Bill Text: GA HB168 | 2011-2012 | Regular Session | Comm Sub
Bill Title: Revenue and tax; incorporate certain federal provisions into Georgia Law; define terms
Spectrum: Partisan Bill (Republican 4-0)
Status: (Passed) 2011-04-27 - Effective Date [HB168 Detail]
Download: Georgia-2011-HB168-Comm_Sub.html
11 LC 18
9876S
House
Bill 168 (COMMITTEE SUBSTITUTE)
By:
Representatives Knight of the
126th,
Channell of the
116th,
and Holt of the
112th
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Title 48 of the Official Code of Georgia Annotated, relating to revenue
and taxation, so as to define the terms "Internal Revenue Code" and "Internal
Revenue Code of 1986" and thereby incorporate certain provisions of the federal
law into Georgia law; to provide for the revision of sales and use tax
provisions for streamlined sales tax purposes; to change and provide for
definitions; to change and provide for exemptions; to change provisions related
to deductions for bad debts; to change certain provisions relating to taxability
burden of proof; to change certain provisions relating to reporting and
accounting methods; to change certain provisions relating to dealer returns and
estimated tax liability; to change certain provisions relating to sourcing; to
provide for certification of review software; to provide for liability and
relief from liability; to provide for an effective date; to provide
applicability; to repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Title
48 of the Official Code of Georgia Annotated, relating to revenue and taxation,
is amended in Code Section 48-1-2, relating to definitions regarding revenue and
taxation, by revising paragraph (14) as follows:
"(14)
'Internal Revenue Code' or 'Internal Revenue Code of 1986' means for taxable
years beginning on or after January 1,
2009
2010,
the provisions of the United States Internal Revenue Code of 1986, as amended,
provided for in federal law enacted on or before January 1,
2010
2011,
except that Section 85(c), Section 108(i), Section 163(e)(5)(F), Section
164(a)(6), Section 164(b)(6), Section 168(b)(3)(I), Section 168(e)(3)(B)(vii),
Section 168(e)(3)(E)(ix), Section 168(e)(8), Section 168(k) (but not excepting
Section 168(k)(2)(A)(i), Section 168(k)(2)(D)(i), and Section 168(k)(2)(E)),
Section 168(m), Section 168(n), Section 172(b)(1)(H), Section 172(b)(1)(J),
Section 172(j),
Section 179(f),
Section 199, Section 810(b)(4), Section 1400L, Section 1400N(d)(1), Section
1400N(f), Section 1400N(j), Section 1400N(k), and Section 1400N(o) of the
Internal Revenue Code of 1986, as amended, shall be treated as if they were not
in effect, and except that Section 168(e)(7), Section 172(b)(1)(F), Section
172(i)(1), and Section 1221 of the Internal Revenue Code of 1986, as amended,
shall be treated as they were in effect before the 2008 enactment of federal
Public Law 110-343, and except that Section 163(i)(1) of the Internal Revenue
Code of 1986, as amended, shall be treated as it was in effect before the 2009
enactment of federal Public Law 111-5, and except that Section 13(e)(4) of 2009
federal Public Law 111-92 shall be treated as if it was not in
effect, and
except that the limitations provided in Section 179(b)(1) shall be $250,000.00
for tax years beginning in 2010 and shall be $250,000.00 for tax years beginning
in 2011, and except that the limitations provided in Section 179(b)(2) shall be
$800,000.00 for tax years beginning in 2010 and shall be $800,000.00 for tax
years beginning in 2011.
For taxable
years beginning on or after January 1, 2009, the terms 'Internal Revenue Code'
or 'Internal Revenue Code of 1986' shall also include the provisions of federal
Public Law 111-126 as enacted on January 22,
2010. In the event a reference is made in
this title to the Internal Revenue Code or the Internal Revenue Code of 1954 as
it existed on a specific date prior to January 1,
2010
2011,
the term means the provisions of the Internal Revenue Code or the Internal
Revenue Code of 1954 as it existed on the prior date. Unless otherwise provided
in this title, any term used in this title shall have the same meaning as when
used in a comparable provision or context in the Internal Revenue Code of 1986,
as amended. For taxable years beginning on or after January 1,
2009
2010,
provisions of the Internal Revenue Code of 1986, as amended, which were as of
January 1,
2010
2011,
enacted into law but not yet effective shall become effective for purposes of
Georgia taxation on the same dates upon which they become effective for federal
tax purposes."
SECTION
2.
Said
title is further amended in Code Section 48-8-2, relating to sales and use tax
definitions, by adding new paragraphs to read as follows:
"(11.1)
'Dietary supplement' means any product, other than tobacco, intended to
supplement the diet that:
(A)
Contains one or more of the following dietary ingredients:
(i)
A vitamin;
(ii)
A mineral;
(iii)
An herb or other botanical;
(iv)
An amino acid;
(v)
A dietary substance for use by humans to supplement the diet by increasing the
total dietary intake; or
(vi)
A concentrate, metabolite, constituent, extract, or combination of any
ingredient described in this subparagraph;
(B)
Is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid
form, or if not intended for ingestion in such a form, is not represented as
conventional food and is not represented for use as a sole item of a meal or of
the diet; and
(C)
Is required to be labeled as a dietary supplement, identifiable by the
'Supplements Facts' box found on the label as required pursuant to 21 C.F.R.
Section 101.36."
"(20.1)
'Over-the-counter drug' means a drug that contains a label that identifies the
product as a drug as required by 21 C.F.R. Section 201.66. The
'over-the-counter drug' label includes:
(A)
A 'Drug Facts' panel; or
(B)
A statement of the 'active ingredient(s)' with a list of those ingredients
contained in the compound, substance, or
preparation."
"(39.1)
'Tobacco' means cigarettes, cigars, chewing or pipe tobacco, or any other item
that includes tobacco."
SECTION
3.
Said
title is further amended in said Code section by revising paragraphs (16), (29),
and (34) to read as follows:
"(16)
'Food and food ingredients' means substances, whether in liquid, concentrated,
solid, frozen, dried, or dehydrated form, that are sold for ingestion or chewing
by humans and are consumed for their taste or nutritional value. 'Food and food
ingredients' shall not include alcoholic
beverages,
dietary supplements, or
tobacco."
"(29)
'Prosthetic device' means a replacement, corrective, or supportive device
including repair and replacement parts for the same worn on or in the body
to:
(A)
Artificially replace a missing portion of the body;
(B)
Prevent or correct physical deformity or malfunction; or
(C)
Support a weak or deformed portion of the body.
'Prosthetic
device' shall not include hearing
aids."
"(34)(A)
'Sales price' applies to the measure subject to sales tax and means the total
amount of consideration, including cash, credit, property, and services, for
which personal property or services are sold, leased, or rented, valued in
money, whether received in money or otherwise without any deduction for the
following:
(i)
The seller's cost of the property sold;
(ii)
The cost of materials used, labor, or service cost, interest, losses, all costs
of transportation to the seller, all taxes imposed on the seller, and any other
expense of the seller;
(iii)
Charges by the seller for any services necessary to complete the
sale, other
than delivery and installation charges;
and
(iv)
Delivery
charges;
(v)
Installation charges; and
(vi)
Credit for any trade-in, except as otherwise provided in division (vii) of
subparagraph (B) of this
paragraph.
(B)
'Sales price' shall not include:
(i)
Discounts, including cash, term, or coupons that are not reimbursed by a third
party that are allowed by a seller and taken by a purchaser on a
sale;
(ii)
Interest, financing, and carrying charges from credit extended on the sale of
personal property or services, if the amount is separately stated on the
invoice, bill of
sale,
or similar document given to the purchaser;
(iii)
Any taxes legally imposed directly on the consumer that are separately stated on
the invoice, bill of sale, or similar document given to the
purchaser;
(iv)
Installation charges if they are separately stated on the invoice, billing, or
similar document given to the purchaser;
(v)
Charges by
the seller for any services necessary to complete the sale if they are
separately stated on the invoice, billing, or similar document given to the
purchaser;
(vi)
Telecommunications nonrecurring charges if they are separately stated on the
invoice, billing, or similar document; and
(vii)(vi)
Credit for any
motor
vehicle trade-in.
(C)
'Sales price' shall include consideration received by the seller from third
parties if:
(i)
The seller actually receives consideration from a party other than the purchaser
and the consideration is directly related to a price reduction or discount on
the sale;
(ii)
The seller has an obligation to pass the price reduction or discount through to
the purchaser;
(iii)
The amount of the consideration attributable to the sale is fixed and
determinable by the seller at the time of the sale of the item to the purchaser;
and
(iv)
One of the following criteria is met:
(I)
The purchaser presents a coupon, certificate, or other documentation to the
seller to claim a price reduction or discount where the coupon, certificate, or
documentation is authorized, distributed, or granted by a third party with the
understanding that the third party will reimburse any seller to whom the coupon,
certificate, or documentation is presented;
(II)
The purchaser identifies himself or herself to the seller as a member of a group
or organization entitled to a price reduction or discount; provided, however,
that a 'preferred customer' card that is available to any patron shall not
constitute membership in such a group; or
(III)
The price reduction or discount is identified as a
third
party
third-party
price reduction or discount on the invoice received by the purchaser or on a
coupon, certificate, or other documentation presented by the
purchaser."
SECTION
4.
Said
title is further amended in Code Section 48-8-3, relating to exemptions from
sales and use tax, by revising paragraphs (12), (18), (47), (50), (52), (54),
and (57) as follows:
"(12)
School
lunches
Food and food
ingredients and prepared food sold and
served to pupils and employees of public schools
as part of a
school lunch program;"
"(18)
Charges made for the transportation of tangible personal property
except
delivery charges by the seller associated with the sale of taxable tangible
personal property, including, but not
limited to, charges for accessorial services such as refrigeration, switching,
storage, and demurrage made in connection with interstate and intrastate
transportation of the property;"
"(47)(A)(i)
The sale or use of
controlled
substances and drugs which are lawfully
dispensed
dispensable
only by prescription for the treatment of
natural persons, and
sales
the sale or
use of prescription eyeglasses and contact
lenses including, without limitation, prescription contact lenses distributed by
the manufacturer to licensed dispensers as free samples not intended for resale
and labeled as
such.;
and
(ii)
The sale or use of
those
controlled substances and drugs lawfully
dispensable by prescription for the treatment of natural persons which are
dispensed or distributed without charge to physicians, dentists, clinics,
hospitals, or any other person or entity located in Georgia by a pharmaceutical
manufacturer or distributor; and the use of
controlled
substances, drugs, new animal drugs, and medical
devices
drugs and
durable medical equipment lawfully
dispensed or distributed without charge solely for the purposes of a clinical
trial approved by either the United States Food and Drug Administration or by an
institutional review board.
(B)
For purposes of this paragraph, the term:
(i)
'Controlled substance' means the same as provided in Code Section
16-13-1.
(ii)(i)
'Drug' means the same as provided in Code Section 48-8-2
but shall not
include over-the-counter drugs or
tobacco.
(iii)(ii)
'Institutional review board' means an institutional review board as provided in
21 C.F.R. Section 56.
(iv)
'Medical device' means a device as defined in subsection (h) of 21 U.S.C.
Section 321.
(v)
'New animal drug' means a new animal drug as defined in subsection (v) of 21
U.S.C. Section 321.
(C)
The commissioner is authorized to prescribe forms and promulgate rules and
regulations deemed necessary in order to administer and effectuate this
paragraph;"
"(50)
Sales of
blood
measuring devices, other monitoring equipment, or insulin delivery systems used
exclusively by diabetics and sales of
insulin, insulin
syringes,
and blood glucose level measuring strips dispensed without a
prescription;"
"(52)
Reserved
The sale or
use of hearing aids;"
"(54)
The sale or use of any durable medical equipment
that is sold
or used pursuant to a prescription or
prosthetic device
that is sold
or used pursuant to a prescription
prescribed
by a physician;"
"(57)(A)
The sale of food and food ingredients
to an
individual consumer for off-premises human
consumption, to the extent provided in
subparagraph
(B) of this paragraph.
(B)
For the purposes of this paragraph,
the
term 'food and food ingredients'
as defined in
Code Section 48-8-2 shall not include
prepared food,
alcoholic
beverages, or tobacco as defined in Code Section
48-8-2
drugs, or
over-the-counter drugs.
(C)
The exemption provided for in this paragraph shall not apply to the sale or use
of food and food ingredients when purchased for any use in the operation of a
business.
(C)(i)(D)(i)
The exemption provided for in this paragraph shall not apply to any local sales
and use tax levied or imposed at any time.
(ii)
For the purposes of this subparagraph, the term 'local sales and use tax' shall
mean any sales tax, use tax, or local sales and use tax which is levied and
imposed in an area consisting of less than the entire state, however authorized,
including, but not limited to, such taxes authorized by or pursuant to
constitutional amendment; by or pursuant to Section 25 of an Act approved March
10, 1965 (Ga. L. 1965, p. 2243), as amended, the 'Metropolitan Atlanta Rapid
Transit Authority Act of 1965'; by or pursuant to any article of this
chapter.
(D)(E)
The commissioner shall adopt rules and regulations to carry out the provisions
of this paragraph;"
SECTION
5.
Said
title is further amended by revising Code Section 48-8-38, relating to
taxability burden of proof, as follows:
"48-8-38.
(a)
All gross sales of a retailer are subject to the tax imposed by this article
until the contrary is established. The burden of proving that a sale of
tangible personal property is not a sale at retail is upon the person who makes
the sale unless
he
such
person takes from the purchaser a
certificate stating that the property is purchased for resale or is otherwise
exempt.
(b)
The certificate relieves the seller from the burden of proof as provided in
subsection (a) of this Code section if the seller acquires from the
purchaser a properly completed certificate.
(c)
The certificate shall include such information as is determined by the
commissioner and is signed by the purchaser if it is a paper exemption
certificate.
(d)
A purchaser claiming an exemption electronically shall use the standard form as
adopted by the Streamlined Sales Tax Governing Board.
(e)
A seller shall obtain the same information for proof of a claimed exemption
regardless of the medium in which the transaction occurred.
(f)
The department shall relieve a seller of the tax otherwise applicable if the
seller obtains a fully completed exemption certificate approved by the
Streamlined Sales Tax Governing Board, the department, or the Multistate Tax
Commission or captures the relevant data elements required under the Streamlined
Sales and Use Tax Agreement within 90 days subsequent to the date of sale. If
the seller has not obtained a fully completed exemption certificate or all
relevant data elements required under the Streamlined Sales and Use Tax
Agreement within 90 days subsequent to the date of sale, the department shall
provide the seller with 120 days subsequent to a request for substantiation to
either:
(1)
Obtain a fully completed exemption certificate from the purchaser, taken in good
faith which means that the seller obtain a certificate that claims an exemption
that:
(A)
Was statutorily available on the date of the transaction in the jurisdiction
where the transaction is sourced;
(B)
Could be applicable to the item being purchased; and
(C)
Is reasonable for the purchaser's type of business; or
(2)
Obtain other information establishing that the transaction was not subject to
the tax.
(g)
The department shall relieve a seller of the tax otherwise applicable if the
seller obtains a blanket exemption certificate from a purchaser with which the
seller has a recurring business
relationship."
SECTION
6.
Said
title is further amended by revising Code Section 48-8-45, relating to reporting
and accounting methods, as follows:
"48-8-45.
(a)
Any
person
dealer
taxable under this article having both cash and credit sales may report the
sales on either the cash or accrual basis of accounting. Each election of a
basis of accounting shall be made on the first return filed and, once made, the
election shall be irrevocable unless the commissioner grants written permission
for a change. Permission for a change in the basis of accounting shall be
granted only upon written application and under rules and regulations
promulgated by the commissioner.
(b)
Any
person
dealer
reporting on a cash basis of accounting shall include in each return all cash
sales made during the period covered by the return and all collections made in
any period on credit sales of prior periods and shall pay the tax on the sales
at the time of filing the return.
(c)
Any
person
dealer
reporting on the accrual basis of accounting shall be allowed a deduction for
bad debts under rules and regulations of the commissioner.
Any deduction
taken or refund claimed that is attributed to bad debts shall not accrue or
include interest.
(d)
An assignee
of private label credit card debt purchased directly from a dealer without
recourse or a credit card bank which extends such credit to customers under a
private label credit card program shall be allowed a deduction for private label
credit card bad debts under rules and regulations of the commissioner. An
issuer or assignee of private label credit card debt may claim its deduction for
private label credit card bad debts on a return filed by a member of an
affiliated group as defined under 26 U.S.C. Section
1504.
The bad debt
may be deducted on the return for the period during which the bad debt is
written off as uncollectable in the claimant's books and records and is eligible
to be deducted for federal income tax purposes. Any such deduction for such bad
debt shall be reported as a separate line item on the claimant's sales and use
tax return. If such deduction is not reported as a line item, it shall be
disallowed. A claimant who is not required to file federal income tax returns
may deduct a bad debt on a return filed for the period in which the bad debt is
written off as uncollectable in the claimant's books and records and the
claimant would be eligible for a bad debt deduction for federal income tax
purposes if the claimant was required to file a federal income tax
return.
(e)
If a deduction is taken for a bad debt and the debt is subsequently collected in
whole or in part, the tax on the amount so collected must be paid and reported
on the return filed for the period in which the collection is made. For the
purposes of reporting a payment received on a previously claimed bad debt, any
payments made on a debt or account are applied first proportionally to the
taxable price of the property or service and the sales tax thereon, and,
secondly, to interest, service charges, and any other charges.
(f)(1)
As used in this subsection, 'assignee' includes but is not limited
to:
(A)
Assignees of promissory notes, accounts, or accounts receivable; or
(B)
Financial institutions that do not make taxable retail sales but that finance
retail sales by making loans or issuing credit cards to purchasers.
(2)
The deduction and refund provided for in this Code section are not assignable.
The deduction and refund provided for in this Code section are only available to
a dealer that makes a taxable retail sale, remits tax on that sale, and
subsequently incurs a bad debt with respect to that sale. Assignees may not
take a deduction or claim a refund pursuant to this Code section.
(g)
For purposes of calculating the deduction taken or refund claimed, a 'bad debt'
shall have the same meaning as defined in 26 U.S.C. Section 166. However, the
amount calculated pursuant to 26 U.S.C. Section 166 shall be adjusted to
exclude:
(1)
Financing charges or interest;
(2)
Sales or use taxes charged on the purchase price;
(3)
Uncollectable amounts on property that remain in the possession of the seller
until the full purchase price is paid;
(4)
Expenses incurred in attempting to collect any debt; and
(5)
Repossessed property.
(h)
For bad debts incurred and written off after January 1, 2011, when the amount of
bad debt exceeds the amount of taxable sales for the period during which the bad
debt is written off, a refund claim may be filed. The statute of limitations
for filing such claim shall be three years from the due date of the return on
which the bad debt could first be claimed. Such refund shall be claimed on such
form as shall be established by the commissioner.
(i)
Where filing responsibilities have been assumed by a certified service provider,
the department allows the service provider to claim, on behalf of the seller,
any bad debt allowance provided by this Code section. Such refund shall be
claimed on such form as shall be established by the commissioner. The certified
service provider must credit or refund the full amount of any bad debt allowance
or refund received to the seller.
(j)
Where the books and records of the party claiming the bad debt allowance support
an allocation of the bad debts among the Streamlined Sales Tax member states,
such allocation is
permitted."
SECTION
7.
Said
title is further amended by revising subsections (b) and (c) of Code Section
48-8-49, relating to dealer returns and estimated tax liability, as
follows:
"(b)(1)
As used in this subsection, the term 'estimated tax liability' means a dealer's
tax liability, adjusted to account for any subsequent change in the state sales
and use tax rate, based on the dealer's average monthly payments for the last
fiscal
calendar
year.
(2)
If the tax liability of a dealer in the preceding calendar year was greater than
$30,000.00
$60,000.00
excluding local sales taxes, the dealer shall file a return and remit to the
commissioner not less than 50 percent of the estimated tax liability for the
taxable period on or before the twentieth day of the period. The amount of the
payment of the estimated tax liability shall be credited against the amount to
be due on the return required under subsection (a) of this Code section. This
subsection shall not apply to any dealer whose primary business is the sale of
motor fuels who is remitting prepaid state tax under paragraph (2) of subsection
(b) of Code Section 48-9-14.
(c)
Gross
proceeds from rentals
Rentals
or leases of tangible personal property shall be reported and the tax shall be
paid with respect to the
gross
proceeds
sales
price in accordance with the rules and
regulations prescribed by the commissioner."
SECTION
8.
Said
title is further amended by revising subparagraph (d)(2)(A) of Code Section
48-8-77, relating to sourcing, as follows:
"(A)
Except as otherwise provided in this paragraph, sales of 'other direct mail' are
sourced in accordance with subparagraph
(l)(1)(A)
(b)(1)(C)
of this Code section;"
SECTION
9.
Said
title is further amended by adding a new Code section as follows:
"48-8-77.1.
(a)
For purposes of this Code section, the definitions as provided in Code Section
48-8-161 shall apply.
(b)
The department shall review software submitted to the Streamlined Sales Tax
Governing Board for certification as a Certified Automated System under Section
501 of the Streamlined Sales and Use Tax Agreement. Such review shall include a
review to determine that the program accurately reflects the taxability of the
product categories included in the program. Upon approval by the department,
the state will certify its acceptance of the software to the Streamlined Sales
Tax Governing Board.
(c)
The department shall relieve certified service providers and model 2 sellers
from liability to the state and local jurisdictions in the state for not
collecting sales or use taxes resulting from the certified service provider or
model 2 seller relying on the certification provided by the state.
(d)
The department shall provide relief from liability to certified service
providers for not collecting sales and use taxes in the same manner as provided
to sellers under Code Section 48-8-38.
(e)
If the department determines that an item or transaction is incorrectly
classified as to the item or transaction's taxability, the department shall
notify the certified service providers or model 2 sellers of the incorrect
classification. The certified service provider or model 2 seller shall have ten
days to revise the classification after receipt of notice from the department of
the determination."
SECTION
10.
This
Act shall become effective upon its approval by the Governor or upon its
becoming law without such approval and Section 1 of this Act shall be applicable
to all taxable years beginning on or after January 1, 2010.
SECTION
11.
All
laws and parts of laws in conflict with this Act are repealed.