Georgia R&D Tax Credit Summary

GEORGIA R&D TAX CREDIT SUMMARY

Georgia State R&D Tax Credit

A business enterprise that has qualified research expenses in Georgia in a taxable year exceeding a base amount is eligible for a tax credit provided the corporation claims and is allowed a federal research credit under IRC § 41. The definition of “qualified research expenses” is the same as that used for federal purposes.

Businesses engaged in manufacturing, warehousing and distribution, processing, telecommunications, tourism, and research and development are eligible for the credit. The headquarters of such businesses qualify for the credit, but retail businesses are not included
The tax credit is equal to 10% of the excess over a base amount consisting of the product of the business enterprise’s Georgia gross receipts in the current taxable year and either the average of the ratios of its aggregate qualified research expenses to Georgia gross receipts for the preceding three taxable years or 30%, whichever is less

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The base amount of a business that has no Georgia gross receipts during any one or more of the three preceding tax years will be determined by multiplying the current year Georgia gross receipts by 30%
Any qualified research expense credit earned before January 1, 2012, and any attributed credit carry-forward will be governed under Ga. Code Ann. §48-7-40.12 as in effect for the taxable year when the credit was earned, including but not limited to determining if such credit or any credit carry-forward may be taken as a credit against the taxpayer’s quarterly or monthly wage withholding payments under Ga. Code Ann. §48-7-103
A taxpayer need not have had a positive taxable net income for the preceding three taxable years in order to claim the credit

How to Obtain the Credit?

For a business enterprise to claim the research tax credit, the business enterprise must submit Form IT-RD

Refundable/Transferable Tax Credit – No

Flow-Through Entity

When the business enterprise is a pass-through entity and has no income tax liability of its own, the tax credits will pass to its members, shareholders, or partners based on the year ending profit/loss percentage and the limitations of this regulation. The credit forms will initially be filed with the tax return of the business enterprise to establish the amount of the credit available for pass through. The credit will then pass through to its shareholders, members, or partners to be applied against the tax liability on their income tax returns. The shareholders, members, or partners may not claim any excess research tax credit against their withholding tax liabilities.

The credits are available for use as a credit by the shareholders, members, or partners for their tax year in which the income tax year of the pass-through entity ends. For example, A partnership earns the credit for its tax year ending January 31, 2013. The partnership passes the credit to a calendar year partner. The credit is available for use by the partner beginning with the calendar 2013 tax year.

Georgia R&D Tax Credit Summary