Bill Text: GA HB983 | 2009-2010 | Regular Session | Introduced

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Bill Title: Income taxes; expenses paid to captive factoring entities; disallow

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2010-01-28 - House Second Readers [HB983 Detail]

Download: Georgia-2009-HB983-Introduced.html

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10 LC 18 8767

House Bill 983

By: Representative O`Neal of the 146th

A BILL TO BE ENTITLED
AN ACT

To amend Article 2 of Chapter 7 of Title 48 of the Official Code of Georgia Annotated, relating to imposition, rate, computation, and exemptions regarding income taxes, so as to define certain terms; to disallow expenses paid to captive factoring entities; to provide for procedures, conditions, and limitations; 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 imposition, rate, computation, and exemptions regarding income taxes, is amended in subsection (b) of Code Section 48-7-21, relating to taxation of corporations, by adding a new paragraph to read as follows:

"(17) Georgia taxable income shall be adjusted as provided in Code Section 48-7-28.5."

SECTION 2.

Said article is further amended in subsection (b) of Code Section 48-7-27, relating to computation of taxable net income, by adding a new paragraph to read as follows:

"(14) Georgia taxable income shall be adjusted as provided in Code Section 48-7-28.5."

SECTION 3.

Said article is further amended by adding a new Code section to read as follows:

"48-7-28.5.

(a) As used in this Code section, the term:

(1) 'Captive factoring entity' means any related member which buys accounts receivables from persons that are related members.

(2) 'Related member' means the same as is defined in Code Section 48-7-28.3.

(b) For purposes of computing Georgia taxable net income under Code Sections 48-7-21 and 48-7-27, a taxpayer shall add back all expenses and costs directly or indirectly paid, accrued, or incurred to a captive factoring entity. Such expenses and costs shall be added back before the income is apportioned or allocated as provided by Code Section 48-7-31.

(c) The amount of the adjustment required by subsection (b) of this Code section shall be reduced, but not below zero, to the extent the corresponding expenses and costs received as income by the captive factoring entity are reduced by expenses that have been allowed in computing the captive factoring entity's federal taxable income and that have not been paid, accrued, or incurred by the captive factoring entity to persons that are related members.

(d) The commissioner shall have the authority to reverse in whole or in part the adjustments required in subsection (b) of this Code section when the taxpayer and the commissioner agree in writing to the application or use of an alternative method of apportionment under subparagraph (d)(2)(C) of Code Section 48-7-31, Code Section 48-7-35, or Code Section 48-7-31.1. Nothing in this Code section shall be construed to limit or negate the commissioner's authority otherwise to enter into agreements and compromises otherwise allowed by law.

(e)(1) For purposes of this subsection, the term:

(A) 'Allocated or apportioned, or both' does not mean the amount of income that is subject to allocation or apportionment, or both. Rather it means the amount that is arrived at after applying the allocation and apportionment rules of a state as defined in subparagraph (B) of this paragraph. A tax or the portion of a tax, which is or would be imposed regardless of the amount of the income, shall not be considered to be a tax on or measured by the income of the captive factoring entity.

(B) 'State' means a state in the United States of America, including the District of Columbia, but does not include those states under whose laws the taxpayer files with the captive factoring entity, or the captive factoring entity files with another related member, a combined income tax report or return, a consolidated income tax report or return, or any other report or return where such report or return is due because of the imposition of a tax on, or measured by, income and where such combined income tax report or return, consolidated income tax report or return, or other report or return results in the elimination of the tax effects from transactions directly or indirectly between the taxpayer and the captive factoring entity or between the captive factoring entity and another related member.

(2) The amount of the adjustment required by subsection (b) of this Code section shall be reduced, but not below zero, to the extent the corresponding expenses and costs are received as income in an arm's length transaction by the captive factoring entity and to the extent such income is allocated or apportioned, or both, to and taxed by Georgia or another state that imposes a tax on or measured by the income of the captive factoring entity. For purposes of this paragraph, the corresponding expenses and costs shall not be considered to have been received as income by the captive factoring entity to the extent such income is reduced, in computing the income of the captive factoring entity in Georgia or another state, by expenses paid, accrued, or incurred to persons that are not related members as provided in subsection (c) of the Code section.

(f) In claiming the exceptions allowed by subsections (c) and (e) of this Code section, the taxpayer shall disclose on its return, with respect to the captive factoring entity, the name, the federal identification number, the name of each state, the amount of the expenses and costs allocated or apportioned to and taxed by each state, and such other information as the commissioner may prescribe. Failure to make this disclosure on the return shall preclude the taxpayer from utilizing the exceptions provided in these subsections.

(g) Nothing in this Code section shall require a taxpayer to add to its Georgia taxable net income more than once any amount of expenses and costs that the taxpayer pays, accrues, or incurs to a captive factoring entity.

(h) Nothing in this Code section shall be construed to limit or negate the commissioner's authority to make adjustments under Code Section 48-7-58.

(i) The adjustment required by this Code section shall apply to a corporation that files a separate return with Georgia and to the separate taxable income computation of each member of a Georgia consolidated return.

(j) In addition to other penalties imposed by this title, the penalty for failure to make the adjustment required by this Code section shall be 10 percent of the additional tax that results because of this Code section. The commissioner may waive this penalty pursuant to the provisions of Code Section 48-2-43.

(k) The commissioner is authorized to prescribe forms and promulgate rules and regulations deemed necessary in order to effectuate this Code section."

SECTION 4.

This Act shall become effective upon its approval by the Governor or upon its becoming law without such approval and shall be applicable to all taxable years beginning on or after January 1, 2011.

SECTION 5.

All laws and parts of laws in conflict with this Act are repealed.