TAX NEWS - August 2009

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Business Tax General Questions - State of Georgia tax

Q. Will Georgia follow IRS Notice number 2004-54 relating to paid preparer signatures?

A. Yes. Using the IRS requirements, Georgia will permit paid tax preparers to sign original returns, amended returns, or requests for tax filing extensions by rubber stamp, mechanical device (such as signature pen), or computer software program. Also refer to Regulation 560-3-2-.27  "Signature requirements for tax returns."


Q. What is the due date for corporate tax returns?

A. The corporate income tax return is due on or before the 15th day of the 3rd month following the close of the taxable year. The corporate net worth tax return must be filed on or before the fifteenth day of the third month following the beginning of the corporation's taxable period. Both the income tax and net worth tax are reported on the same form, Form 600 or 600S.


Q. What is the due date for the partnership tax return?

A. The partnership return is due on or before the 15th day of the 4th month following the close of the taxable year.


Q. Does Georgia accept the Federal extension?

A. Georgia accepts the Federal extension to extend the due date for filing the return. Attach a copy of the Federal extension to the Georgia tax return when it is filed.


Q. If I only want to extend the Georgia income tax return, does Georgia have its own extension available?

A. Yes, the Georgia extension Form IT-303 is available and provides up to a six-month extension. Georgia law prohibits the granting of an extension of over 6 months from the due date of the tax return.


Q. Who must file a Georgia income tax return?

A. Every corporation, partnership, and LLC which does business or owns property in Georgia or receives income from Georgia sources. Additionally, every partnership or LLC being treated as a partnership, which has partners or members which are domiciled in Georgia, must file a Georgia income tax return.


Q. Where do I file my Georgia Tax Returns? (See the next question for the mailing address if you claim tax credits)

A. The c-corporation tax return (Form 600) is mailed to: Georgia Department of Revenue, Processing Center, P.O. Box 740397, Atlanta, GA 30374-0397. The s-corporation return (Form 600S) is mailed to: Georgia Department of Revenue, Processing Center, P.O. Box 740391, Atlanta, GA 30374-0391. The partnership return (Form 700) is mailed to: Georgia Department of Revenue, Processing Center, P.O. Box 740315, Atlanta, GA 30374-0315.


Q. Where do I file my Georgia Tax Returns if credits were claimed on Schedule 9 or 10 of Form 600, Schedule 10 or 11 of Form 600S, or Schedule 2 of Form 700?

A. The c-corporation tax return (Form 600), s-corporation return (Form 600S), and the partnership tax return (Form 700) are mailed to: Georgia Department of Revenue, Taxpayer Services Division, P.O. Box 49431, Atlanta, GA 30359-1431.


Q. How do I amend a Georgia tax return?

A. To file an amended Georgia tax return, check the "amended return" box on the front of the return. A c-corporation should use Form 600, an s-corporation should use Form 600S, and a partnership should use Form 700. Attach an explanation of any changes made. Show the computations in detail. If the change involves an item of income, deduction, or credit that you were required to support with a form or schedule on your original tax return, attach the corrected form or schedule.


Q. What are the reporting requirements as the result of an IRS audit?

A. When there is an IRS change, the taxpayer has 180 days to report the change to the Department of Revenue on an amended return. A complete copy of the Federal change must be included with the amended return. If the taxpayer fails to notify the Department of the change, the Department has five years from the date the report is received from the IRS to issue an assessment. A taxpayer who fails to notify the Commissioner within 180 days forfeits any Georgia tax refund as a result of the audit if the normal statute of limitations has passed. However, for tax years beginning on or after January 1, 1987, 90% of any overpayment can be applied to a balance due for another year that is a result of the same IRS audit.


Q. If I close my business, should I notify the Department of Revenue?

A. You are required to file a final tax return. Check the box marked "final return" on the face of the income tax return. A corporate tax return is due on or before the 15th day of the third month after the date of dissolution and a partnership return is due on or before the 15th day of the fourth month after the date of the dissolution. For a corporation, there is no net worth tax due on the final return.


Q. If a company has to file a short period Federal income tax form, does it have to file a short period Georgia income tax return?

A. Yes. However, please see the exception for mergers and acquisitions in the C-Corporations section below.


Q. What U.S. Government interest is deductible from Federal income?

A. Interest from Direct Federal Obligations (such as Treasury Bonds & Notes) and other interest that is specifically exempt by Federal statute are not taxed by Georgia (including dividends received from mutual funds that derive income from these sources). Any amount exempted must be reduced by any direct and indirect interest expense attributable to the production of the interest or dividend income. To arrive at such reduction, the total interest expense is multiplied by a fraction, the numerator of which is the taxpayer's average adjusted basis of U.S. obligations, and the denominator of which is the average adjusted basis of all assets of the taxpayer. The interest can not be from third party obligations such as Federal National Mortgage Association (F.N.M.A.), Government National Mortgage Association (G.N.M.A.), etc.


Q. What municipal interest has to be added to Federal income?

A. Interest received from non-Georgia municipal bonds and dividends received from mutual funds that derive income from non-Georgia municipal bonds must be added to Federal income if it is not already included.


Q. What types of taxes have to be added to Federal income?

A. Any taxes on, or measured by, net income or net profits paid or accrued within the taxable year imposed by the authority of the United States or any foreign country, and by any state (except the state of Georgia) or by any territory, county, school district, municipality, or other tax subdivision of any state, territory, or foreign country to the extent such taxes are deducted in determining Federal taxable income. In general, these are taxes based upon income.


Q. Has Georgia adopted the Uniform Division of Income for Tax Purposes Act (UDIPTA).

A. No, Georgia has not specifically adopted UDIPTA.


Q. Does Georgia follow the Multi-state Tax Commission (MTC) regulations and policies?

A. No. Georgia is only a sovereignty member.


Q. What are my chances of being audited and what is the time frame for an audit?

A. Companies are selected on a random basis for audit. The DOR has 3 years after the filing of a return to audit a taxpayer. Tax may be assessed at any time in the case of a false or fraudulent return or a return filed with the intent to evade tax, or the failure to file a return.


Q. What is required if my tax return is chosen for an audit?

A. The auditor will ask to see supporting documentation for the income, deductions, exemptions and/or credits reported on the tax return. A taxpayer will receive notification that the return(s) have been selected for audit and generally an audit will be scheduled three to nine months after notification, allowing the taxpayer sufficient time to compile the supporting documentation.


Q. Does Georgia consider the Texas Margin Tax to be an income tax?

A. No.
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