HB 38 - Income tax; corporate net income; apportionment formula
Georgia House of Representatives - 1995/1996 Sessions
HB 38 - Income tax; corporate net income; apportionment formula
Page Numbers - 1/ 2/ 3/ 4/ 5/ 6
1. Buck 135th 2. Jamieson 22nd 3. Royal 164th
4. Skipper 137th 5. Culbreth 132nd 6. Ladd 59th
House Comm: W&M / Senate Comm: F&PU /
House Vote: Yeas 169 Nays 2 Senate Vote: Yeas 52 Nays 0
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House Action Senate
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1/9/95 Read 1st Time 2/3/95
1/10/95 Read 2nd Time 2/10/95
2/1/95 Favorably Reported 2/9/95
2/2/95 Read 3rd Time 3/6/95
2/2/95 Passed/Adopted 3/9/95
Comm/Floor Amend/Sub FS
3/15* Amend/Sub Agreed To
Amend/Sub Disagreed To3/15*
3/15/95 Insists
3/15/95 Conf Comm Appointed 3/15/95
3/17/95 Conf Comm Rep Adopted 3/17/95
3/31/95 Sent to Governor
4/12/95 Signed by Governor
V2 Act/Veto Number
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Rules Suspended to Introduce
Action Suspended 3/6/95
House Agrees to Senate Substitute as Amended by House
Senate Disagrees to House Amendment to Senate Substitute
Code Sections amended: 48-7-31, 48-7-141, 48-7-29
HB 38 LC 18 6942S
A BILL TO BE ENTITLED
AN ACT
1- 1 To amend Chapter 7 of Title 48 of the Official Code of
1- 2 Georgia Annotated, relating to income taxes, so as to change
1- 3 certain provisions relating to the calculation and payment
1- 4 of income taxes by persons or corporations; to increase the
1- 5 amount of certain exemptions; to increase the amount of
1- 6 certain standard deductions; to change the method of
1- 7 allocation and apportionment of corporate net income of
1- 8 certain corporations for state and local income tax
1- 9 purposes; to provide for effective dates; to provide for
1-10 applicability; to repeal conflicting laws; and for other
1-11 purposes.
1-12 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
1-13 Chapter 7 of Title 48 of the Official Code of Georgia
1-14 Annotated, relating to income taxes, is amended by striking
1-15 subsection (b) of Code Section 48-7-26, relating to personal
1-16 exemptions with respect to income taxes, and inserting in
1-17 its place a new subsection (b) to read as follows:
1-18 "(b)(1) An exemption of $3,000.00 $5,000.00 shall be
1-19 allowed as a deduction in computing Georgia taxable
1-20 income of a taxpayer and spouse, but only if a joint
1-21 return is filed.
1-22 (2) An exemption of $1,500.00 $2,500.00 shall be allowed
1-23 as a deduction in computing Georgia taxable income for
1-24 each taxpayer other than a taxpayer who files a joint
1-25 return.
1-26 (3)(A) For taxable years beginning on or after January
1-27 1, 1994, and prior to January 1, 1995, an exemption of
1-28 $2,000.00 for each dependent of a taxpayer shall be
1-29 allowed as a deduction in computing Georgia taxable
1-30 income of the taxpayer.
1-31 (B) For taxable years beginning on or after January 1,
1-32 1995, an exemption of $2,500.00 for each dependent of
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LC 18 6942S
2- 1 a taxpayer shall be allowed as a deduction in
2- 2 computing Georgia taxable income of the taxpayer."
SECTION 2.
2- 3 Said chapter is further amended by striking paragraph (1) of
2- 4 subsection (a) of Code Section 48-7-27, relating to the
2- 5 computation of taxable net income, and inserting in its
2- 6 place a new paragraph (1) to read as follows:
2- 7 "(a)(1) Either the sum of all itemized nonbusiness
2- 8 deductions used in computing federal taxable income if
2- 9 the taxpayer used itemized nonbusiness deductions in
2-10 computing federal taxable income or, if the taxpayer
2-11 could not or did not itemize nonbusiness deductions,
2-12 then a standard deduction as provided for in the
2-13 following subparagraphs:
2-14 (A) In the case of a single taxpayer or a head of
2-15 household, $2,300.00 $3,100.00;
2-16 (B) In the case of a head of household, $5,400.00;
2-17 (B)(C) In the case of a married taxpayer filing a
2-18 separate return, $1,500.00 $3,100.00;
2-19 (C)(D) In the case of a married couple filing a joint
2-20 return, $3,000.00 $6,200.00;
2-21 (D)(E) An additional deduction of $700.00 $1,250.0
2-22 for the taxpayer if he such taxpayer has attained the
2-23 age of 65 before the close of his such taxpayer's
2-24 taxable year. An additional deduction of $700.00
2-25 $1,250.00 for the spouse of the taxpayer shall be
2-26 allowed if a joint return is made by the taxpayer and
2-27 his such taxpayer's spouse and the spouse has attained
2-28 the age of 65 before the close of the taxable year;
2-29 and
2-30 (E)(F) An additional deduction of $700.00 $1,250.0
2-31 for the taxpayer if he such taxpayer is blind at the
2-32 close of the taxable year. An additional deduction of
2-33 $700.00 $1,250.00 for the spouse of the taxpayer shall
2-34 be allowed if a joint return is made by the taxpayer
2-35 and his such taxpayer's spouse and the spouse is blind
2-36 at the close of the taxable year. For the purposes of
2-37 this subparagraph, the determination of whether the
2-38 taxpayer or the spouse is blind shall be made at the
2-39 close of the taxable year except that, if either the
2-40 taxpayer or the spouse dies during the taxable year,
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LC 18 6942S
3- 1 the determination shall be made as of the time of the
3- 2 death;".
SECTION 3.
3- 3 Said chapter is further amended by striking paragraph (2) of
3- 4 subsection (d) of Code Section 48-7-31, relating to the
3- 5 allocation and apportionment of corporate net income for
3- 6 state income tax purposes, and inserting in its place a new
3- 7 paragraph (2) to read as follows:
3- 8 "(2) Where the net business income of the corporation is
3- 9 derived principally from the manufacture, production, or
3-10 sale of tangible personal property, the portion of the
3-11 net income therefrom attributable to property owned or
3-12 business done within this state shall be taken to be the
3-13 portion arrived at by application of the following three
3-14 factor formula:
3-15 (A) Property factor. The property factor is a
3-16 fraction, the numerator of which is the average value
3-17 of the taxpayer's real and tangible personal property
3-18 owned or rented and used in this state during the tax
d d P Žþ C@ P áþ C@ P 4þ C@ P ‡þ C@ P Úþ C@ P
3-20 value of all the taxpayer's real and tangible personal
3-21 property owned or rented and used during the tax
3-22 period;
3-23 (i) Property owned by the taxpayer is valued at its
3-24 original cost. Property rented by the taxpayer is
3-25 valued at eight times the net annual rental rate.
3-26 Net annual rental rate is the annual rental rate
3-27 paid by the taxpayer less any annual rental rate
3-28 received by the taxpayer from subrentals;
3-29 (ii) The average value of property shall be
3-30 determined by averaging the values at the beginning
3-31 and end of the tax period, except that the
3-32 commissioner may require the averaging of monthly
3-33 values during the tax period if such averaging is
3-34 reasonably required to reflect properly the average
3-35 value of the taxpayer's property;
3-36 (B) Payroll factor. The payroll factor is a fraction,
3-37 the numerator of which is the total amount paid in
3-38 this state during the tax period by the taxpayer for
3-39 compensation and the denominator of which is the total
3-40 compensation paid everywhere during the tax period.
3-41 The term 'compensation' means wages, salaries,
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LC 18 6942S
4- 1 commissions, and any other form of remuneration paid
4- 2 to employees for personal services. Payments made to
4- 3 an independent contractor or any other person not
4- 4 properly classified as an employee are excluded.
4- 5 Compensation is paid in this state if:
4- 6 (i) The employee's service is performed entirely
4- 7 within this state;
4- 8 (ii) The employee's service is performed both within
4- 9 and outside this state and the service performed
4-10 outside this state is incidental to the employee's
4-11 service within this state; or
4-12 (iii) Some of the service is performed in this state
4-13 and either the base of operations or the place from
4-14 which the service is directed or controlled is in
4-15 this state or the base of operations or the place
4-16 from which the service is directed or controlled is
4-17 not in any state in which some part of the service
4-18 is performed but the employee's residence is in this
4-19 state;
4-20 (C) Gross receipts factor. The gross receipts factor
4-21 is a fraction, the numerator of which is the total
4-22 gross receipts from business done within this state
4-23 during the tax period and the denominator of which is
4-24 the total gross receipts from business done everywhere
4-25 during the tax period. For the purposes of this
4-26 subparagraph, receipts shall be deemed to have been
4-27 derived from business done within this state only if
4-28 the receipts are received from products shipped to
4-29 customers in this state or products delivered within
4-30 this state to customers. In determining the gross
4-31 receipts within this state, receipts from sales
4-32 negotiated or effected through offices of the taxpayer
4-33 outside this state and delivered from storage in this
4-34 state to customers outside this state shall be
4-35 excluded;
4-36 (D) Apportionment formula. The property factor, the
4-37 payroll factor, and the gross receipts factor shall be
4-38 separately determined and the three percentages
4-39 averaged an apportionment fraction shall be calculated
4-40 using the following formula:
4-41 (i) The property factor shall represent 25 percent
4-42 of the fraction;
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LC 18 6942S
5- 1 (ii) The payroll factor shall represent 25 percent
5- 2 of the fraction; and
5- 3 (iii) The gross receipts factor shall represent 50
5- 4 percent of the fraction.
5- 5 The net income of the corporation shall be apportioned
5- 6 to this state according to such average fraction;".
SECTION 4.
5- 7 Said chapter is further amended by striking subsection (a)
5- 8 of Code Section 48-7-141, relating to the imposition of
5- 9 local income taxes, and inserting in its place a new
5-10 subsection (a) to read as follows:
5-11 "(a) Subject to the requirement of a referendum election
5-12 as provided in this article, the governing authority of
5-13 each county or municipality of this state, by ordinance or
5-14 resolution enacted pursuant to the procedure set forth in
5-15 this article, may adopt a local income tax at the rate of
5-16 1 percent upon the entire Georgia taxable net income as
5-17 defined in Code Section 48-7-27 of every resident
5-18 individual of the county or municipality and of every
5-19 corporation and fiduciary with respect to that portion of
5-20 its Georgia taxable net income which is reasonably
5-21 attributable to property owned and business done by it
5-22 within the county or municipality, to be determined by
5-23 application of the three factor ratio in the same manner
5-24 as otherwise provided in Code Section 48-7-31 for state
5-25 income tax purposes."
SECTION 5.
5-26 (a) Except as otherwise provided in subsection (b) of this
5-27 section, this Act shall become effective upon its approval
5-28 by the Governor or upon its becoming law without such
5-29 approval.
5-30 (b)(1) Section 1 of this Act shall become effective on
5-31 January 1, 1997, and shall be applicable to all taxable
5-32 years beginning on or after January 1, 1997.
5-33 (2) Section 2 of this Act shall become effective on
5-34 January 1, 1998, and shall be applicable to all taxable
5-35 years beginning on or after January 1, 1998.
5-36 (3) Sections 3 and 4 of this Act shall become effective
5-37 on January 1, 1996, and shall be applicable to all
5-38 taxable years beginning on or after January 1, 1996.
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LC 18 6942S
SECTION 6.
6- 1 All laws and parts of laws in conflict with this Act are
6- 2 repealed.
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Office of the Clerk of the House
Robert E. Rivers, Jr., Clerk of the House
Last Updated on 01/02/97