08 LC
18 7365S
House
Bill 1151 (COMMITTEE SUBSTITUTE)
By:
Representatives Knight of the
126th,
Tumlin of the
38th,
and Mosby of the
90th
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Titles 16 and 48 of the Official Code of Georgia Annotated, relating,
respectively, to crimes and offenses and revenue and taxation, so as to change
provisions regarding raffle operations by nonprofit, tax-exempt organizations;
to change certain provisions regarding bingo definitions and licensing
procedures; to revise and modernize certain provisions regarding state income
tax; to change certain provisions regarding organizations exempt from state
income tax; to change certain requirements regarding consent agreements; to
change certain substantiation requirements regarding the tax credit for private
driver education courses; to provide for certain electronic filing requirements;
to define the terms "distribution credited" and "distribution paid" with respect
to current income tax payments; to authorize certain elections regarding lump
sum distributions with respect to withholding requirements for income tax; to
revise and change certain provisions regarding withholding tax on distributions
to nonresident members of partnerships, Subchapter "S" corporations, and limited
liability companies; to provide an effective date; to provide for applicability;
to repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Titles
16 of the Official Code of Georgia Annotated, relating to crimes and offenses,
is amended by revising subparagraph (d)(2)(E) of Code Section 16-12-22.1,
relating to raffle licenses, as follows:
"(E)
A
determination
letter from the Georgia Department of Revenue
certifying
statement
affirming that the applicant is exempt
under the
income
tax laws of this state
under Code
Section 48-7-25;"
SECTION
2.
Said
title is further amended by revising paragraph (3.1) of Code Section 16-12-51,
relating to definitions pertaining to bingo, as follows:
"(3.1)
'Nonprofit, tax-exempt organization' means an organization, association,
corporation, or other legal entity which has been determined by the federal
Internal Revenue Service to be exempt from taxation under federal tax law and
has been
determined by the Georgia Department of Revenue to
be
which
is exempt from taxation under the
income
tax laws of this state
under Code
Section 48-7-25; which is organized or
incorporated in this state or authorized to do business in this state; and which
uses the proceeds from any bingo games conducted by such organization solely
within this state."
SECTION
3.
Said
title is further amended by revising paragraph (5) of subsection (b) of Code
Section 16-12-53, relating to bingo licensing procedures, as
follows:
"(5)
A
determination
letter from the Georgia Department of Revenue
certifying
statement
affirming that the applicant is exempt
under the
income
tax laws of this state
under Code
Section 48-7-25;"
SECTION
4.
Title
48 of the Official Code of Georgia Annotated, relating to revenue and taxation,
is amended by revising subsections (a) and (b) of Code Section 48-7-25, relating
to organizations exempt from Georgia income tax, as follows:
"(a)
The following organizations shall be exempt from taxation imposed by Code
Section 48-7-21
unless the
exemption is denied under subsection (b) or (c) of this Code
section
as
indicated:
(1)
Those
Subject to
subsections (b) and (c) of this Code section,
those organizations
described
by
which are
exempt from federal income taxation pursuant
to Section 501(c), 501(d), 501(e), 664, or
401 of the Internal Revenue Code of 1986
shall be
deemed to have similar exempt status for purposes of Code Section
48-7-21.
Organizations
described in this paragraph shall be exempt from taxation for state purposes in
the same manner and to the same extent as for federal
purposes; and
(2)
Insurance companies which pay to the state a tax upon premium
income.
(b)(1)
An
organization requesting exemption under paragraph (1) of subsection (a) of this
Code section shall file a written application with the commissioner. The
commissioner shall issue a determination letter or ruling to an organization
requesting the exemption and shall either grant or disallow the requested exempt
status. Until a determination letter granting exempt status is issued by the
commissioner, no exempt status shall exist. Those organizations which have an
exempt status in effect under Section 501(c), 501(d), 501(e), 664, or 401 of the
Internal Revenue Code of 1986 on January 1, 1987, shall retain the exempt status
unless revoked as provided by law. The commissioner may issue rules governing
the filing of written applications and the issuance of determination
letters.
An
organization´s exempt status under paragraph (1) of subsection (a) of this
Code section shall be subject to review and revocation by the commissioner in
accordance with the provisions of paragraph (2) of this subsection.
(2)(A)
The commissioner may revoke the exempt status of any organization described in
paragraph (1) of subsection (a) of this Code section when:
(i)
The Internal Revenue Service revokes the exempt status of the
organization;
(ii)
The organization ceases to be organized or operated in the manner in which it
was organized or operated at the time the exempt status was
granted;
(iii)
The organization engages in any prohibited transaction as set forth in the
Internal Revenue Code of 1986; or
(iv)
There is any material change in the character or purpose of the organization or
in the mode of operation of the organization.
(B)
Revocation of an exempt status shall revoke the exempt status retroactively to
the time of the occurrence of the disqualifying event or events. All exempt
organizations shall immediately notify the commissioner in writing of the
occurrence of any of the disqualifying events described in subparagraph (A) of
this paragraph or of receipt by the organization of a notice of intent to
terminate its exempt status by the Internal Revenue Service. The statute of
limitations governing the assessment of any taxes determined to be due this
state due to the revocation of exempt status shall be tolled as of the date of
the occurrence of the disqualifying event or events described in subparagraph
(A) of this paragraph. The commissioner at any time may require an organization
which is exempt from taxation to file an information return stating the
organization´s gross income, receipts, disbursements, accumulation of
income, and other data deemed necessary for the proper administration of this
Code section."
SECTION
5.
Said
title is further amended in Code Section 48-7-27, relating to computation of
taxable net income, by revising paragraph (2) of subsection (d) as
follows:
"(2)
Nonresident shareholders of a Georgia Subchapter 'S' corporation
must
shall
execute a consent agreement to pay Georgia income tax on their portion of the
corporate income in order for
the
such
Subchapter 'S' corporation to be recognized for Georgia purposes.
This
A
consent agreement
must
for each
shareholder shall be filed by the
corporation with its corporate tax return
in the year in
which the Subchapter 'S' corporation is first required to file a Georgia income
tax return. For a Subchapter 'S' corporation in existence prior to January 1,
2008, the consent agreement shall be filed for each shareholder in the first
Georgia tax return filed for a year beginning on or after January 1, 2008. A
consent agreement shall also be filed in any subsequent year for any additional
nonresident who first becomes a shareholder of the Subchapter 'S' corporation in
that year. Shareholders of a federal
Subchapter 'S' corporation which is not recognized for Georgia purposes may make
an adjustment to federal adjusted gross income in order to avoid double taxation
on this type of income. Adjustments
will
shall
not be allowed unless tax was actually paid by
the
such
corporation."
SECTION
6.
Said
title is further amended in Code Section 48-7-29.5, relating to the tax credit
for private driver education courses, by revising subsection (d) as
follows:
"(d)
No credit shall be allowed under this Code section unless the taxpayer
submits
with the claim for such credit
has
obtained written proof of the successful
completion of the course of driver education by the dependent minor child and
the amount expended by the taxpayer for such course."
SECTION
7.
Said
title is further amended by revising Code Section 48-7-54, which is reserved, as
follows:
"48-7-54.
Reserved
The
commissioner may require any nonindividual taxpayer to electronically file any
return, report, or other document required to be filed by this chapter when the
federal counterpart of such return, report, or other document is required to be
filed electronically pursuant to the Internal Revenue Code of 1986 or Internal
Revenue Service regulations. The commissioner shall be authorized to prescribe
forms and promulgate rules and regulations deemed necessary in order to
effectuate this Code
section."
SECTION
8.
Said
title is further amended in Code Section 48-7-100, relating to definitions
regarding current income tax payment, by revising paragraph (2.1) and adding a
new paragraph to read as follows:
"(2.1)
'Distribution
credited' means a recognition or assignment of interest in proceeds or property
of a partnership, Subchapter 'S' corporation, or limited liability company,
including a net distributive share of income which is passed through to members
and which may be subject to Georgia income tax.
(2.2)
'Distribution paid
or
credited'
shall
mean
means
any disbursement of funds
or
recognition or assignment of interest in proceeds or
property of a partnership, Subchapter 'S'
corporation, or limited liability company
which is
passed through to the members and which may be subject to Georgia income
tax
that is made
to a member with respect to that member´s interest in the entity and which
may be subject to Georgia income
tax."
SECTION
9.
Said
title is further amended in Code Section 48-7-101, relating to withholding
requirements for income tax, by adding a new subsection to read as
follows:
"(j)(1)
The payee of any nonperiodic payment may elect to have withholding made on
distributions from a pension, annuity, or similar fund. Such an election shall
remain in effect until revoked by the payee.
(2)
Upon such election by a payee as provided in paragraph (1) of this subsection,
the payor of any nonperiodic payment shall withhold from such payment the amount
specified by the payee, but in no event shall the amount withheld be less than
the amount which would be required to be withheld if such payment were a payment
of wages by an employer to an employee for the appropriate payroll
period.
(3)
The commissioner shall be authorized to prescribe forms and to promulgate rules
and regulations setting forth the requirements for withholding from such
nonperiodic payments and the requirements for making elections to
withhold."
SECTION
10.
Said
title is further amended by revising Code Section 48-7-129, relating to
withholding tax on distributions to nonresident members of partnerships,
Subchapter "S" corporations, and limited liability companies, as
follows:
"48-7-129.
(a)(1)
Any partnership, Subchapter 'S' corporation, or limited liability company which
owns property or does business within this state shall be subject to a
withholding tax. Such tax shall be withheld from any distributions paid or
any
distributions credited
but not
paid to members who are not residents of
Georgia, except as provided in subsection (c) of Code Section
48-7-24.
(2)
The amount of tax to be withheld for each nonresident member shall be determined
by multiplying the distribution paid or
the
distribution credited
but not
paid by a rate of 4 percent. To the extent
that the partnership, Subchapter 'S' corporation, or limited liability company
remits withholding tax during the course of the tax year which exceeds the
Georgia income tax liability of a nonresident member, that member shall be
entitled to a refund of the excess withholding at the end of the taxable
year.
(3)
Any partnership, Subchapter 'S' corporation, or limited liability company which
fails to withhold and pay over to the commissioner any amount required to be
withheld under this Code section may be liable for a penalty equal to
25 percent
of the amount not withheld and paid over.
Any penalty imposed under this subsection shall be paid upon notice and demand
by the commissioner or the commissioner´s delegate and shall be assessed
and collected in the same manner as the withholding taxes imposed by this
article.
(4)
The partnership, Subchapter 'S' corporation, or limited liability company and
its members shall be jointly and severally liable for the withholding tax
liability imposed under this subsection and shall be assessed
accordingly.
(b)(1)
As an alternative to the withholding requirement imposed by subsection (a) of
this Code section, the commissioner may allow the filing of composite returns by
partnerships, Subchapter 'S' corporations, or limited liability companies on
behalf of their nonresident members and may provide for the requirements of
filing composite returns by regulation. For purposes of this subsection, the
term 'composite return'
shall
mean
means
a return filed by a partnership, Subchapter 'S' corporation, or limited
liability company on behalf of all of its nonresident members which reports and
remits the Georgia income tax of the nonresident members.
(2)
Where a partnership, Subchapter 'S' corporation, or limited liability company
chooses to file a composite return and meets all the requirements of filing
the
such
composite return, such partnership, Subchapter 'S' corporation, or limited
liability company shall be exempt from the withholding requirements imposed
under subsection (a) of this Code section.
(3)
The liability imposed by this subsection shall be paid upon notice and demand by
the commissioner or the commissioner´s delegate and shall be assessed and
collected in the same manner as all other withholding taxes imposed by this
article.
(c)(1)
If a partnership, Subchapter 'S' corporation, or limited liability company fails
to remit withholding for a nonresident member and the commissioner determines
that such failure is due to a false representation that the member is a resident
of Georgia, there shall be imposed in addition to the tax a penalty of the
greater of $250.00 or 5 percent of the amount which should have been withheld.
The partnership, Subchapter 'S' corporation, or limited liability company and
the nonresident member shall be jointly and severally liable for any such
penalty imposed.
(2)
The penalty imposed by this subsection shall be paid upon notice and demand by
the commissioner or the commissioner´s delegate and shall be assessed and
collected in the same manner as withholding tax imposed by this
article.
(d)(1)
Every partnership, Subchapter 'S' corporation, or limited liability company
which is required to deduct and withhold the withholding tax imposed by
subsection (a) of this Code section shall
remit such tax
and file the required return on a form
approved by the commissioner
and remit
payment to the department
as
follows:
(A)
Taxes deducted and withheld on distributions paid by a partnership, Subchapter
'S' corporation, or limited liability company to members who are nonresidents
shall be due on or before the last day of
the calendar month following the calendar month within which the distribution
was paid or
credited;
and
(B)
Taxes deducted and withheld on distributions credited but not paid by a
partnership, Subchapter 'S' corporation, or limited liability company to members
who are nonresidents shall be due on or before the due date for filing the
income tax return for the partnership, Subchapter 'S' corporation, or limited
liability company as prescribed in subsection (a) of Code Section 48-7-56
without regard to any extension of time for filing such income tax
return.
(2)
Every partnership, Subchapter 'S' corporation, or limited liability company
required to deduct and withhold tax under this article shall
furnish,
within 30 days of the close of its taxable year, to each nonresident member for
which tax is withheld a written statement in duplicate, showing the name of the
partnership, Subchapter 'S' corporation, or limited liability company, the name
of the member of the partnership, Subchapter 'S' corporation, or limited
liability company, the member´s federal tax identification number, the
total amount of distributions paid to the member during the taxable year, and
the total amount of tax deducted and withheld with respect to the member during
the taxable year. The written statement shall be in a form approved by the
commissioner and shall contain such additional information as the commissioner
may prescribe. The partnership, Subchapter 'S' corporation, or limited liability
company shall file copies of all such written statements with the
commissioner
a written
statement or form approved by the commissioner to each nonresident member. Such
statement or form shall include the name and federal tax identification number
of the partnership, Subchapter 'S' corporation, or limited liability company,
the member´s name and federal tax identification number, the total amount
of distributions paid to the member during the taxable year, the total amount of
tax deducted and withheld with respect to such member during the year, and such
other information as the commissioner shall prescribe. Such statement or form
shall be furnished to the nonresident member and filed in duplicate with the
commissioner on or before the earlier of the date the income tax return is filed
or the due date for filing the income tax return of such partnership, Subchapter
'S' corporation, or limited liability company as prescribed in subsection (a) of
Code Section 48-7-56 without regard to any extension of time for filing such
income tax return.
(3)
Any partnership, Subchapter 'S' corporation, or limited liability company
required to furnish a nonresident member with the written statement required by
this subsection which furnishes a false or fraudulent statement or which fails
to furnish the statement shall be subject to the penalty contained in subsection
(d) of Code Section 48-7-126. The penalty imposed by this subsection shall be
paid upon notice and demand by the commissioner or the commissioner´s
delegate and shall be assessed and collected in the same manner as the
withholding tax imposed by this article.
(e)(1)
Notwithstanding subsection (a) of this Code section, a partnership, Subchapter
'S' corporation, or limited liability company shall not be required to deduct
and withhold tax for a nonresident member if:
(A)
A composite return is filed on behalf of nonresident members pursuant to the
requirements of filing such composite returns as set by the
commissioner;
(B)
The aggregate annual distributions made to a member are less than
$1,000.00;
(C)
A federally chartered Subchapter 'S' corporation fails to meet the requirements
of subparagraph (b)(7)(B) of Code Section 48-7-21 and is therefore required to
remit corporate income tax;
(D)
Compliance will cause undue hardship on the partnership, Subchapter 'S'
corporation, or limited liability company, provided that no partnership,
Subchapter 'S' corporation, or limited liability company shall be exempt from
complying with the withholding requirements imposed under subsection (a) of this
Code section unless the commissioner approves in writing a written petition for
exemption from the withholding requirements based on undue hardship. The
commissioner may prescribe the form and contents of such a petition and specify
standards for when a partnership, Subchapter 'S' corporation, or limited
liability company
will
shall
not be required to comply with the withholding requirements due to undue
hardship;
(E)
The partnership is a publicly traded partnership as defined in Section 7704 of
the Internal Revenue Code of 1986; or
(F)
The member meets one of the exceptions as set forth in the rules and regulations
promulgated by the commissioner.
(2)
Where distributions paid or
distributions
credited but
not paid, or both, to nonresident members
of partnerships, Subchapter 'S' corporations, or limited liability companies are
subject to withholding under other provisions of Georgia law or represent a
return of such member´s investment or a return of capital, such
distributions shall not be subject to withholding under subsection (a) of this
Code section.
(f)
The commissioner
is
shall
be authorized to prescribe forms and to
promulgate rules and regulations which the commissioner deems necessary in order
to effectuate this Code section."
SECTION
11.
This
Act shall become effective upon its approval by the Governor or upon its
becoming law without such approval and shall be applicable to all taxable years
beginning on or after January 1, 2008.
SECTION
12.
All
laws and parts of laws in conflict with this Act are repealed.