Georgia revenue quarterly, Jan. - Mar. 2002

GEORGIA REVENUE QUARTERLY

Roy E. Barnes, Governor

T. Jerry Jackson, Commissioner

New Federal Law Impacts Computer

2001 Georgia Tax Returns

On March 9, President Bush signed into law the Job Creation and Worker Assistance

2002 session. House Bill 1026, which has been
signed by Governor Barnes (see related ar-

Act of 2002.

ticle) does not have any relationship to this

The bill contains provisions that im- Act.

pact Georgia tax returns for both businesses

Adjustments must be made for any

and individuals.

items affecting 2001 returns.

The Georgia legislature did not adopt

The two major differences for tax year

the provisions of the Job Creation and 2001 are:

Worker Assistance Act of 2002, during its

! It allows an increase for the

Bill Brings State

carryback period for net operating losses to five years for tax years ending in 2001

Into Conformity With

and 2002. ! The 2002 Act allows businesses a

2001 Federal Tax Act
Governor Roy Barnes signed House Bill 1026 on April 18,
which updates Georgia's in-

30 percent bonus depreciation in the first year for certain types of property.
Georgia will continue to use the twoyear carryback as provided in the old federal law.

come tax code bringing it into conformity

Additionally, there are specific steps

with the Internal Revenue Code as of Jan. the taxpayer must follow to adjust for the

1, 2002.

30 percent bonus depreciation.

This means Georgia has adopted the

Taxpayers, who filed their 2001 Geor-

Economic Growth and Tax Relief Recon- gia return and claimed the 30 percent bo-

ciliation Act of 2001.

nus depreciation without the required ad-

Some key provisions of the Act on the justments, should file an amended return.

federal level are:

The Georgia forms affected by the Job

! A new 10 percent federal rate.

Creation and Worker Assistance Act of 2002

! Increases Educational IRA contri- are:

butions to $2,000 per year. ! Increases IRA deductions to $3,000
with a catch-up provision for those 50 years of age and older.
! Estate tax exemption increases and rate decreases until repeal in 2010.

! Form 500 for individuals ! Form 501 for trusts ! From 600 for corporations ! Form 600S for S-Corporations ! Form 700 for partnerships All flow through entities that own

Individuals desiring more information property, do business in Georgia or have

about the Economic Growth and Tax Relief Georgia resident owners/beneficiaries

Reconciliation Act of 2001 and how it might should notify them of the required adjust-

impact them should contact their tax advi- ments.

sor.

Continued on page 2

Assisted Audits
Save Taxpayers
Time And Money
Businesses desiring to reduce the cost, time and personnel hours involved in a traditional sales and use tax audit should consider a Computer Assisted Audit. A Computer Assisted Audit reduces the disruption of the taxpayer's day-to-day activities and reduces the amount of time required to prepare for the audit. In a Computer Assisted Audit, data is sent to the DOR and analyzed prior to the auditor's arrival at the taxpayer's location. The auditor arrives prepared and spends less time on site. By selecting fewer but more representative records for examination, Computer Assisted Audits reduce the risks often associated with conventional block samples. Additionally, taxpayer data can be transferred back and forth between the Department and the taxpayer for easier analysis with less data entry. Computer assisted audits can be used as the foundation for a Managed Compliance Agreement with the Department's Compliance Division. An MCA is a contract between the taxpayer and the Department and applies only to expense purchases. The agreement is customized to fit the needs of each taxpayer. An MCA allows taxpayers to compute and remit use tax on aggregate purchases made during the filing period instead of computing and remitting use tax on every transaction. The taxpayer calculates and
Continued on page 3

January - March 2002

A Georgia Department of Revenue Publication

Commissioner's Letter

During March, Georgians took part in their first Shop Georgia! sales tax holiday and

from most indications it was a huge success for consumers and retailers alike. Consum-

ers were able to save money by shopping tax-free while retailers benefited from in-

creased sales, which are reported to be far greater than during the same time period last

year.

The Department of Revenue is currently evaluating the Sales Tax Holiday to deter-

mine how we can make the August 2-3 Shop Georgia! more successful.

Information for the next sales tax holiday will be posted on our website

(www.gatax.org) beginning in June. Please visit the site

often to keep abreast of any changes to the tax-exempt

list or to the regulations governing Shop Georgia!

At this writing, we are in the midst of the 2001 in-

come tax processing season. Electronic filing continues

to be a success story for Georgians and the DOR. As of

April 16th, we had received 1.5 million electronic returns,

surpassing last year's total of 1.2 million.

Another success for this processing season is the

Department's implementation of 2-D bar coding, which

reduces the time required to process paper returns.

The 2-D bar code contains all the information on the

return, and it allows the return to be scanned directly

Commissioner Jackson

into our tax processing system. This reduces the processing time and ensures the record is accurately filed

into our system.

This year six companies (Intuit, H&R Block, STF, Creative Solutions, Drake and

CCH) produced tax preparation software that printed the 2-D bar code onto the form. As

of April 15th, we had received over 300,000 forms printed with 2-D bar codes.

Compared to a paper return, we estimate that 2-D bar coding saves at least 10 days

in processing time and costs approximately 40 percent less to be processed. We are

extremely pleased with the first year's statistics and appreciate the support and assis-

tance of the participating companies and the tax professionals who utilized the software.

Included in this edition of the Revenue Quarterly is a schedule of our sales tax

seminars for the remainder of the year. I encourage anyone involved in reporting or

collecting sales tax to attend one of our free seminars. If you attended a seminar years

ago, I urge you to consider attending again. These seminars are an excellent way to keep

current on law and policy changes affecting your business.

At the Department of Revenue, we are always looking for new ways to get informa-

tion to our taxpayers. One method we are currently expanding is the Important Bulletin

section on the front page of our Sales and Use Tax Report that is mailed monthly to

retailers. We intend to use this medium more extensively in the future. It will be used to

bring attention to important matters such as last minute changes to the sales and use tax

rate chart, Shop Georgia!, seminar schedules, and much more.

On a final note, special thanks to the Georgia Retail Association, the Georgia Food

Industry Association, all retailers, and DOR staff associated with making Shop Georgia!

such a success. We look forward to working with you again in August.

Very truly yours, T. Jerry Jackson

Retraining Tax
Credit Explained
Georgia law allows a business to take a tax credit of $500 or half of the cost of retraining per full-time employee, whichever is less. The tax credit is contained in O.C.G.A. 48-7-40.5. Taxpayers can use the following methods to combine classes, which are similar, for the purpose of calculating the tax credit. ! Classes with a direct cost of less than $1,000 may be combined, and ! Classes with a direct cost of $1,000 or more may be combined. The retaining tax credit does not allow averaging and is claimed on form IT-RC. For example: Corporation A has 12 employees whose training qualifies for the tax credit. Ten employees attend a course on spreadsheets, which costs $250 per employee. The other two employees attend a network systems course, which cost $5,000 per employee. In determining the retraining tax credit, the 10 classes on spreadsheets must be claimed on one form IT-RC and the network systems classes should be claimed on another form IT-RC. The claimed tax credit would be $3,500 (10 x $250 + 2 X $500). Anyone having questions about the retraining tax credit should contact the DOR at 404-417-2441.
New Federal Law
Continued from page 1
In order for Georgia to conform to federal legislation, action is required by the legislature and governor.
This is the case in approximately half of the 50 states. The other states have passed previous legislation with automatic conformity provisions.
Information about how to properly file the affected forms is available on DOR's website at www.gatax.org. Use the link "Federal Tax Changes and How They Affect Georgia."
Additional information can also be obtained by contacting the DOR at 404417-2300.

Page 2

Refund Status
Available 24
Hours A Day axpayers wanting to check the
status of their refund can call
Tthe Department's automated
information line 24 hours a day. Within the metro Atlanta calling area
or outside the state, the number is 404-6566286. Outside the metro area but within Georgia, the number is 800-338-2389.
Callers should be ready to enter the social security number listed on the return and the whole dollar amount of the refund.
DOR officials ask that you allow eight to 10 weeks from the date you filed your paper return before making an inquiry. Electronic filers should wait two weeks before checking on their refund.
Computer Assisted
Continued from page 1
remits use tax by using one or more effective tax rates.
The percentage of purchases used as a basis for reporting sales and use tax is established by performing an historical analysis of tax due on expense purchases.
Taxpayers who are required to file any return or to pay or remit Georgia sales or use taxes are eligible for the program. The final acceptance authority lies with the Revenue Commissioner.
For more information about the Department's Computer Assisted Audit and Managed Compliance Agreement programs contact either Donald Bloom or Michael McCullough at 404-417-6400.
The Revenue Quarterly is a publication of the Georgia Department of Revenue. Comments, suggestions and mailing list additions or corrections should be addressed to the Georgia Department of Revenue, Public Information Office, 1800 Century Center Boulevard, Suite 15114, Atlanta, GA 30345-3205. The telephone number is 404-417-2106. Address e-mail to cwwilley@gw.rev.state.ga.us.

Sales Tax Seminar Schedule he Sales and Use Tax Division conducts free tax-payer seminars
throughout Georgia. The seminars provide the latest information about
TGeorgia's sales and use tax law, local taxes, audit and form preparation and
other areas of interest. All sessions are conducted between 8:30 a.m. and 5 p.m. Due to limited seating, indivduals should register 30 days in advance of the seminar. For additional information contact the Sales and Use Tax Division at 404-417-6601.

DATE

LOCATION

TO REGISTER

May 14

Rome: The Floyd College, SBDC-Heritage Hall, 415 E. 3rd Avenue

706-295-6326

May 16

Albany: Darton College, 2400 Gillionville Rd, Room J121

229-420-1144

May 21

Dublin: Laurens County Library, 801 Bellevue Avenue

912-681-5551

June 6, 12

Decatur: Maloof Auditorium, 1st Floor Annex Bldg, 1300 Commerce Drive

404-373-6930

June 11

Columbus: Community Room Public Safety Bldg., 510 10th Street

706-469-7433

July 17

Carrollton: Carroll County Chamber of Commerce, 200 Northside Drive

770-836-6610

July 31

Gainesville: Auditorium, Lanier Technical College, 2990 Landrum Education Drive, Oakwood, GA

770-531-5681

Aug. 6, Hapeville: Tradeport Facility, 4245 International

7, 8

Parkway

404-417-6601

Aug. 22

Lawrenceville: Gwinnett Justice & Administration Center Auditorium, 75 Langley Drive

770-806-2124

Aug. 27, Kennesaw: Kennesaw State College, 3333 Busbee

29

Drive, KSU Center

770-423-6450

Sept. 3, 4

Atlanta: Georgia Power Bldg., 241 Ralph McGill Blvd.

404-651-3550

Sept. 12

Savannah: Coastal Georgia Center, 305 Fahm Street

912-651-3200

Sept. 18

Newnan: Coweta-Newnan Chamber of Commerce, Farmer Street

770-836-6610

Oct. 9

Columbus: Community Room Public Safety Bldg., 510 10th Street

706-649-7433

Oct. 24

Macon: Macon State College, 100 College Station Drive

478-751-6592

Nov. 7

Athens: UGA/Chicopee Complex Auditorium, 1180 E. Broad Street

706-542-2134

Nov. 12

Augusta: Augusta Tech, Jack Patrick Information Technology Center, Bldg. 1000 Auditorim

706-737-1790

Page 3

Georgia Department of Revenue Public Information Office 1800 Century Center Boulevard Suite 15114 Atlanta, GA 30345-3205 Address Services Requested

Collections Down 5.7% For First Nine Months Of FY 2002

State Revenue Commissioner T. Jerry Jackson announced on April 11

FY 2002 Through March Compared to FY 2001 Through March

*Sales and Use Taxes $3,644,687,222.58 down

($192,066,324.78)

Motor Fuel Tax

$341,200,135.00 up

$6,206,561.02

-5.0% 1.9%

that net revenue collections for the IndividualTax

$4,767,159,121.99 down

($241,692,624.20) -4.8%

first nine months of fiscal year 2002 Corporate Income Tax $324,433,846.04 down

($135,516,827.28) -29.5%

totaled $9,451,673,727.77 com- Cigar and Cigarette Tax $63,887,460.04 up

$5,947,825.03 10.3%

pared to $10,026,198,109.60 for the Liquor Tax / Fees

$28,965,793.04 up

$976,766.52 3.5%

same period in fiscal year 2001, a Malt Beverage Tax / Fees $60,246,184.53 up

$2,730,844.30 4.7%

decrease of $574,524,381.83. The Estate Tax

$91,484,591.76 down

($7,513,402.15) -7.6%

percentage decrease for the fiscal Property Tax

$51,865,357.42 up

$6,256,433.06 13.7%

year is 5.7 percent.

Wine Tax / Fees

$15,978,663.57 up

$944,370.94 6.3%

Collections for the month of Miscellaneous

$61,765,351.80 down

($20,798,004.29) -25.2%

March totaled $763,857,148.64

Total

$9,451,673,727.77

($574,524,381.83) -5.7%

compared to $826,674,432.94 for *Includes 2nd Motor Fuel Tax (9 months ) - $145,257,698.38

March 2001, a decrease of

Footnote: Collections for Motor Vehicles were excluded from this report. The Depart-

$62,817,284.30. The percentage ment of Motor Vehicle Safety (DVMS) began collecting and reporting this financial infor-

decrease for the month is 7.6 per- mation on Nov. 1, 2001.

cent.

Visit DOR's Website At www.gatax.org