A tax guide for Georgia citizens [2004]

Tax Guide
For Georgia Citizens
Department of Revenue
Bart L. Graham
Revenue Commissioner

Commissioner's Letter
July 1, 2004
My Fellow Georgians,
This is the 20th edition of the Tax Guide For Georgia Citizens. It contains a helpful summary of the various taxes that are collected in Georgia. This Tax Guide has traditionally proven especially useful to new Georgia residents or individuals who are considering a move to our state.
Whether you are a new resident or have lived in the Peach State for some time, the mission of the Georgia Department of Revenue applies equally to all: "To administer Georgia's tax laws in a manner that promotes confidence in our competence, fairness, and integrity with exceptional customer service."
For added convenience to our taxpayers, the Department has 11 Regional Offices located throughout the state. Their locations and telephone numbers are listed on page 41. The staffs in these offices are always ready to respond to your request for assistance.
Another excellent source for Georgia tax information is our Internet website at www.gatax.org. The site contains the latest information about the different taxes we administer and it offers a comprehensive list of tax forms, which can be downloaded.
As always, our primary purpose in serving Georgia's citizens is to help you our customer. No matter when you request assistance, our goal is to ensure that your interaction with the Department of Revenue is a pleasant one.
Very truly yours,
Bart L. Graham Commissioner
2

Table Of Contents
Important Reminders ................................................................ 5 Taxpayer Services Division ..................................................... 7
Individual Income Tax ....................................................... 7 Rate of Taxation ................................................................. 7 Withholding Tax ................................................................. 9 Corporate Income Tax ..................................................... 10 Corporate Income Tax Credits ......................................... 11 Corporate Net Worth Tax .................................................. 11 Estate Tax ......................................................................... 12 Centralized Taxpayer Accounting .................................. 12 Centralized Taxpayer Registration ................................. 12 Taxation of Banks and Mutual Financial Institutions .... 13 Georgia Higher Education Savings Plan ....................... 14 Property Tax ........................................................................... 15 Property and Assessed Values ........................................ 15 Special Assessment Programs ........................................ 15 Timber ............................................................................... 17 Millage Rate ..................................................................... 17 Exemptions ....................................................................... 18 When To File For Freeport Exemption ........................... 19 Deferrals ........................................................................... 20 Appeals ............................................................................. 21 Mobile Homes ................................................................... 22 Public Utilities And Railroads ......................................... 23 Airline Flight Equipment ................................................. 24 Real Estate Transfer Tax .................................................. 24 Railroad Equipment Companies ..................................... 24 Intangible Recording Tax ................................................ 25 Taxation of Financial Institutions .................................... 25 Unclaimed Property ......................................................... 26 Ad Valorem Taxes On Motor Vehicles ............................ 28 Sales And Use Tax Division ................................................... 29 Most Frequently Asked Questions ................................... 32 Motor Fuel Tax ................................................................. 34 Motor Carrier Fuel Use Tax ............................................. 35 Alcohol and Tobacco Division ............................................... 37 Georgia's Alcohol and Tobacco Taxes ........................... 38 Coin-Operated Amusement Machines ............................ 39 Compliance Division .............................................................. 40 Regional Offices ..................................................................... 41
3

A TAX GUIDE FOR GEORGIA CITIZENS
This booklet answers basic questions about Georgia's system of taxation. We believe the information will be especially useful to newcomers to our state or individuals contemplating moving to Georgia. The information is very basic. Detailed inquiries about specific tax matters are best handled by contacting the appropriate division of the Georgia Department of Revenue.
THE GEORGIA DEPARTMENT OF REVENUE
The Department of Revenue is the principal tax collecting agency for the State of Georgia. The Department strives to be the fairest and most efficient revenue collecting agency in the nation. The Department and the Office of Revenue Commissioner were created by law in 1938. The Revenue Commissioner is appointed by the Governor and is the chief executive officer of the Department. The Commissioner is charged with the duty of administering virtually all of the state's tax laws. In addition to administering tax laws, the Commissioner is responsible for enforcing Georgia's laws and regulations pertaining to the control and sale of alcoholic beverages and tobacco products. Auditors, accountants, agents, clerks, field representatives, collectors, and specialists in many areas are all authorized agents of the Commissioner. The employees of the Department of Revenue are proud of the agency's national standing and take great pride in pursuing their primary task of administering Georgia's tax laws in a fair, courteous and professional manner. The Department of Revenue is located at 1800 Century Boulevard approximately a half-mile west of the Clairmont Road and I-85 intersection in DeKalb County.
4

Important Reminders
z If you work for a regular salary, fill out the proper G-4 and W-4 forms through your employer. If you are self-employed or otherwise not on a regular salary and no income taxes are withheld, you should file a Declaration of Georgia Estimated Income Tax accompanied with your required payment. (See Individual Income Tax section for more information.)
z Apply for a Homestead Exemption (property taxes) if you reside in a home you own on January 1. (See "Exemptions" in Property Tax section.)
z Apply for Georgia license plates for all of your motor vehicles within 30 days of establishing residence in the county where the vehicles will be located.
z Sales Tax Exemptions: A new resident is not required to pay Use Tax on personal property brought into Georgia as a result of a change of domicile unless the property is used in a business, profession or trade. However, he or she may be required to pay Georgia Use Tax on property subsequently imported depending upon whether or not a similar tax was previously paid on the item to a reciprocating state. Drugs dispensed by prescription, prescription eyeglasses and contact lenses, and oxygen prescribed by a physician are exempt from tax. Insulin, insulin syringes sold without prescription, blood monitoring devices and hearing aids are also exempt from tax. Sales transactions for which food stamps or WIC coupons are used as the medium of exchange are exempt from Sales and Use Tax. Food and beverages sold for home consumption are exempt from Georgia State Sales Tax (four percent), although most local county sales taxes apply to these foods and beverages.
z Georgia law stipulates that taxes shall be paid in lawful money of the United States free of any expense to the State of Georgia. When mailing your payment for taxes, please pay with a check or money order. Do not send cash through the mail.
z Your Return Is Confidential: In Georgia and throughout the United States, many taxes are collected on the basis of voluntary self-assessment by the taxpaying public. Taxpayers provide information they would not ordinarily disclose to their friends and neighbors and certainly not to their business competitors. To preserve the concept of voluntary compliance, Georgia law provides that tax information be kept strictly confidential. The law provides for a few exceptions in the areas of property taxation, motor fuel taxation and general statistical information not pertaining to any individual or corporate taxpayer. Other than these few categories, information provided about taxpayers' business and financial affairs is kept strictly confidential and is seen only by the proper tax administrators.
5

z If Your Taxes Are Audited. The Georgia Department of Revenue routinely audits tax records of all types. The Department and U.S. Internal Revenue Service continuously exchange and cross-check information on state and federal returns.
Each auditor is thoroughly trained to make detailed and exhaustive findings of pure fact. They exercise no punitive or judicial authority. Each auditor exercises authority delegated by the State Revenue Commissioner to examine all books and records pertaining to a taxpayer's income and other tax information.
If a tax deficiency is assessed against a taxpayer, he or she may contest such assessment by filing a written protest and requesting a conference within 30 days on the matter at the Department's Century Center headquarters or at one of the Department's regional offices. The assessment can be appealed to the Superior Court in the taxpayer's county of residence, if it cannot be settled administratively.
z Whenever an adjustment is made by the federal government to the income tax liability of a Georgia taxpayer, the taxpayer must formally report that fact to the Georgia Department of Revenue and pay the tax or claim the refund due.
For More Information
This booklet does not cover all areas of taxation. Detailed publications are available from the Department without charge. Complete copies of all laws and regulations may be obtained at a nominal cost from the Secretary of State, Administrative Procedures Division, State Capitol, Atlanta, GA 30334.
PUBLISHED BY Georgia Department of Revenue
1800 Century Boulevard, NE Atlanta, GA 30345-3205 20th Edition July 2004
6

Taxpayer Services Division
Like most states, Georgia has both an individual income tax and a corporate income tax. Georgia's individual income tax is based on federal adjusted gross income with certain adjustments including those related to the 2002 Job Creation and Worker Assistance Act and the Jobs and Growth Tax Relief Reconciliation Act of 2003. Georgia's corporate income tax is based on federal taxable net income with certain adjustments including those related to the 2002 Job Creation and Worker Assistance Act and the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Internal Revenue Service and Georgia's Taxpayer Services Division thoroughly check and exchange information shown on individual and corporate income tax returns. Georgia income tax forms can be found during the tax-filing season (January 1 - April 15) at some libraries, post offices, and all Department of Revenue regional offices. They can be ordered utilizing voice mail or fax by calling 404-4176011 or downloaded from the DOR website at www.gatax.org.
Individual Income Tax
The Georgia individual income tax is a graduated tax based upon an individual's federal adjusted gross income after certain adjustments are made as required by Georgia law. The tax is paid by:
z All resident individuals, estates, and trusts who file a federal return or who have income that exceeds the standard deduction and personal exemptions.
z All nonresident individuals, estates, and trusts who file a federal return which includes income from sources in Georgia.
z All residents or nonresidents who have income subject to Georgia income tax that is not subject to federal income tax.
Exclusion of Retirement Income: Each taxpayer who is a) Age 62 or older during any part of the taxable year; or b) Permanently and totally disabled, may exclude up to $15,000 of retirement income for taxable years beginning on January 1, 2003, until January 1, 2006. The retirement income exclusion increases to $25,000 for income tax year 2006, to $30,000 for income tax year 2007, and to $35,000 for taxable years beginning on or after January 1, 2008.
Rate of Taxation
Joint or Head of Household: Tax is computed at a graduated rate and is assessed in a range from one to five percent on the first $10,000 of net taxable income (total tax on first $10,000 of net taxable income is $340) plus six percent of the excess of net taxable income over $10,000.
Single Return: One to five percent of the first $7,000 of net taxable income (total tax on the first $7,000 of net taxable income is $230) plus six percent of the
7

excess of net taxable income over $7,000.
Married Couple Filing Separate Return: One to five percent on the first $5,000 of net taxable income (total tax on the first $5,000 of net taxable income is $170) plus six percent of the excess of net taxable income over $5,000.
Date Return and Tax Due: For calendar year taxpayers the return is due no later than April 15. If that date falls on a non-banking day (weekend or holiday), the tax is due the next banking day. For fiscal year taxpayers, the return is due no later than the 15th day of the fourth month after the close of the taxpayer's fiscal year. The tax is due by the statutory due date of the return. No provision exists for an extension for payment of tax.
Extension of Time for Filing Return: Georgia will accept an automatic federal extension, a copy of which must be attached to the Georgia return in order to avoid any penalty for late filing. The estimated tax liability must be prepaid and submitted with Form 560. Any granted extension is for filing purposes only and does not relieve the taxpayer of late payment penalties and interest on any amount of tax not paid by the statutory due date.
Exemptions and Deductions: The personal exemption amount is $2,700 each for taxpayer and spouse and $3,000 for each dependent. The standard deduction is $2,300 for singles and heads of households, $3,000 for joint returns, and $1,500 for married couples filing separately. An additional exemption amount of $1,300 is added to the standard deduction for taxpayers who are over age 65 or blind and who do not itemize deductions.
Estimated Tax: Estimated tax is required for each individual or fiduciary subject to Georgia income tax who reasonably expects to have gross income which exceeds: 1) personal exemption, plus 2) credit for dependents, plus 3) estimated deductions, plus 4) $1,000 income not subject to withholding. Payments are due quarterly.
Tax Credits: A credit is allowed to Georgia residents for income taxes paid to other states but not to foreign countries. This is a nonrefundable credit against the tax liability. Certain resident individuals whose federal adjusted gross income is no more than $19,999 might be entitled to a refundable low income credit. Please see our income tax booklet for information about additional credits.
Refunds: Almost 70 percent of Georgia taxpayers receive refunds each year. Refund checks are usually received within 30 to 90 days after the return is filed. The earlier and more accurately the return is filed, the earlier any refund due will be
8

received.
Electronic Filing and Telefiling: Georgia is a participant in the joint Federal/ State Electronic Filing and TeleFile programs. As a member of this program, taxpayers may file their returns electronically through an approved tax professional, through an on-line filing package or via telephone.
Withholding Tax
Your employer is required to withhold Georgia income taxes from your salary and it must be reflected on your payroll records. If income taxes are not being withheld, it is the taxpayer's responsibility to report incomplete payroll records to the Department of Revenue. Georgia's withholding tax payment schedule is similar to federal withholding tax payment requirements. The employer's payment schedule for the calendar year is based upon the amount of taxes they were required to withhold for the 12-month period that ended the previous June 30. For example, the amount of taxes required to be withheld for the period July 1, 2002 through June 30, 2003, determines the employer's payment schedule for calendar year 2004.
Withholding filing requirements include: z Annual Filers: Every employer whose tax withheld or required to be withheld is $800 or less per year can request to remit payment with return (G-7) on or before January 31 of the following year. Requests to file annually must be in writing and received prior to the first quarter due date. Annual filers should submit Form G-7 for the fourth quarter only.
z Quarterly Filers: Every employer whose tax withheld or required to be withheld is $200 or less per month, but more than $800 per year, is required to file and remit payment with return (G-7) on or before the last day of the month following the end of the quarter.
z Monthly Filers: Effective April 1, 2004, every employer who is required to withhold $50,000 or less during the 12-month period that ended the previous June 30 must remit payment with a payment voucher (GA-V) on or before the 15th day of the following month, unless they are required to remit such payment electronically. The employer is required to file a return (G-7) reconciling all payments made during the quarter on or before the last day of the month following the end of the quarter.
z Semi-Weekly Filers: Effective April 1, 2004, every employer who is required to withhold more than $50,000 during the 12-month period that ended the previous June 30 must remit payment via electronic funds transfer (EFT) using the
9

following schedule:
If the payday is on a Wednesday, Thursday or Friday, then the taxes required to be withheld must be remitted to the Department via EFT on the following Wednesday. The employer is required to file a return (G-7) reconciling all payments made during the quarter on or before the last day of the month following the end of the quarter.
If the payday is on a Saturday, Sunday, Monday or Tuesday, then the taxes required to be withheld must be remitted to the Department via EFT on the following Friday. The employer is required to file a return (G-7) reconciling all payments made during the quarter on or before the last day of the month following the end of the quarter.
z One-Day Rule: Effective April 1, 2004, every employer who is required to withhold more than $100,000 in taxes for the payday must remit those taxes via EFT by the next banking day after the payday.
z Nonresident Distributions: Withholding of four percent is required on distributions paid by or credited to partnerships, limited liability companies, or S Corporations to nonresident members. Registration for a withholding number is required pursuant to O.C.G.A. Section 48-7-129.
z W-2 Forms: The W-2 form (statement of wages and income taxes withheld) is issued by employers for use in preparing your individual income tax return. If you do not receive a W-2 form during the month after the end of the taxable year, contact your employer at once and request one.
Corporate Income Tax
The Georgia corporate income tax is a nongraduated percentage tax based on a corporation's federal taxable net income with certain adjustments including those related to the 2002 Job Creation and Worker Assistance Act and the Jobs and Growth Tax Relief Reconciliation Act of 2003. Corporations that own property or do business in Georgia are subject to corporate income tax.
Rate of Taxation: The rate is six percent of a corporation's taxable net income attributable to business done in Georgia.
Date Return and Tax Due: For calendar year taxpayers, the return and tax are due no later than March 15. For fiscal year taxpayers, the return is due no later than the 15th day of the third month after the close of the corporation's fiscal year.
10

The tax is due by the statutory due date of the return. No provision exists for an extension of time to pay the tax.
Extension of Time for Filing Return: Georgia will accept an automatic federal extension, a copy of which must be attached to the Georgia return in order to avoid any penalty for late filing. The tax liability estimated to be due on your return must be prepaid and submitted with Form IT-560C. An extension is for filing purposes only. It does not relieve the taxpayer of late payment penalties and interest on any amount of tax not paid by the statutory due date.
Corporate Income Tax Credits
Georgia tax law provides for the following income tax credits: z Job Tax Credits in all 159 counties. z Investment tax credits. z Optional Investment tax credits. z A retraining credit. z Credits to employers who provide or sponsor child care for employees. z Basic Skills Education Tax Credits. z A Research tax credit. z A Rapidly Growing Small Business Tax Credit. z A credit for increased port activities. z Low income housing tax credit. z Headquarters job tax credit. z Low emission/zero emission vehicle credit. z Diesel emission reduction credit. z Transportation fringe benefit tax credit. z Cigarette export credit. z Business Occupation/Business License Tax Credit (Bank Credit). z Historic Rehabilitation Credit.
Corporate Net Worth Tax
This tax is based on the net worth of a corporation and is levied in exchange for the privilege of doing business or exercising a corporate franchise in Georgia. Corporations that own property or do business in Georgia are subject to Net Worth Tax. Tax is due at the beginning of the year in which business will be conducted.
Rate of Taxation: The amount varies according to the corporation's net worth. The minimum tax is $10 for a net worth less than $10,001. The maximum is $5,000 for a net worth in excess of $22 million.
Date Return and Tax Due: The first return for a new domestic corporation or a foreign corporation qualifying to do business in Georgia must be filed and the tax
11

paid on or before the 15th day of the third calendar month after incorporation or qualification. Thereafter, an annual return must be filed and the tax paid on or before the 15th day of the third month following the beginning of the corporation's taxable period. There is no provision for an extension for payment of the tax.
Exemptions: Nonprofit organizations (not organized for pecuniary gain or profit) and insurance companies taxed separately are not subject to the corporate net worth tax.
Dormant corporations or corporations with a deficit net worth must file a return and pay the tax to retain their charters. For more information contact the Taxpayer Services Division.
Estate Tax
The Georgia estate tax is the amount allowable by the Internal Revenue Service as a credit for state death taxes. In effect, the estate taxes paid to Georgia may be used to reduce the estate taxes due the Internal Revenue Service.
Georgia does not have a separate estate tax return. A copy of the United States Estate Tax Return (Form 706) should be filed with Georgia if Form 706 is filed with the Internal Revenue Service if: 1) the deceased was a resident of Georgia; or 2) the deceased was a nonresident and owned property located in Georgia. The copy of Form 706 should be filed with Georgia on or before the date the original return must be filed with the Internal Revenue Service, but not later than the date the return is filed with federal authorities. Contact the Internal Revenue Service for Form 706.
Georgia does not have an inheritance tax or a gift tax.
Centralized Taxpayer Accounting
CTA is primarily a customer service organization. The Unit provides problem resolution for questions or protests concerning tax assessments or changes in refund amount for Individual Income Tax, Sales and Use Tax, Withholding Tax, Corporate Tax, Motor Fuel Tax, and Citations. The Unit issues certain tax refund checks and is the contact point for inquiries on the status of refunds. The Unit also provides assistance with questions on filing requirements, tax form preparation, and collection and enforcement of Georgia's Tax Laws. All inquiries regarding assessments or refunds should be directed to this Unit.
Centralized Taxpayer Registration
CTR is responsible for the registration and maintenance of businesses having
12

a business nexus in Georgia. State law requires all such businesses to register with the State.
CTR registers the following tax types: z Sales and Use Tax
z Motor Fuel Tanker Truck Permits
z Retail Tobacco Licenses
z Withholding Tax
z Motor Fuel Distributor Tax(*) (*) associated fees required
CTR handles annual renewals for the following licenses: z Wholesale and Retail Alcohol Licenses (*)
z International Fuel Tax Agreement Licenses and Decals (*)
z Amusement Machine Licenses and Decals (*)
z Wholesale (*)
z Tobacco Licenses (*) associated fees required
Taxation of Banks and Mutual Financial Institutions
All banks and savings and loan associations owning property or conducting business in Georgia must file a Georgia Financial Institutions Business Occupation Tax return on Form 900. These institutions were formerly taxed on bank shares.
Rate of Taxation: The State Occupation Tax is imposed at the rate of 0.25 percent of adjusted gross receipts. (See Property Tax section for municipal and county gross receipts tax computation.) Financial institutions are allowed a dollarfor-dollar tax credit against the state corporate income tax liability for state occupation, municipal, and county gross receipts taxes paid. Starting with tax years beginning on or after January 1, 2001, financial institutions which are S Corporations are allowed to flow-through a pro rata share of the credit to shareholders.
Georgia gross receipts for a financial institution conducting business inside
13

and outside the State are determined using the apportionment factor prescribed under O.C.G.A. Section 48-7-31(d)(2)(C). This code section states, in part, that the gross receipts factor is a fraction, the numerator of which is the total gross receipts from business conducted within Georgia during the tax period and the denominator of which is the total gross receipts from business conducted everywhere for the tax period. Gross receipts are considered to be earned in Georgia if the receipts are derived from customers inside Georgia or if the receipts are otherwise attributable to Georgia's marketplace.
Due Date of Return: The State Occupation Tax return is scheduled to be filed by March 1 each year with the Taxpayer Services Division. This due date will be extended automatically to correspond with the due dates for payment of municipal and/or county business taxes if necessary.
A corporate income tax/net worth tax return (Form 600) must be filed timely.
Georgia Higher Education Savings Plan
The Georgia Higher Education Savings Plan is a qualified state tuition program that meets the requirements of Internal Revenue Code Section 529. This program allows people to participate in a tax-advantaged program that increases access to higher education by offering a simple and affordable way to save for college expenses. For additional information visit www.gacollegesavings.com or call 1-877-424-4377.
14

Property Tax
Information contained in this section is general in nature and intended as a brief description of the functions relating to Property Tax. In-depth information can be found at the Property Tax Division's website at www.ptd.gatax.org.
All real and personal property are taxable unless the property has been exempted by law. Real property is land and generally anything that is erected, growing, or affixed to the land. Personal property is everything owned that is not real estate.
Property taxes are charged against the owner of the property on January 1, or against the property itself, if the owner is not known. Unless otherwise specified, tax returns are to be filed between January 1 and April 1. These dates may vary from county to county.
Real property is taxable in the county where the land is located. Personal property is taxable in the county where the owner maintains a permanent legal residence unless otherwise provided by law. For most counties, taxes are due by December 20, but this may vary from county to county. If taxes are not collected on the property, it may be levied upon and ultimately sold even though the property may have changed hands during the year.
For specific questions about special assessment programs or personal exemptions contact the local county board of assessor's office.
Property and Assessed Values
County tax bills include both the fair market value and assessed value of the property. Fair Market Value means "the amount a knowledgeable buyer would pay for the property and a willing seller would accept for the property at an arm's length, bona fide sale."
Taxable tangible personal property is assessed at 40 percent of its fair market value. Taxable tangible real property is assessed at 40 percent of its fair market value unless otherwise specified.
Special Assessment Programs
Historic property that qualifies for listing in the Georgia or National Register of Historic Places may qualify for preferential assessment. The preferential assessment shall extend to the building or structure, the real property on which the building or structure is located, and not more than two acres surrounding the building or structure. Such property may not be changed for a period of nine years.
15

Property under this special program must be certified by the Department of Natural Resources as rehabilitated historic property or landmark historic property.
Rehabilitated historic property may qualify for preferential assessment when the rehabilitation has increased the fair market value of the building or structure. When the property is:
z Owner-occupied residential real property - the rehabilitation has increased the fair market value by not less than 50 percent.
z Income-producing real property - the rehabilitation has increased the fair market value by not less than 100 percent.
z Real property used primarily as a residence but partially as income-producing property - the rehabilitation has increased the fair market value by not less than 75 percent.
Landmark historic property may qualify: z When the property has been certified by a local government as landmark historic property, and z When local ordinances extend the preferential assessment to:
a. tangible income-producing real property, or, b. tangible nonincome-producing real property, or, c. a combination of tangible income-producing real property and nonincomeproducing real property.
Other special assessment programs are available to taxpayers who agree to maintain their property in these programs for a period of 10 years. These special programs include:
z Preferential Agricultural Property - Bona fide agricultural property can be assessed at 75 percent of the assessment of other property. This means that this type of property is assessed at 30 percent of fair market value rather than 40 percent.
z Conservation Use Property - Bona fide agricultural property can be assessed at its current use value rather than the fair market value.
z Environmentally Sensitive Property - Property can be assessed at its current use value rather than the fair market value when such property is maintained in its natural condition and meets the requirements set by the Department of Natural Resources.
z Residential Transitional Property - Property can be assessed at its current use value rather than fair market value when it is used for residential purposes but
16

located in an area that is changing to or being developed for a use other than residential.
z Constructed Storm Water Wetland Property - Property can be assessed at its current use value rather than fair market value when the Department of Natural Resources certifies the property as constructed storm water wetlandsand approved for such use by the local government.
z Environmentally Contaminated Property - Property qualifying as Environmentally Contaminated Property can have the value frozen for a period of 10 years as an incentive for cleanup. Owners of Environmentally Contaminated Property can offset certain eligible cleanup costs against taxes assessed.
Timber
Standing timber is not taxed until sold or harvested, at which time it is taxed based upon 100 percent of its fair market value. There are three types of sales and harvests that are taxable:
z Lump sum sales where the timber is sold at a specific price regardless of volume.
z Unit price sales where the timber is sold or harvested based on a specific price per volume.
z Owner harvests where a land owner harvests his own timber and sells it by volume.
Millage Rate
The tax rate, or millage, in each county is set annually by the Board of County Commissioners or other governing authority of the taxing jurisdiction and by the Board of Education. A tax rate of one mill represents a tax liability of one dollar per $1,000 of assessed value. The average county and municipal millage rate is 32 mills; the state millage rate in each county is 0.25 mills. Municipalities also assess property taxes based upon county-assessed values and rates established by the municipal governing authority.
The assessed value (40 percent of the fair market value) of a house that is worth $100,000 is $40,000. In a county where the millage rate is 25 mills the property tax on that house would be $1,000 ($25 for every $1,000 of assessed value or $25 x 40).
17

Exemptions
What is the Homestead Exemption: Homestead is the real property owned by and in possession of the applicant on January 1 of the taxable year. This includes, but is not limited to, the land owned surrounding the home.
z The home of each resident of Georgia that is actually occupied and used as the primary residence by the owner may be granted a $2,000 exemption from state, county, and school taxes except for taxes levied by municipalities. The $2,000 exemption is deducted from the 40 percent assessed value of the homestead. The owner of a dwelling house on a farm that is granted a homestead exemption may also claim a homestead exemption in participation with the program of rural housing under contract with the local housing authority.
z Individuals 65 years of age and older may claim a $4,000 exemption from state and county property taxes, but only if the net income of that person and his spouse does not exceed $10,000 for the prior year. Social security income is excluded from net income and other retirement income is excluded up to a specified amount. The owner must notify the tax commissioner if they no longer meet the requirements for this exemption.
z Individuals 62 years of age and older who are residents of each independent school district and of each county school district may claim an additional exemption from taxes for educational purposes and to retire school bond indebtedness if the net income of that person and his spouse does not exceed $10,000 per year. Social Security income is excluded from net income and other retirement income is excluded up to a specified amount. This exemption may not exceed $10,000 of the homestead's assessed value.
z Individuals 62 years of age and older who are denied homestead exemption because of excess income, or because they have not reached the age of 65, may still obtain a floating inflation-proof state and county homestead exemption based on natural increases in the homestead's value. If the appraised value of your home has increased by more than $10,000, you may benefit from this exemption. Federal adjusted gross income, together with spouse, cannot exceed $30,000. This exemption does not affect any municipal or educational taxes and is meant to be used in place of any other state and county homestead exemption.
z Any qualifying disabled veteran may be granted an exemption of $50,000 (or the maximum amount granted under Section 802 of Title 38 of the United States Code, as amended) from paying property taxes for state, county, municipal, and school purposes. The value of the property in excess of this exemption remains
18

taxable. This exemption is extended to an unremarried surviving spouse or minor children.

z Any unremarried surviving spouse of a member of the armed forces of the United States who was killed or died as a result of a war or armed conflict in which the armed forces of the United States engaged may be granted an exemption of $50,000 (or the maximum amount granted a disabled veteran under Section 2102 of Title 30 of the United States Code, as amended) from paying property taxes for state, county, municipal, and school purposes. The value of the property in excess of this exemption amount remains taxable. Applicants filing for this exemption are required to file information relative to their marital status with the tax commissioner's office in the county of residence, along with any other information required by the county board of tax assessors.

z In order to receive a homestead exemption, the deed reflecting actual ownership of the property must be recorded in the deed records of the county prior to the filing of the homestead exemption application. The time period for filing homestead exemptions for most counties is January 1 to June 1 of the applicable tax year.

z Homeowners may be eligible for a credit on a portion of the state, county, and school property taxes that would normally be due on their home. The credit will be paid to the county and school by the state and deducted from the homeowner's tax bill. This essentially has the same tax benefit to the homeowner as if their homestead exemption was increased.

When To File For Freeport Exemption
Application for the full amount of freeport exemption must be filed on or before the closing date for the return of property taxes for the county in which the applicant's business is located. Closing dates may vary between each county, although for most counties an application must be filed between January 1 and April 1.

Application for a reduced amount of freeport exemption can be made after the closing date established by the county up to June 1, with a decreasing percentage of exemption for the year.

In counties that allow application for freeport exemption to be filed between January 1 and March 1, if application is made:

Between March 2 April 1

And March 31 April 30

Percentage of Exemption Allowed 9/12 or 75 percent 8/12 or 67 percent

19

May 1 On June 1

May 31

7/12 or 58 percent 6/12 or 50 percent

In counties that allow application for freeport exemption to be filed between January 1 and April 1, if application is made:

Between April 2 May 1 On June 1

And April 30 May 31


Percentage of Exemption Allowed 8/12 or 67 percent 7/12 or 58 percent 6/12 or 50 percent

Deferrals
Individuals who are 62 years of age or older and entitled to file homestead exemption may elect to have payment of their ad valorem taxes deferred. The taxpayer must file an annual application for tax deferral with the tax commissioner or tax collector on or before April 1 of the year for which the deferral is sought. Interest at the rate of three-fourths of one percent per month begins accruing on deferred taxes from the date the taxes are due in that year.

If the taxpayer meets the qualifications for tax deferral, they may choose one of two options:
z If the home for which a tax deferral is sought has an assessed value of $50,000 or more, the deferral will apply only to the taxes on the portion of the assessed value which is $50,000 or less.

z If the population in the county is 550,000 or more, taxes can be deferred on all or any part of that portion which exceeds four percent of the individual's gross household income for the immediately preceding calendar year.

Qualifications for Property Tax Deferral z Applicant must be at least 62 years old on January 1 of the year he/she
applies.

z Applicant must be entitled to claim homestead exemption for the current tax year.

z The total amount of deferred taxes and interest plus the total amount of all other unsatisfied liens on the homestead cannot exceed 85 percent of the fair market value of the homestead as shown on the county tax digest for the immediately preceding tax year.

20

z Gross household income cannot exceed $15,000 for the immediately preceding year.
z Property cannot be subject to any lien the terms of which are dictated by federal law, rule, or regulation prohibiting deferral of taxes.
z Applicant must have fire and extended coverage insurance on the property in an amount which is in excess of the sum of all outstanding liens and deferred taxes and interest with a loss-payable clause to the county tax collector or tax commissioner. A copy of the insurance policy number, expiration date, and losspayable clause is required upon application.
Appeals
Taxpayers may challenge an assessment by the county board of tax assessors by appealing to the county board of equalization or to an arbitrator or arbitrators. Once a decision has been made by the county board of equalization or by an arbitrator or arbitrators, the taxpayer may appeal to the county superior court by mailing or filing with the county board of tax assessors a written notice of appeal. This notice must be made within 30 days from which the decision of the county board of equalization was mailed or within 30 days upon which the arbitration decision was rendered.
Appeals may be filed on matters of: z taxability z uniformity of assessment z value z denials of homestead exemption for residents
Appeals to the County Board of Equalization Taxpayers may appeal their assessment to the county board of equalization by
mailing or filing with the county board of tax assessors a notice of appeal within 45 days from the date on which the notice was mailed; or in counties where the governing authority allows payment of taxes in installments, a notice of appeal must be filed or mailed within 30 days.
The county board of tax assessors will review the situation or denial in question and, if any corrections or changes are made, the board of tax assessors will send a notice of any corrections or changes to the taxpayer. The notice will state that if the taxpayer is still not satisfied after these changes or corrections have been made, they may then appeal to the county board of equalization by mailing or filing with the board of tax assessors a written notice of appeal within 21 days of the date upon which the change or correction was mailed.
21

The taxpayer does not need to take any further action if the county board of tax assessors does not make any corrections or changes to their appeal. The county board of tax assessors will send written notice to the taxpayer and the county board of equalization of their decision not to make corrections or changes to the appeal.
Upon receipt of an appeal, the county board of equalization will set a hearing date within 15 days of receipt of the notice of appeal and will notify the taxpayer and the county board of tax assessors in writing.
A hearing will take place no earlier than 20 days, and no later than 30 days, after notification. The three members of the county board of equalization will specifically decide and vote upon all questions presented by the appeal. The county board of equalization will notify the taxpayer and the county board of tax assessors in writing by sending a copy of the decision by registered or certified mail.
Appeals to an Arbitrator or Arbitrators If the taxpayer chooses not to have their appeal heard by the county board of
equalization, they have the option of appealing the county board of tax assessors' assessment to an arbitrator or arbitrators. A written notice of appeal specifically stating the grounds for arbitration should be filed with the county board of tax assessors within 45 days from the date the assessment notice was mailed to the taxpayer, or within 30 days in counties that allow installment payments of ad valorem taxes.
The county board of assessors will have the notice of arbitration certified to the clerk of superior court along with any other information submitted by the taxpayer seeking arbitration. The superior court judge will then appoint a referee within 15 days of the certification.
The arbitrator or a majority of the arbitrators will render a decision within 30 days after their appointment.
Decisions of the arbitrator or arbitrators may be appealed to the superior court in the same manner as a decision by the county board of equalization. Costs incurred by arbitration are shared equally by the taxpayer and the county.
Mobile Homes
Every mobile home owned in Georgia on January 1 is subject to property taxation. Every year on or before May 1, the owner must obtain a mobile home location permit from the tax collector or tax commissioner in the county of taxa-
22

tion of the mobile home. The county of taxation is the county where the mobile home is located unless used in connection with an established business, in which case it is the county where the business in located. Issuance of the permit is evidenced by a decal that must be prominently attached and displayed on the mobile home. Mobile homes must be returned for taxation and the taxes paid at the time of application for the mobile home permit, or at the time of the first sale or transfer of the mobile home after December 31, or on May 1, whichever occurs first.
Any mobile home that qualifies the owner for a homestead exemption will not be considered a mobile home for purposes of ad valorem taxation and will be taxed as real property. A decal is required to be obtained annually for this type mobile home.
Any mobile home for which a current Certificate of Permanent Location has been properly filed with the Clerk of Superior Court and the Commissioner of Motor Vehicle Safety will not be considered a mobile home for purposes of ad valorem taxation and will be taxed as real property. These types of mobile homes are not required to obtain a decal and may qualify the owner for homestead exemption when both the mobile home and land are owned and considered the principal legal place of residence.
For further information on mobile homes, please contact the local county board of tax assessors.
Public Utilities And Railroads
The chief executive officer of each public utility or railroad is required to make an annual return to the State Revenue Commissioner on or before March 1 of all property located in Georgia on January 1 of that year. Upon presentation of the Commissioner's recommendations of proposed assessments of public utilities and railroads, the State Board of Equalization issues notices of proposed assessments of each public utility or railroad to the companies and to the county Boards of Tax Assessors where the property is located. Each county's Board of Tax Assessors then issues notices of final assessments to each public utility or railroad with property in their county. They may, but are not required to, use the State Board's proposed assessments as the county's assessments.
A public utility or railroad may appeal the State Board's notice of proposed assessment of its properties by filing an appeal in the Superior Court of Fulton County within 30 days of receipt of the notice. The company must have previously notified the State Revenue Commissioner and each county board of tax assessors in which they have property of their intent to file the appeal within 20 days of the notice. The company may appeal any notice of final assessment from a
23

county board of tax assessors in the same manner as other assessments issued by the county board.
Airline Flight Equipment
Each airline company operating in Georgia is required to make an annual property tax return of its flight equipment to the State Revenue Commissioner on or before March 1 for activity in the preceding calendar year. The value of the flight equipment is allocated to the State of Georgia and distributed to the counties of operation within Georgia based on plane hours. The Commissioner's presentation of recommended proposed assessments to the State Board of Equalization, subsequent notices of assessments, and appeals are handled in the same manner as those for the properties of public utilities.
Real Estate Transfer Tax
The real estate transfer tax is not a property tax. It is a tax payable prior to the recording of a deed when real property is sold or transferred for consideration with a value of $100 or more.
The real estate transfer tax must be paid before a deed, instrument, or other writing can be recorded in the office of the clerk of the appropriate county superior court. Once the tax has been paid, the clerk of the superior court or their deputy will attach to the deed, instrument, or other writing a certification that the tax has been paid.
The real estate transfer tax is based upon the property's fair market value, less any encumbrances existing at the time of the sale or transfer and not removed by the sale or transfer at a rate of $1 for the first $1,000 or fractional part of $1,000, plus 10 cents for each additional $100 or fractional part of $100. The tax must be paid by the person who executes the deed, instrument, or other writing or the person for whose use or benefit the deed, instrument, or other writing is executed.
Railroad Equipment Companies
Every person owning, leasing, furnishing, or operating railroad cars operating in Georgia, except for railroad companies, is considered a railroad equipment company. The chief executive officer of each such company is required to make an annual property tax return of their railroad cars to the State Revenue Commissioner on or before March 1 for activity in the preceding calendar year. The value of the railroad cars is allocated to Georgia based on car-wheel miles. Upon presentation of the Commissioner's recommendations of assessments of railroad equipment companies, the State Board of Equalization issues notices of final assessment to each company. The company may appeal the notice by filing suit in Fulton
24

County Superior Court.
Intangible Recording Tax
Every holder of a long-term note secured by real estate must record the security instrument in the county in which the real estate is located within 90 days from the date the instrument is executed to secure the note. Before recording the instrument with the clerk of the appropriate county superior court, the instrument must be presented to the collecting officer of the county in which the real estate is located. The collecting officer means the clerk of superior court. In counties having a population of 50,000 or less, at the discretion of the clerk of superior court, "collecting officer" may mean the tax collector or tax commissioner of the county.
The collecting officer will collect the intangible recording tax due from the holder of the instrument. The collecting officer will then attach a certificate to the instrument indicating that the tax has been paid. The tax for recording the instrument is at a rate of $1.50 for each $500 or fractional part of the face amount of the note secured by the instrument. The maximum amount of recording tax on any single note is $25,000. Failure to pay the tax timely will incur a 50 percent penalty of the tax amount due and one percent interest per month from the time the tax was due.
The Georgia intangible recording tax is not the same as the Georgia personal property tax. Inquiries concerning specific exemptions should be addressed to the collecting officer in the county in which the property securing the note is located, or to the Property Tax Division, Georgia Department of Revenue.
Taxation of Financial Institutions
Georgia cities and counties may impose a tax on the gross receipts of financial institutions located within their respective jurisdictions. This tax is known as the Local Business License Tax and is filed on Form PT-440 with the cities and counties.
The State also imposes a gross receipts tax known as the State Occupation Tax which is filed on Form 900. The State Occupation Tax and copies of Local Business License Tax Forms are filed with the State each year by March 1.
The law provides for cities and counties that choose to impose the gross receipts tax to set a levy of not more than the State rate of 0.25 of one percent. A city or county may establish a minimum tax levy of $1,000.
In addition to the tax on gross receipts, financial institutions are subject to
25

personal property taxes, real property taxes, corporate net worth taxes, and corporate income taxes. For information on filing Form 900 call 404-417-2409. For Form PT-440 call your county or local municipality.

Unclaimed Property
The Disposition of Unclaimed Property Act protects the rights of owners of abandoned property and relieves those holding the property of the continuing responsibility to account for the property.

Under the Act, when someone holds property (holder) that belongs to someone else (owner) but has lost contact with the owner for a specified period (holding period), that holder must turn over (remit) the property to the State. The State serves as the custodian for any property remitted under the Act allowing the owners or their heirs an opportunity to claim their property in the future.

Anyone holding abandoned property must remit it to the State when they have held the property for the specified holding period.

Companies located out of state and companies not incorporated in Georgia must remit to this state abandoned property belonging to an owner having a Georgia address. Companies incorporated in Georgia must remit any unclaimed property of owners having an unknown, incomplete, or foreign address to this state. Georgia companies incorporated outside the state must remit property to the state reflected on the last known address of the owner or to the state of incorporation if there is unknown or incomplete address information.

Unclaimed property is reported and remitted annually after the holding period has expired. For insurance companies, the report year is the calendar year beginning January 1 and ending December 31; the report is due the following May 1. For all others, the report year is the fiscal year beginning July 1 and ending June 30; the report is due the following November 1.

The holding period is the time that must elapse before the property is consid-

ered abandoned and reportable to the State. The duration depends upon the type

of property held:

Property Type

Holding Period

Wages ................................................................ 1 year from payday

Company Liquidation Proceeds ........................1 year from sell date

Safe Deposit Boxes ...........................................2 years from drilling date

Money Orders ................................................... 7 years from issue date

Travelers Checks ...............................................15 years from issue date

All Other Property ............................................. 5 years from last contact

26

Could I Be an Owner of Unclaimed Property: Please call 404-968-0490 or write to the Georgia Unclaimed Property Section to determine whether or not you have any unclaimed property. When making your inquiry, please provide the name as it would have appeared on the account. Write to the Unclaimed Property Section at:
Georgia Department of Revenue Property Tax Division
Unclaimed Property Section 4245 International Parkway, Suite A
Hapeville, GA 30354-3903
If the State is holding unclaimed property you believe to be yours, simply request a claim form from the Department of Revenue. Return the completed form along with documentation proving your identity and ownership of the account. Examples of proof of ownership include account statements, bank books, W-2 statements, and letters referencing the unclaimed account. Also, provide a copy of your driver's license for proof of identity. If the evidence proves you are the rightful owner of an unclaimed account, you should receive a check within 30 days. Georgia is a custodial state. The State maintains perpetual custody of unclaimed property until the rightful owner or their heirs claim it. There is no time limit to claim property. Georgia returns unclaimed property at no charge to the owner!
Individuals or companies that locate unclaimed property for a fee are known as locators. They often approach Georgia citizens. If a locator offers to help you find property that is rightfully yours, call the Department of Revenue's Unclaimed Property Section first! Signing an agreement with a locator can be costly. Our section will assist you in locating and reclaiming your property for free!
How Do I Keep My Property from Becoming Unclaimed? z Open all correspondence from banks or companies handling your money.
z Keep an accurate record of all financial matters.
z When you move, notify all banks and companies of your new address.
z At least once a year, make a deposit or withdrawal on all bank accounts.
z Cash all checks received promptly.
z Contact the company immediately, if you stop receiving stock dividends.
z Inform a family member, attorney, or trusted friend of the whereabouts of all
27

financial records.
Ad Valorem Taxes On Motor Vehicles
Each year every motor vehicle owned in Georgia is subject to ad valorem taxes imposed by the local taxing jurisdictions. These taxes are based on the vehicle's assessed value determined by the State and the local millage rate set by the local tax boards.
The assessed value of passenger motor vehicles and motorcycles are determined using national market guide values as of January of each tax year based on a vehicle in average condition. The assessed value is 40 percent of the State valuation. The State valuation is 50 percent of the fair market value plus 50 percent of the wholesale value.
Commercial vehicles, trailers and recreational vehicles are assessed by applying the original purchase price to a depreciation table prepared by the State.
Taxpayers who believe the valuation on their vehicle is incorrect can appeal the valuation to the County's Tax Assessor's Office after payment of the taxes reflected on the original bill. Under appeal, the Tax Assessor or Board of Equalization will review the vehicle's valuation and condition. If the Tax Assessor's Office finds in favor of the taxpayer, a refund for any difference in the tax assessed will be mailed to the taxpayer.
28

Sales and Use Tax Division
Sales and Use Tax is a tax upon the consumption of tangible personal property and certain services. It is levied or imposed upon retail sales, rentals, leases, uses, or consumption of tangible personal property and certain services that are specifically taxed under the Georgia Retailer's and Consumer's Sales and Use Tax Act. Every person making a retail sale should collect and remit the applicable tax on all sales not otherwise supported as exempt. The sales tax rate ranges from four to seven percent of the purchase price or rental charge of tangible personal property sold or rented in Georgia. The tax rate varies among counties because of the Local Option Tax, Educational Local Option Tax, Special Purpose Local Option Tax, Homestead Local Option Tax, and Metropolitan Atlanta Rapid Transit Authority (MARTA) Tax.
Who Pays the Tax? The seller collects the sales tax from the retail purchaser, renter, lessor, user, or consumer of tangible personal property.
When is the Tax Paid? Sales tax is paid at the time of purchase of tangible personal property in addition to the purchase price. Georgia Sales and Use Tax is a point of delivery tax collected when the seller passes title or possession to the purchaser.
Internet, Mail Order and Out of State Purchases: Georgia Use Tax is due on all purchases made through the internet, via mail order, or from an out-of-state company when Georgia Sales Tax is not collected by the selling company. The use tax rate is the same as the sales tax rate imposed in the Georgia county of delivery. The form (ST-3USE) for reporting use tax or additional information may be obtained at the Department's Regional Offices or from the Department's webpage (www.gatax.org).
What are the Rates? There is a four percent statewide sales tax, a one percent MARTA Tax (Fulton and DeKalb counties only), a one percent Homestead Local Option Tax (DeKalb and Rockdale counties only), a one percent Local Option Tax, a one percent Educational Local Option Tax, and/or a one percent Special Local Option Tax (where applicable). The maximum rate in any county is seven percent. Local Option, Educational, and Special Local Option tax rate information is available from the Sales and Use Tax Division and is available on the Department's website (www.gatax.org). The information is updated quarterly.
There is an established bracket for the collection of sales tax based upon parts of a dollar. There is no requirement to collect tax on sales of less than 8 cents. However, every dealer must remit at least the amount of tax due on net taxable sales at the rate where delivery occurs or the amount collected under the following
29

bracket system. The one, two, and three percent brackets for food and beverages are available on the Department's website or can be requested from the Sales and Use Tax Division.

Four Percent Bracket: 10 cents or less 11 cents through 25 cents 26 cents through 50 cents 51 cents through 75 cents 76 cents through $1.00 Over $1.00, 4 cents plus above for parts of a dollar.

No requirement 1 cent 2 cents 3 cents 4 cents

Five Percent Bracket: 10 cents or less 11 cents through 20 cents 21 cents through 40 cents 41 cents through 60 cents 61 cents through 80 cents 81 cents through $1.00 Over $1.00, 5 cents plus above for parts of a dollar.

No requirement 1 cent 2 cents 3 cents 4 cents 5 cents

Six Percent Bracket: 10 cents or less 11 cents through 20 cents 21 cents through 35 cents 36 cents through 50 cents 51 cents through 67 cents 68 cents through 85 cents 86 cents through $1.00 Over $1.00, 6 cents plus above for parts of a dollar.

No requirement 1 cent 2 cents 3 cents 4 cents 5 cents 6 cents

Seven Percent Bracket: 7 cents or less 8 cents through 21 cents 22 cents through 35 cents 36 cents through 49 cents 50 cents through 64 cents 65 cents through 78 cents 79 cents through 92 cents 93 cents through $1.07

No requirement 1 cent 2 cents 3 cents 4 cents 5 cents 6 cents 7 cents

Who Must File a Return? Every dealer must file a return on or before the

30

20th day of the following calendar month for which the tax is due. The tax may be reported on the cash or accrual basis of accounting. The seller must make this election based on the filing method on the first return. On the cash basis, the seller reports the sale and remits the tax in the month that the tax is collected. On the accrual basis, the tax is reported in the month the sale is made.
What are the Filing Requirements for Sales and Use Tax? Taxpayers must file a return for each period even if their business did not operate or there were no taxable sales. The reporting period is monthly unless the Department of Revenue permits the taxpayer to file the return on a quarterly or annual basis. Forms and detailed filing instructions will be sent with the certificate of registration after each taxpayer's application has been processed.
What are the Exemptions? Certain purchasers and dealers are exempt from sales and use tax. A certificate of exemption form must be presented to the seller on transactions between exempt purchasers and dealers. Specific questions regarding particular exemptions should be directed to the Sales and Use Tax Division.
Who Must Register for Sales and Use Tax? Every person, partnership, limited liability entity, firm, or corporation who sells, uses, distributes, or manufactures tangible personal property in Georgia should register for sales and use tax or if:
z They import goods from any state or foreign country for sale at retail, or for use, consumption, distribution, or storage in Georgia.
z They lease or rent tangible personal property in Georgia for consideration without acquiring title to the property.
z They maintain an office, distribution house, sales room, or warehouse in Georgia from which tangible personal property is sold.
z They acquire parts to manufacture tangible personal property for sale at retail or for use, consumption, distribution, or storage in Georgia.
z They regularly solicit orders for tangible personal property within Georgia.
How Do I Register For Sales Tax? You can either: z Obtain the registration forms from the Department's website at www.gatax.org and fax the completed forms to Centralized Taxpayer Registration at 404-417-4318.
z Contact Centralized Taxpayer Registration at 404-417-4490.
31

What Should I Do With My Certificate of Registration? The certificate must be conspicuously displayed at all times at the location for which the certificate has been issued. It must be displayed in a prominent place where customers or occupants can see it. Each sales location is required to register and display a separate Certificate of Registration.
Should Contractors and Sub-Contractors Register for Sales Tax? A contractor is deemed to be the ultimate consumer of all material used in constructing, altering, or improving real property and therefore must pay sales tax on all materials used in the project. Every business that contracts to furnish tangible personal property or perform services in constructing, altering, remodeling, or improving real property in Georgia must complete an application. One Sales and Use Tax registration number (prefix 214) covers all operations of the company throughout the state. This number is for reporting contractual activities and paying use tax only; it is not valid for purchasing tangible personal property tax exempt. There are bonding requirements for resident and nonresident contractors as outlined in O.C.G.A. Sections 48-8-63 and 48-13-32, respectively. For additional information, contact the Contract Section at 404-417-6658.
Most Frequently Asked Questions
Q. How do I contact the Sales and Use Tax Division? A. The mailing address is 1800 Century Boulevard, Suite 8214, Atlanta, GA 30345-3205. The telephone number is 404-417-6601.
Q. Is any educational training available to assist companies in properly collecting Georgia's Sales and Use Tax?
A. The Department offers "Free" Sales and Use Tax Awareness seminars throughout the State. The annual schedule is posted on our web page and is available at the Department's Regional Offices.
Q. Are freight and transportation charges taxable? A. When tangible personal property is sold F.O.B. destination and/or the transportation cost is passed to the purchaser by the seller, it is subject to tax.
Q. Are shipping and handling charges taxable? A. Yes, if the property is shipped in the seller's vehicle or F.O.B. destination.
Q. Are nonprofit organizations and churches exempt from paying sales and use tax on purchases for use?
A. Not generally. Some organizations specified in O.C.G.A. section 48-8-3 are exempt and sales by churches of religious papers and certain short-term fund-
32

raising activities can be exempt.
Q. Is computer software taxable? A. The tax applies to prewritten (canned) software and canned software which has been modified for a customer's use. The tax does not apply to software written for a particular customer or tailored to a particular customer's needs, sometimes known as "custom software." Maintenance agreements which are separately stated are not subject to the tax.
Q. Are labor charges exempt? A. Repair and installation labor are exempt when separately stated on an invoice. If not separately stated, labor charges are taxable. Fabrication labor is taxable unless the total sale is otherwise exempt.
Q. Are repair charges taxable? A. Materials used in a repair are subject to tax. Installation or repair labor is not subject to the tax when separately stated on the invoice.
Q. Can contractors purchase tangible personal property tax exempt? A. No. Contractors are deemed the consumers of tangible personal property used in a construction project and must pay tax at the time of purchase. This is true even if the materials are used in contracts performed for government agencies.
Q. Is use tax due if property is purchased from a foreign vendor (out-ofstate seller) and delivered into and used in Georgia?
A. Yes, if the seller fails to collect Georgia sales taxes (state and local). The purchaser may file a use tax form and submit the appropriate state and local county taxes. A credit may be allowed on like taxes paid in the state of origin.
Q. Are government employees and agencies exempt from sales tax on hotel/motel charges?
A. Sales to the federal government, the State of Georgia, any county or municipality of this state, or any bona fide department of such governments, when purchased directly from the seller by warrant with appropriated government funds accompanied by an ST-5, Georgia Sales and Use Tax Certificate of Exemption, are exempt. Government employees are not exempt when paying with their own funds, even if they are later reimbursed.
Q. Company A sells to Company B (an out-of-state company) and drop ships to Company C (a Georgia company). Is Company A required to collect sales tax?
A. Yes. Company A must collect tax on this transaction or obtain a Certifi-
33

cate of Exemption from Company B's home state.
Q. Company A (an out-of-state company) leases tangible personal property to a customer in Georgia. Must Company A collect sales tax or is the customer obligated to pay the tax to the state?
A. Company A must collect sales tax on the sale or lease of all property which is delivered into the State. Tax must be collected on the gross lease or rental receipts.
Q. Are parts covered under a factory warranty taxable? A. Parts exchanged under a warranty are not taxable. However, if any charge is made for parts, it would be subject to the tax.
Q. Are parts covered under an extended warranty or maintenance agreement taxable?
A. The cost of any parts used to repair property which is covered under the warranty or maintenance agreement is subject to sales and use tax, as are parts used to repair property which is not covered under an extended warranty. The service provider is responsible for the tax.
Q. Are all-terrain vehicles, boats or other recreational vehicles subject to Georgia sales and use tax?
A. Yes. Georgia Law does not grant an exemption to the purchase of all-terrain vehicles, boats or other recreational vehicles when the purchaser accepts delivery in Georgia.
Motor Fuel Tax
The Motor Fuel Tax is a state excise tax on any motor fuel sold or used in Georgia. It is collected by licensed distributors of motor fuel and is passed on to the consumer at the retail level. The excise tax is 7 cents per gallon. There is also a Prepaid State Tax, which is four percent of the average statewide retail selling price, which is adjusted semiannually. In addition, there is a federal tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel.
Date Distributor Report and Tax Due: The distributor report and tax are due on the 20th of each month for transactions occurring during the preceding month. There is a provision for quarterly or annual reporting. Contact the Motor Fuel Tax Unit for more information at 404-417-6712.
Exemptions: Many transactions among licensed distributors of motor fuel are exempt from these taxes. For specific information regarding these exemptions, consult O.C.G.A. Sections 48-9-3 and 48-9-14, or contact the Motor Fuel Tax Unit.
34

Refunds: z Agricultural Use: A refund of all but 1 cent per gallon of the state excise tax imposed by O.C.G.A. Section 48-9-3(a)(1) on gasoline purchased in quantities of 25 gallons or more is permitted by law provided the fuel is used in farm equipment for agricultural purposes. All but 10 percent of the state motor fuel excise tax is refundable for clear diesel fuel purchased and used in licensed agricultural field use vehicles as defined in O.C.G.A. 48-9-2.
z Non-highway Use: Clear diesel fuel purchased in quantities of 25 gallons or more and used in equipment for non-highway purposes is eligible for a refund of state motor fuel excise tax paid except that no interest shall be paid on the refund.
z Retail Dealers: Retail dealers of motor fuel are entitled to a refund of two percent of the first 5 cents per gallon of motor fuel taxes as compensation to cover evaporation, shrinkage and spillage losses.
Prepaid State Tax: The Sales and Use Tax and Motor Fuel Tax law was amended effective January 1, 2004, to collect the three percent Second Motor Fuel Tax and the one percent State Sales Tax on motor fuels as a four percent Prepaid State Tax. The motor fuel wholesaler collects this tax at the time the 7 cents, per gallion excise tax is imposed and remits both taxes to the Motor Fuel Tax Unit. Wholesalers are compensated and penalties and interest are imposed in accordance with the Motor Fuel law (O.C.G.A. 48-9).
Motor Carrier Fuel Use Tax
The Road Use Tax on motor carriers is imposed for the privilege of using Georgia's highways. The State of Georgia is a member of the International Fuel Tax Agreement (IFTA). As a result there is a composite tax rate, equivalent to the 7 cents per gallon Motor Fuel Excise Tax and a three percent Prepaid State Tax. The composite rate is published quarterly for use in calculating and reporting the amount of tax due on the IFTA tax return. The Road Use Tax applies to fuel used in Georgia. Under IFTA, excess credits for motor fuel taxes paid to other states may be applied to the Georgia tax. Conversely, motor fuel tax credits for excess purchases of fuel in Georgia may be applied to taxes due other IFTA jurisdictions. This is done on the IFTA quarterly tax return. Carriers that have entirely intrastate operations are not required to register with Georgia for IFTA.
Date Report and Tax Due: The report and tax are due on the last day of the month immediately following the end of each calendar quarter (April 30, July 31, October 31, January 31). All IFTA-registered motor carriers must report each quarter even if no operations were conducted during the reporting period.
35

Tax Credit: Every IFTA motor carrier subject to this tax is entitled to a tax credit equal to the net of any fuel taxes paid in all jurisdictions minus the amount owed to all jurisdictions.
Who Pays the Tax? The tax is levied upon and paid by interstate motor carriers who operate qualified motor vehicles on Georgia highways that are used, designed, or maintained for the transportation of persons or property and:
z Having two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds or 11,797 kilograms.
z Having three or more axles regardless of weight. z Used in combination, when the weight of such combination exceeds 26,000 pounds or 11,797 kilograms gross vehicle or registered gross vehicle weight. Qualified Motor Vehicle does not include recreational vehicles when used exclusively for personal pleasure by an individual. Only IFTA motor carriers based in Georgia are required to register and file tax returns with the Department. Intrastate motor carriers must pay motor fuel taxes at the retail pump or to their bulk storage supplier if not licensed with the Department.
36

Alcohol and Tobacco Division
The Alcohol and Tobacco Division is composed of two units: the Law Enforcement Section and the Audit and Regulatory Section.
The Department of Revenue collects state excise taxes on cigarettes through the use of tax-paid indicia (stamps) which are placed on the products before they enter the marketplace. Distilled spirits, beer, wine, cigar and loose/smokeless tobacco taxes are collected via a complex reporting system that eliminates the need for stamps.
The State Revenue Commissioner is charged by law with regulating the legal alcohol industry and preventing the illegal production and sale of alcohol products. Georgia is a local option state in regard to control, sale, and taxation of beverage alcohol products. Under this system, governing authorities of any county or incorporated municipality have sole discretionary power to permit the sale of malt beverages and wine within their jurisdiction. The law does not provide for a referendum for the sale of these products.
For the sale of distilled spirits, a special referendum must be conducted. If the vote is against the sale of distilled spirits, another referendum may not be held for two years. If the vote is against the sale of mixed drinks, the waiting period is one year.
In conjunction with the local option concept, Georgia is also a local license state. Accordingly, a manufacturer, importer, wholesaler, brewpub, retailer, or consumption-on-premises business must first obtain a local license to sell beverage alcohol products prior to obtaining a state license from the Georgia Department of Revenue. Persons considering engaging in the beverage alcohol business should note that in order to obtain and hold such license, they must be current (paid up to date) in all Georgia tax categories.
The Department of Revenue's Alcohol and Tobacco Division administers alcohol and tobacco tax laws. Most laws pertain to distilled spirits, beer, and wine licensees, and the manufacturers and distributors of tobacco products. Several important laws are of concern to all taxpayers:
z The minimum legal drinking age in Georgia is 21 years of age.
z The minimum legal age to purchase or possess for personal use cigarettes, tobacco, tobacco products, or tobacco-related objects is 18 years of age.
z Certain types of businesses (primarily restaurants) in specific localities as
37

outlined in O.C.G.A. Section 3-3-7, which derive more than 50 percent of their annual gross sales from the sale of prepared meals, may serve beverage alcohol for consumption on premises after 12:30 p.m., on Sundays. These are the only areas of the state where alcohol beverage sales are permissible on Sundays with the exception of those cities and counties that may under state law sanction alcohol beverage sales for a certain number of hours after midnight Saturday, with the exception of certain sports facilities.
z It is illegal to possess more than a half gallon of non-Georgia tax paid distilled spirits in Georgia. If you go to another state, purchase more than a half gallon of distilled spirits and return to Georgia, you would be in possession of illegal alcohol. The restriction applies to all distilled spirits whether or not the bottle has been opened. It is also illegal to manufacture distilled spirits in any quantity in Georgia without a license.
z Georgia citizens may bring into the state no more than two cases (48 twelveounce containers or 576 total ounces) of non-Georgia tax paid beer at one time. The beer must be for personal consumption and not for resale. Georgia law permits a head of household to manufacture up to 50 gallons of malt beverages per year for personal or family consumption.
z It is illegal to transport or possess more than a half-gallon of non-Georgia tax paid wine purchased in another state. A consumer of legal age, while on a winery's premise, may purchase for personal use,but not transport, up to five cases of wine from any one winery per calendar year. The winery must ship the wine to the consumer's address and documentation of the purchase and shipment must remain in the possession of the consumer. Georgia law, however, permits a head of household to manufacture up to 200 gallons of wine per year for personal or family consumption.
z No more than 10 packs of non-Georgia tax paid cigarettes, 20 individual cigars, or six containers of loose or smokeless tobacco can be brought into the state by one person at one time. A vehicle can carry 10 packs of cigarettes and 20 individual cigars or six containers of loose or smokeless tobacco per person of lawful age (18 years or older). Persons bringing more than the maximum allowable amounts of tobacco products into Georgia are subject to arrest, confiscation of tobacco products, and seizure of their vehicle.
Georgia's Alcohol and Tobacco Taxes
Distilled Spirits: An excise tax of 50 cents per liter upon the first sale, use, or final delivery within this State of all distilled spirits, and a similar tax of 70 cents per liter on all alcohol; a tax of 50 cents per liter upon the importation for use, consump-
38

tion, or final delivery into this State of all distilled spirits; a similar tax of 70 cents per liter upon the importation of all alcohol; and a local tax, where applicable, of up to 22 cents per liter.
Beer: $1.08 per standard case of 24 twelve-ounce containers of beer plus a uniform local beer tax of $1.20 per standard case.
Wine: An excise tax of 11 cents per liter on the first sale, use, or final delivery within this State of all taxable wines (i.e., wines of 14 percent or less alcohol by volume), and a similar tax of 27 cents per liter on all dessert wines (i.e., wines of more than 14 percent, but not more than 21 percent alcohol by volume); and a tax of 29 cents per liter upon the importation for use, consumption, or final delivery into this State of all table wines, and a similar tax of 40 cents per liter upon the importation of all dessert wines. Wine fortified with distilled spirits, which results in an alcohol content of more than 21 percent alcohol by volume, is taxed as distilled spirits. A local tax, where applicable, of up to 22 cents per liter is also due.
Tobacco Products: The state excise tax on cigarettes is 37 cents per pack of 20 ($3.70 per carton); the state excise tax on cigars is 23 percent of the wholesaler's cost; the state excise tax on loose or smokeless tobacco is 10 percent of the wholesaler's cost.
Coin-Operated Amusement Machines
Georgia law requires each owner or operator of bona fide coin-operated amusement machines that are available for public play within the state, to obtain a Master License based upon the number of machines owned or operated. Additionally, each machine must display an annual permit sticker.
Master License and Machine Fees: z Level 1 (1-5 machines): $250.00
z Level 2 (6-60 machines): $1,500.00
z Level 3 (61 or more machines): $2,500.00
z Annual Permit Sticker: $25.00 per machine
Machines in operation in Georgia without the required Master License and decals will be seized and penalties assessed.
39

Compliance Division
The Compliance Division handles all tax collection enforcement for the Department of Revenue. Eleven regional offices are maintained throughout the state to provide taxpayer assistance for all tax types. In addition, each office performs collection and audit activities for businesses located in the geographical region covered by that office.
Audit Unit: The Audit Unit is responsible for ensuring taxpayer compliance with Georgia's laws. The Unit conducts a variety of audits including but not limited to:
z Income Tax z Sales and Use Tax z Withholding Tax z International Fuel Tax Agreement Tax z In addition, the Unit assists taxpayers with voluntary disclosures.
Collection Unit: Each regional office of the Compliance Division is given the responsibility for collecting unpaid Income, Sales and Use, and Motor Fuel taxes owed to the state. Agents can provide assistance in preparing tax reports and computing amounts due upon request. Tax payments of any type can be made by mail or in person during regular business hours (8 a.m. to 4:45 p.m.).
Unregistered Businesses: The Collection Unit is responsible for tax compliance for special events which often involve out-of-state-based or other businesses that are not registered for collection of Sales and Use Tax. Each regional office monitors events in its region to ensure that Sales and Use Tax is being properly collected and remitted.
Special Collections Programs: Specialized programs include collection and delinquent call center operations, installment payment programs for individuals, problem resolution, the Bankruptcy Program, the Offer in Compromise Program, and the Private Collection Agency Program.
Taxpayer Assistance: Each regional office provides customer service information both in person and by telephone concerning Georgia taxes. During income tax filing season, please call ahead to ascertain what documents may be required in order to assist you in filing your return. (See the list of office locations and telephone numbers on Page 41.)
40

REGIONAL OFFICES

ALBANY Georgia Department of Revenue Albany Regional Office P.O. Box 1357 Albany, GA 31702-1357 Telephone: 229-430-4242

DOUGLAS Georgia Department of Revenue Douglas Regional Office 1214 North Pointe Plaza, Suites H, I, J Douglas, GA 31533 Telephone: 912-389-4094

ATHENS Georgia Department of Revenue Athens Regional Office 190 Ben Burton Circle Bogart, GA 30622 or P.O. Box 1843 Athens, GA 30603-1843 Telephone: 706-542-6058
ATLANTA Georgia Department of Revenue Atlanta Regional Office 4245 International Parkway Hapeville, GA 30354 Telephone: 404-362-6422
AUGUSTA Georgia Department of Revenue Augusta Regional Office Interstate West Office Park, Suite 310 1054 Claussen Road Augusta, GA 30907 Telephone: 706-737-1870
COLUMBUS Georgia Department of Revenue Columbus Regional Office 1501 13th Street, Suite A Columbus, GA 31901 Telephone: 706-649-7451

LITHIA SPRINGS Georgia Department of Revenue Lithia Springs Regional Office 351 Thornton Road, Suite 101 Lithia Springs, GA 30122-1589 Telephone: 770-732-5812
MACON Georgia Department of Revenue Macon Regional Office 630 North Avenue, Suite B Macon, GA 31211-1493 Telephone: 478-751-6055
NORTHEAST METRO OFFICE Georgia Department of Revenue Northeast Metro Office 1800 Century Boulevard, NE Atlanta, GA 30345-3205 Telephone: 404-417-6605
ROME Georgia Department of Revenue Rome Regional Office 1401 Dean Street, Suite E Rome, GA 30161-6494 Telephone: 706-295-6061
SAVANNAH Georgia Department of Revenue Savannah Regional Office 6606 Abercorn Street, Suite 220 Savannah, GA 31405 Telephone: 912-356-2140

41