"(1)
Where the net business income of the corporation is derived principally from the
manufacture, production, or sale of tangible personal property, the portion of
the
net income therefrom attributable to property owned or business done within this
state shall be taken to be the portion arrived at by application of the
following formula:
(A)
Property factor. The property factor is a fraction, the numerator of which is
the average value of the
taxpayeŕs
real and tangible personal property owned or rented and used in this state
during the tax period and the denominator of which is the average value of all
the
taxpayeŕs
real and tangible personal property owned or rented and used during the tax
period;
(i)
Property owned by the taxpayer is valued at its original cost. Property rented
by the taxpayer is valued at eight times the net annual rental rate. Net annual
rental rate is the annual rental rate paid by the taxpayer less any annual
rental rate received by the taxpayer from subrentals;
(ii)
The average value of property shall be determined by averaging the values at the
beginning and end of the tax period, except that the commissioner may require
the averaging of monthly values during the tax period if such averaging is
reasonably required to reflect properly the average value of the
taxpayeŕs
property;
(B)
Payroll factor. The payroll factor is a fraction, the numerator of which is the
total amount paid in this state during the tax period by the taxpayer for
compensation and the denominator of which is the total compensation paid
everywhere during the tax period. The term 'compensation' means wages, salaries,
commissions, and any other form of remuneration paid to employees for personal
services. Payments made to an independent contractor or any other person not
properly classified as an employee are excluded. Compensation is paid in this
state if:
(i)
The
employeés
service is performed entirely within this state;
(ii)
The
employeés
service is performed both within and outside this state and the service
performed outside this state is incidental to the
employeés
service within this state; or
(iii)
Some of the service is performed in this state and either the base of
operations,
or the place from which the service is directed or
controlled,
is in this state or the base of operations or the place from which the service
is directed or controlled is not in any state in which some part of the service
is performed but the
employeés
residence is in this state;
(C)
Gross receipts factor.
(i)
The gross receipts factor is a fraction, the numerator of which is the total
gross receipts from business done within this state during the tax period and
the denominator of which is the total gross receipts from business done
everywhere during the tax period. For the purposes of this subparagraph,
receipts shall be deemed to have been derived from business done within this
state only if the receipts are received from products shipped to customers in
this
state,
or
from
products delivered within this state to customers. In determining the gross
receipts within this state, receipts from sales negotiated or effected through
offices of the taxpayer outside this state and delivered from storage in this
state to customers outside this state shall be excluded;
(ii)
Where a
taxpayeŕs
gross receipts are also derived from activities described in paragraph (2) of
this subsection, gross receipts shall also include the gross receipts from the
activities described in paragraph (2) of this subsection and shall be attributed
to Georgia based upon division (2)(C)(i) of this subsection;
(D)
Apportionment formula. The property factor, the payroll factor, and the gross
receipts factor shall be
separately
determined
separately
and an apportionment fraction shall be calculated using the following
formula:
(i)
The property factor shall represent
25
10
percent of the fraction;
(ii)
The payroll factor shall represent
25
10
percent of the fraction; and
(iii)
The gross receipts factor shall represent
50
80
percent of the fraction.
The
net income of the corporation shall be apportioned to this state according to
such fraction;
(2)
Except as otherwise provided in paragraph (2.1) or (2.2) of this subsection,
where the net business income is derived principally from business other than
the manufacture, production, or sale of tangible personal property, the net
business income of the corporation shall be
arrived
at
determined
by
application
of
applying
the following three-factor formula:
(A)
Property factor. The property factor is a fraction, the numerator of which is
the average value of the
taxpayeŕs
real and tangible personal property owned or rented and used in this state
during the tax period and the denominator of which is the average value of all
the
taxpayeŕs
real and tangible personal property owned or rented and used during the tax
period;
(i)
Property owned by the taxpayer is valued at its original cost. Property rented
by the taxpayer is valued at eight times the net annual rental rate. Net annual
rental rate is the annual rental rate paid by the taxpayer less any annual
rental rate received by the taxpayer from subrentals;
(ii)
The average value of property shall be determined by averaging the values at the
beginning and end of the tax period, except that the commissioner may require
the averaging of monthly values during the tax period if such averaging is
reasonably required to reflect properly the average value of the
taxpayeŕs
property;
(B)
Payroll factor. The payroll factor is a fraction, the numerator of which is the
total amount paid in this state during the tax period by the taxpayer for
compensation and the denominator of which is the total compensation paid
everywhere during the tax period. The term 'compensation' means wages, salaries,
commissions, and any other form of remuneration paid to employees for personal
services. Payments made to an independent contractor or any other person not
properly classified as an employee are excluded. Compensation is paid in this
state if:
(i)
The
employeés
service is performed entirely within this state;
(ii)
The
employeés
service is performed both within and outside this state and the service
performed outside this state is incidental to the
employeés
service within this state; or
(iii)
Some of the service is performed in this state and either the base of operations
or the place from which the service is directed or controlled is in this state
or the base of operations or the place from which the service is directed or
controlled is not in any state in which some part of the service is performed
but the
employeés
residence is in this state;
(C)
Gross receipts factor.
(i)
The gross receipts factor is a fraction, the numerator of which is the total
gross receipts from business done within this state during the tax period and
the denominator of which is the total gross receipts from business done
everywhere during the tax period.
For purposes
of this subparagraph, the term 'gross receipts' means all gross receipts
received from activities which constitute the
taxpayeŕs
regular trade or business. Gross receipts
are in this state if the receipts are derived from customers within this state
or if the receipts are otherwise attributable to this
statés
marketplace;
(ii)
Where a
taxpayeŕs
gross receipts are also derived from activities described in paragraph (1) of
this subsection, gross receipts shall also include the gross receipts from the
activities described in paragraph (1) of this subsection and shall be attributed
to Georgia based upon division (1)(C)(i) of this subsection;
(D)
Apportionment formula. The property factor, payroll factor, and gross receipts
factor shall be
separately
determined
separately
and an apportionment fraction shall be calculated using the following
formula:
(i)
The property factor shall represent
25
10
percent of the fraction;
(ii)
The payroll factor shall represent
25
10
percent of the fraction; and
(iii)
The gross receipts factor shall represent
50
80
percent of the fraction.
The
net income of the corporation shall be apportioned to this state according to
such fraction;
(E)
If the allocation and apportionment provisions provided for in this paragraph do
not fairly represent the extent of the
taxpayeŕs
business activity in this state, the taxpayer may petition the commissioner for,
or the commissioner may by regulation require, with respect to all or any part
of the
taxpayeŕs
business activity, if reasonable:
(i)
Separate accounting;
(ii)
The exclusion of any one or more of the factors;
(iii)
The inclusion of one or more additional factors that will fairly represent the
taxpayeŕs
business activity within this state; or
(iv)
The employment of any other method to effectuate an equitable allocation and
apportionment of the
taxpayeŕs
income.
The
denial of a petition under this
paragraph
subparagraph
shall be appealable pursuant to either Code Section 48-2-59 or
50-13-12;"
SECTION
5.
Said
article is further amended by striking paragraphs (1) and (2) of subsection (d)
of Code Section 48-7-31, relating to the allocation and apportionment formula
with respect to corporate income, and inserting in their places new paragraphs
(1) and (2) to read as follows:
"(1)
Where the net business income of the corporation is derived principally from the
manufacture, production, or sale of tangible personal property, the portion of
net income therefrom attributable to property owned or business done within this
state shall be taken to be the portion arrived at by application of the
following formula:
(A)
Property factor. The property factor is a fraction, the numerator of which is
the average value of the
taxpayeŕs
real and tangible personal property owned or rented and used in this state
during the tax period and the denominator of which is the average value of all
the
taxpayeŕs
real and tangible personal property owned or rented and used during the tax
period;
(i)
Property owned by the taxpayer is valued at its original cost. Property rented
by the taxpayer is valued at eight times the net annual rental rate. Net annual
rental rate is the annual rental rate paid by the taxpayer less any annual
rental rate received by the taxpayer from subrentals;
(ii)
The average value of property shall be determined by averaging the values at the
beginning and end of the tax period, except that the commissioner may require
the averaging of monthly values during the tax period if such averaging is
reasonably required to reflect properly the average value of the
taxpayeŕs
property;
(B)
Payroll factor. The payroll factor is a fraction, the numerator of which is the
total amount paid in this state during the tax period by the taxpayer for
compensation and the denominator of which is the total compensation paid
everywhere during the tax period. The term 'compensation' means wages, salaries,
commissions, and any other form of remuneration paid to employees for personal
services. Payments made to an independent contractor or any other person not
properly classified as an employee are excluded. Compensation is paid in this
state if:
(i)
The
employeés
service is performed entirely within this state;
(ii)
The
employeés
service is performed both within and outside this state and the service
performed outside this state is incidental to the
employeés
service within this state; or
(iii)
Some of the service is performed in this state and either the base of
operations, or the place from which the service is directed or controlled, is in
this state or the base of operations or the place from which the service is
directed or controlled is not in any state in which some part of the service is
performed but the
employeés
residence is in this state;
(C)
Gross receipts factor.
(i)
The gross receipts factor is a fraction, the numerator of which is the total
gross receipts from business done within this state during the tax period and
the denominator of which is the total gross receipts from business done
everywhere during the tax period. For the purposes of this subparagraph,
receipts shall be deemed to have been derived from business done within this
state only if the receipts are received from products shipped to customers in
this state, or from products delivered within this state to customers. In
determining the gross receipts within this state, receipts from sales negotiated
or effected through offices of the taxpayer outside this state and delivered
from storage in this state to customers outside this state shall be
excluded;
(ii)
Where a
taxpayeŕs
gross receipts are also derived from activities described in paragraph (2) of
this subsection, gross receipts shall also include the gross receipts from the
activities described in paragraph (2) of this subsection and shall be attributed
to Georgia based upon division (2)(C)(i) of this subsection;
(D)
Apportionment formula. The property factor, the payroll factor, and the gross
receipts factor shall be determined separately and an apportionment fraction
shall be calculated using the following formula:
(i)
The property factor shall represent 5 percent of the fraction;
(ii)
The payroll factor shall represent 5 percent of the fraction; and
(iii)
The gross receipts factor shall represent 90 percent of the
fraction.
The
net income of the corporation shall be apportioned to this state according to
such fraction;
(2)
Except as otherwise provided in paragraph (2.1) or (2.2) of this subsection,
where the net business income is derived principally from business other than
the manufacture, production, or sale of tangible personal property, the net
business income of the corporation shall be determined by applying the following
three-factor formula:
(A)
Property factor. The property factor is a fraction, the numerator of which is
the average value of the
taxpayeŕs
real and tangible personal property owned or rented and used in this state
during the tax period and the denominator of which is the average value of all
the
taxpayeŕs
real and tangible personal property owned or rented and used during the tax
period;
(i)
Property owned by the taxpayer is valued at its original cost. Property rented
by the taxpayer is valued at eight times the net annual rental rate. Net annual
rental rate is the annual rental rate paid by the taxpayer less any annual
rental rate received by the taxpayer from subrentals;
(ii)
The average value of property shall be determined by averaging the values at the
beginning and end of the tax period, except that the commissioner may require
the averaging of monthly values during the tax period if such averaging is
reasonably required to reflect properly the average value of the
taxpayeŕs
property;
(B)
Payroll factor. The payroll factor is a fraction, the numerator of which is the
total amount paid in this state during the tax period by the taxpayer for
compensation and the denominator of which is the total compensation paid
everywhere during the tax period. The term 'compensation' means wages,
salaries, commissions, and any other form of remuneration paid to employees for
personal services. Payments made to an independent contractor or any other
person not properly classified as an employee are excluded. Compensation is
paid in this state if:
(i)
The
employeés
service is performed entirely within this state;
(ii)
The
employeés
service is performed both within and outside this state and the service
performed outside this state is incidental to the
employeés
service within this state; or
(iii)
Some of the service is performed in this state and either the base of operations
or the place from which the service is directed or controlled is in this state
or the base of operations or the place from which the service is directed or
controlled is not in any state in which some part of the service is performed
but the
employeés
residence is in this state;
(C)
Gross receipts factor.
(i)
The gross receipts factor is a fraction, the numerator of which is the total
gross receipts from business done within this state during the tax period and
the denominator of which is the total gross receipts from business done
everywhere during the tax period. For purposes of this subparagraph, the term
'gross receipts' means all gross receipts received from activities which
constitute the
taxpayeŕs
regular trade or business. Gross receipts are in this state if the receipts are
derived from customers within this state or if the receipts are otherwise
attributable to this
statés
marketplace;
(ii)
Where a
taxpayeŕs
gross receipts are also derived from activities described in paragraph (1) of
this subsection, gross receipts shall also include the gross receipts from the
activities described in paragraph (1) of this subsection and shall be attributed
to Georgia based upon division (1)(C)(i) of this subsection;
(D)
Apportionment formula. The property factor, payroll factor, and the gross
receipts factor shall be determined separately and an apportionment fraction
shall be calculated using the following formula:
(i)
The property factor shall represent 5 percent of the fraction;
(ii)
The payroll factor shall represent 5 percent of the fraction; and
(iii)
The gross receipts factor shall represent 90 percent of the
fraction.
The
net income of the corporation shall be apportioned to this state according to
such fraction;
(E)
If the allocation and apportionment provisions provided for in this paragraph do
not fairly represent the extent of the
taxpayeŕs
business activity in this state, the taxpayer may petition the commissioner for,
or the commissioner may by regulation require, with respect to all or any part
of the
taxpayeŕs
business activity, if reasonable:
(i)
Separate accounting;
(ii)
The exclusion of any one or more of the factors;
(iii)
The inclusion of one or more additional factors that will fairly represent the
taxpayeŕs
business activity within this state; or
(iv)
The employment of any other method to effectuate an equitable allocation and
apportionment of the
taxpayeŕs
income.
The
denial of a petition under this subparagraph shall be appealable pursuant to
either Code Section 48-2-59 or
50-13-12;".
SECTION
6.
Said
article is further amended by striking paragraphs (1) and (2) of subsection (d)
of Code Section 48-7-31, relating to the allocation and apportionment formula
with respect to corporate income, and inserting in their places new paragraphs
(1) and (2) to read as follows:
"(1)
Where the net business income of the corporation is derived principally from the
manufacture, production, or sale of tangible personal property, the portion of
net income therefrom attributable to property owned or business done within this
state shall be taken to be the portion arrived at by application of the
following formula:
(A)
Gross receipts factor.
(i)
The gross receipts factor is a fraction, the numerator of which is the total
gross receipts from business done within this state during the tax period and
the denominator of which is the total gross receipts from business done
everywhere during the tax period. For the purposes of this subparagraph,
receipts shall be deemed to have been derived from business done within this
state only if the receipts are received from products shipped to customers in
this state, or from products delivered within this state to customers. In
determining the gross receipts within this state, receipts from sales negotiated
or effected through offices of the taxpayer outside this state and delivered
from storage in this state to customers outside this state shall be
excluded;
(ii)
Where a
taxpayeŕs
gross receipts are also derived from activities described in paragraph (2) of
this subsection, gross receipts shall also include the gross receipts from the
activities described in paragraph (2) of this subsection and shall be attributed
to Georgia based upon division (2)(A)(i) of this subsection;
(B)
Apportionment formula. The net income of the corporation shall be apportioned to
this state according to the gross receipts factor pursuant to subparagraph (A)
of this paragraph;
(2)
Except as otherwise provided in paragraph (2.1) or (2.2) of this subsection,
where the net business income is derived principally from business other than
the manufacture, production, or sale of tangible personal property, the net
business income of the corporation shall be determined by applying the following
formula:
(A)
Gross receipts factor.
(i)
The gross receipts factor is a fraction, the numerator of which is the total
gross receipts from business done within this state during the tax period and
the denominator of which is the total gross receipts from business done
everywhere during the tax period. For purposes of this subparagraph, the term
'gross receipts' means all gross receipts received from activities which
constitute the
taxpayeŕs
regular trade or business. Gross receipts are in this state if the receipts are
derived from customers within this state or if the receipts are otherwise
attributable to this
statés
marketplace;
(ii)
Where a
taxpayeŕs
gross receipts are also derived from activities described in paragraph (1) of
this subsection, gross receipts shall also include the gross receipts from the
activities described in paragraph (1) of this subsection and shall be attributed
to Georgia based upon division (1)(A)(i) of this subsection;
(B)
Apportionment formula. The net income of the corporation shall be apportioned to
this state according to the gross receipts factor pursuant to subparagraph (A)
of this paragraph;
(C)
If the allocation and apportionment provisions provided for in this paragraph do
not fairly represent the extent of the
taxpayeŕs
business activity in this state, the taxpayer may petition the commissioner for,
or the commissioner may by regulation require, with respect to all or any part
of the
taxpayeŕs
business activity, if reasonable:
(i)
Separate accounting;
(ii)
The exclusion of any one or more of the factors;
(iii)
The inclusion of one or more additional factors that will fairly represent the
taxpayeŕs
business activity within this state; or
(iv)
The employment of any other method to effectuate an equitable allocation and
apportionment of the
taxpayeŕs
income.
The
denial of a petition under this subparagraph shall be appealable pursuant to
either Code Section 48-2-59 or
50-13-12;"
SECTION
7.
(a)
Sections 1, 2, 3, this section, and Section 8 of this Act shall become effective
January 1, 2006, and shall be applicable to all taxable years beginning on or
after January 1, 2006.
(b) Section 4 of this Act shall become effective January 1, 2006, and shall be applicable to all taxable years beginning on or after January 1, 2006, and prior to January 1, 2007.
(c) Section 5 of this Act shall become effective January 1, 2007, and shall be applicable to all taxable years beginning on or after January 1, 2007, and prior to January 1, 2008.
(d) Section 6 of this Act shall become effective January 1, 2008, and shall be applicable to all taxable years beginning on or after January 1, 2008.
(b) Section 4 of this Act shall become effective January 1, 2006, and shall be applicable to all taxable years beginning on or after January 1, 2006, and prior to January 1, 2007.
(c) Section 5 of this Act shall become effective January 1, 2007, and shall be applicable to all taxable years beginning on or after January 1, 2007, and prior to January 1, 2008.
(d) Section 6 of this Act shall become effective January 1, 2008, and shall be applicable to all taxable years beginning on or after January 1, 2008.
SECTION
8.
All
laws and parts of laws in conflict with this Act are repealed.