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Spring
2008
Georgia Training Tax Credit Offers Businesses Significant State Tax Savings
The Georgia Business
Expansion and Support Act of 1994 allows businesses
in Georgia to recover significant training costs through
an income tax credit incentive. Under the law, companies
can recover costs associated with “retraining,”
including efforts to train for new equipment, technology,
or similar changes that would otherwise result in deficiencies
in the workplace.
The credit computation
is based on one half of the total direct costs toward
employee training, including employee and instructor
wages. The credit can be claimed against the Georgia
income tax, and can offset as much as 50 percent of
a company’s state income tax liability. The state
limits claims to half of the cost of retraining to a
maximum of $500 dollars for an employee in a specific
program.
The credit has
a 10-year carry forward provision. For pass-through
entities, the credit flows to the shareholders. Georgia
also has a unique provision that if a corporation is
part of a federal affiliated filing group, the credit
can be assigned in part or in whole to one of its members.
To claim this credit,
businesses must keep careful records of both the training
and the participating employees in order to prove that
the programs and employees meet the law’s specific
requirements. The most common types of programs include
new or upgraded software, new or upgraded operating
systems, new equipment, ISO implementation, TQM implementation,
and industry-specific operating systems. Additionally,
employees must be Georgia residents, employed full time,
employed for at least 16 weeks prior to the retraining
program, and either first-line employees or immediate
supervisors of first-line level employees.
Many types of programs
do not qualify for the income tax credit, including
training of upper management, OSHA training, government-mandated
training, and several similar programs. While compliance
and application processes can be complicated, the tax
savings can be considerable.
The level of detail
required to receive the Department of Technical and
Adult Education’s approval before claiming this
credit can present some difficulty. CB&H’s
state tax professionals have considerable experience
in successfully securing approval for eligible training
activities, and have been able to maximize tax savings
for clients in prior tax years as a result.
For more information
or for expert guidance in these matters, contact your
local CB&H state tax professionals.
FOR MORE INFORMATION, PLEASE CONTACT:
John Corn
jcorn@cbh.com
404.209.0954
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