07 LC 18
6144
House
Bill 198
By:
Representatives Casas of the
103rd,
Stephens of the
164th,
Cox of the
102nd,
Scott of the
2nd,
and Horne of the
71st
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia
Annotated, relating to the imposition, rate, and computation of income tax, so
as to provide for an income tax credit with respect to qualified businesses
engaged in biotechnology or new or expanding businesses incurring qualified
research expenses; to provide for definitions; to provide for procedures,
conditions, and limitations; to provide for transfer of such credits; to provide
for powers, duties, and authority of the state revenue commissioner, the
Department of Revenue, and the Department of Economic Development with respect
to the foregoing; to provide an effective date; to provide for applicability; to
repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Article
2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating
to the imposition, rate, and computation of income tax, is amended by adding a
new Code section immediately following Code Section 48-7-40.26, to be designated
Code Section 48-7-40.27, to read as follows:
"48-7-40.27.
(a)
As used in this Code section, the term:
(1)
'Biotechnology' means the continually expanding body of fundamental knowledge
about the functioning of biological systems for the macro level to the molecular
and subatomic levels, as well as novel products, services, technologies, and
subtechnologies developed as a result of insights gained from research advances
that add to that body of fundamental knowledge.
(2)
'Biotechnology company' means a company that has its headquarters or base of
operations in this state and that is engaged in a research, development,
production, or provision of biotechnology for the purpose of developing or
providing products or processes for specific commercial or public purposes,
including by not limited to, medical, pharmaceutical, nutritional, and other
health related purposes, agricultural purposes, and environmental purposes, or a
person whose headquarters or base of operations is located in this state,
engaged in providing services or products necessary for such research,
development, production, or provision.
(3)
'New or expanding' means a company that has fewer than 225 employees, of whom 75
percent are Georgia based employees filling a position or job in this state
which incurs qualified research expenses.
(4)
'Qualified business' means a biotechnology company or a new or expanding company
that has its headquarters or base of operations in this state and that employs
some combination of the following: highly educated or trained managers and
workers, or both, employed in this state who use sophisticated scientific
research service or production equipment, processes or knowledge to discover,
develop, test, transfer, or manufacture a product or service.
(5)
'Qualified research expenses' means qualified research expenses for any
qualified business as that term is defined in Section 41 of the Internal Revenue
Code of 1986, as amended, except that all wages paid and all purchases of
services and supplies must be for research conducted within the State of
Georgia.
(b)
A tax credit in an amount not to exceed 50 percent of the qualified research
expenses is allowed a qualified business which has qualified research expenses
in Georgia in a taxable year, provided that the qualified business is allowed a
research credit under Section 41 of the Internal Revenue Code of 1986, as
amended.
(c)
Any unused credit claimed under this Code section may be carried forward 15
years from the close of the taxable year in which the qualified research
expenses were made. No such credit shall be allowed the qualified biotechnology
business against prior years´ tax liability.
(e)
Any tax credits with respect to qualified research expenses not previously
claimed by such qualified business taxpayer against its income tax may be
transferred or sold by such taxpayer to another Georgia taxpayer, subject to the
following conditions:
(1)
A taxpayer may make only three transfers or sales of tax credits during any
calendar year; provided, however, that a single transfer or sale may involve one
or more transferees. The transferee of the tax credits may transfer or sell
such tax credits subject to the conditions of this subsection;
(2)
Transferors and transferees shall submit to the Department of Revenue and the
Department of Economic Development a written notification of any transfer or
sale of tax credits within 30 days after the transfer or sale of such tax
credits. The notification shall include the transferor´s tax credit
balance prior to transfer, the credit certificate number, the remaining balance
after transfer, all tax identification numbers for both transferor and each
transferee, the date of transfer, the amount transferred, and any other
information required by the Department of Revenue and the Department of Economic
Development;
(3)
No transfer shall be authorized if the Department of Economic Development
determines that the transferee is an affiliated entity of the transferor which
owns or controls 5 percent or more of the voting rights or 5 percent or more of
the value of all classes of stock of the transferor;
(4)
Failure to comply with this subsection shall result in the disallowance of the
tax credit until the taxpayers are in full compliance;
(5)
The transfer or sale of this tax credit does not extend the time in which such
tax credit can be used. The carry forward period for tax credit that is
transferred or sold begins on the date on which the tax credit was originally
earned;
(6)
A transferee shall have only such rights to claim and use the tax credit that
were available to the transferor at the time of the transfer. To the extent
that the transferor did not have rights to claim or use the tax credit at the
time of the transfer, the Department of Revenue shall either disallow the tax
credit claimed by the transferee or recapture the tax credit from the
transferee. The transferee´s recourse is against the transferor;
and
(6)
The transferee shall apply such tax credits in the same manner and against the
same taxes as the taxpayer originally awarded the credit unless subsequent
elections are made and allowed.
(f)(1)
The commissioner shall not authorize the transfer of tax credits under this Code
section in excess of an aggregate of $40 million in any taxable
year.
(2)
The commissioner shall not authorize any single qualified business to transfer
tax credits under this code section in excess of an aggregate amount of $10
million.
(g)
The Department of Revenue and the Department of Economic Development shall
develop criteria for the approval or disapproval of applications under this Code
section. Such criteria shall include, but need not be limited to, an evaluation
of the new or expanding emerging technology or biotechnology company's actual or
potential scientific and technological viability, a determination that the new
or expanding emerging technology or biotechnology company's principal products
or services are sufficiently innovative to provide a competitive advantage, a
determination that the proposed financial assistance will result in significant
growth in permanent, full-time employment in this state, a determination made by
the authority that new or expanding emerging technology or biotechnology company
does not have sufficient resources to operate in the short term or cannot secure
financial assistance from venture capital, stock issuance, product sales
revenue, a parent corporation or other affiliates, bank or any other method of
obtaining capital, and a determination that the financial assistance provided
pursuant to this act demonstrates the prospect of a significant positive change
in the applicant's net income. The departments shall establish the weight of
importance to be given each criterion utilized in its application approval
process. No application shall be approved in which the new or expanding
technology or application shall be approved in which the new or expanding
technology or biotechnology company (1) has demonstrated positive net income in
any of the two previous full years of ongoing operations as determined on its
financial statements; or (2) has demonstrated a ratio in excess of 110 percent
or greater of operating revenues divided by operating expenses in any of the two
previous full years of operations as determined on its financial statements; or
(3) is directly or indirectly at least 50 percent owned or controlled by another
corporation that has demonstrated positive net income in any of the two previous
full years of ongoing operations as determined on its financial statements or is
part of a consolidated group of affiliated corporations, as filed for federal
income tax purposes, that in the aggregate has demonstrated positive net income
in any of the two previous full years of ongoing operations as determined on its
combined financial statements. The departments shall require a transferee that
acquires a tax credit to enter into a written agreement with the new or
expanding emerging technology or biotechnology company concerning the terms and
conditions of the funds received in exchange for such credit. The written
agreement may contain terms concerning the maintenance by the new or expanding
emerging technology or biotechnology company of a headquarters or a base of
operations in this state.
(h)
The commissioner shall be authorized to promulgate any rules and regulations
necessary to implement and administer the provisions of this Code
section."
SECTION
2.
This
Act shall become effective on January 1, 2008, and shall be applicable to all
taxable years beginning on or after that date.
SECTION
3.
All
laws and parts of laws in conflict with this Act are repealed.