A corporate tax credit is available to companies that qualify for a research credit under Section 41 of the 1986 IRS code. The credit is for companies with significant research and development expenses. Companies may apply the research and development tax credit to state withholding liability.
i. Conditions of Eligibility
Any type of business except retail may apply.
ii. Value
The credit is a flat 10 percent of a company’s research and development expenses over a “base amount.” The base amount is calculated using the previous three years’ gross receipts and research expenses.
iii. Determination of “Base Amount”
A business enterprise’s “base amount” is its Georgia gross receipts in the current taxable year and the average of the ratios of its aggregate qualified research expenses to Georgia gross receipts for the preceding three taxable years or 0.300, whichever is less. A business is not required to have positive taxable net income history for the preceding three taxable years in order to claim the credit.
iv. Qualified Research Expense
Defined by Section 41 of the 1986 IRS Code
v. Administration
This credit is administered through the Georgia Department of Revenue.
vi. Application Process
Taxpayers seeking the research tax credit must submit Georgia Department of Revenue form IT-RD along with state income tax returns. A copy of Federal Form 6765 must also be included.
vii. Coordination With Other Credits
May be taken with other credits.
Governing Georgia Code and Rules: Georgia Code Sections 48-7-40.12, Department of Revenue Rules and Regulations 560-7-8-.42.