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Investors: Georgia Offers Tax Incentive


5/22/13

Synopsis:

If you are a Georgia taxpayer, beginning in 2014 you may have expanded access to tax credits for qualified research and development investments in Georgia-based businesses. The law also creates new sales tax exemptions and refunds.

Issue:

Invest Georgia Fund: The state of Georgia has created the Invest Georgia Fund, a tax credit fund designed to increase private investment in certain Georgia-based businesses that develop new technologies or methods. Qualified businesses, which must be based in the state, include either:

  • “Early stage” or “seed” businesses: fewer than 20 employees, less than $1,000,000 in gross annual revenue, and no more than $2,000,000 in cash from equity or debt investments
  • “Growth stage” businesses: fewer than 100 employees and more than $1,000,000 in gross annual revenue
     

An individual or a pass-through entity that makes a direct investment in a qualified business in 2014 or 2015 may claim a 35 percent tax credit for the second year after the investment is made. If the investment is made in 2014, the credit can be claimed in 2016. If the investment is made in 2015, the credit can be claimed in 2017. To claim the credit, the investor must apply to the Georgia Department of Revenue and be approved. There will be $5,000,000 in credits available in each year with a $50,000 limit per individual investor.

The Invest Georgia Fund will also make direct investments in selected venture capital funds. These funds will then be required to invest in Georgia-based businesses over a five-year period beginning in 2014. The investments will be managed by the Invest Georgia Board.

Sales tax rules: The law also expands sales tax relief as follows:

  • The sales tax exemption for sales of property used in the renovation or expansion of a “zoological institution,” which is an accredited zoo or aquarium, has been extended through June 30, 2015.
  • Approved companies that have applied for and received approval from the Georgia Department of Community Affairs may receive a sales and use tax refund for new or expanded tourism attractions. Companies will receive a refund of either state and local sales and use taxes or 2.5 percent of all approved costs of the construction or expansion, whichever is lower.
     

What Does CohnReznick Think?
Georgia is setting itself apart from other states by attracting new businesses in the competitive technology, life sciences and manufacturing industries. The state is doing so by providing taxpayers with benefits for engaging in research and development activities. With a dedicated, but limited, fund, CohnReznick believes it is important to act now and file your application with the Georgia Department of Revenue. Our tax specialists can help.


Contact:

To learn how your business can access these new tax benefits in Georgia, please contact:

  • Katherine Morris, Partner, Technology and Life Sciences Practice, at 703-744-6730
  • Alan Wolfson, Partner, Manufacturing /Distribution Practice Leader, at 646-254-7416
  • Patrick Duffany, Partner, State and Local Tax Practice Leader, at 860-368-3607
     

To learn more about CohnReznick’s technology practice, please visit our webpage.


Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.

This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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