As many states grapple with budget deficits and a gloomy economic outlook, the Florida and Georgia legislatures attempted to find inventive ways to stimulate the local economy. This newsletter describes significant tax legislation from the 2013 legislative sessions as they just recently adjourned. The following legislative synopsis contains either direct or indirect excerpts from legislative committees or specific bill language. In addition, this newsletter is current as of the date prepared as stated above and is not intended to be a comprehensive analysis of the respective legislative sessions.
The 2013 Florida Legislature Session
The 2013 Florida Legislature Session which adjourned on May 3, 2013, discussed many issues related to taxation, including several specific to tax exemptions. HB 7007 expanded the sales tax exemption for the purchase of machinery and equipment. The exemption will now apply to all manufacturing machinery and equipments purchases, not just machinery and equipment purchases for new businesses or new equipment that would increase output. SB 406 creates an annual sales tax holiday from August 2, 2013, through August 4, 2013, on purchases of certain items including clothing, wallets, or bags having a sales price of $75 or less per item; school supplies having a sales price of $15 or less per item; and personal computers and related accessories having a sales price of $750 or less per item. In addition, SB 406 provides that in connection to the current sales tax exemption for all fuels used by a public or private utility in the generation of electric power or energy for sale, there is also a sales tax exemption for natural gas used to generate electricity in specific situations. Finally, SB 406 modifies a sales tax exemption for repairs on rotary wing aircraft.
One legislative proposal that did not pass at the time of the adjournment, and is considered “unfinished business,” relates to the issue of remote sales tax collection. The legislation would have helped ensure that sales taxes were collected on taxable internet sales by remote vendors. By expanding the definition of nexus, the bill would have required more internet sellers to collect the tax and remit the money to the state.
The Georgia General Assembly's Regular Session
The Georgia General Assembly’s 2013 Regular Session came to a close on March 28, 2013, with the passing of many bills to encourage economic development, including several bills related to sales and use tax extensions. HB 164 extends the sunset provision of the sales and use tax exemption for “engines, parts, equipment, and other tangible personal property used in the maintenance or repair of aircraft” from June 30, 2013, until June 30, 2015. HB 318 provides a sales and use tax exemption to leased motor vehicles’ extends to 2015 the income tax credit for qualified investment in a qualified business; and extends the sales tax exemption for tangible property used to renovate zoological institutions in Georgia. Finally, HB 266 provides that the use of research tax credit carryforwards will be governed by the law in effect for the tax year in which the credit was earned. This provision was passed to limit a taxpayer’s ability to use a research tax credit carryforward to offset its current withholding tax liability.
Several changes relate to new or modified exemptions of tax. HB 193 extends to 2015 several sales tax exemptions and creates a new sales and use tax exemption from July 1, 2013, through June 30, 2015, for sales of tangible personal property and services to qualified job training organizations. HB 250 amends various provisions of the Georgia Code pertaining to the local energy excise tax by clarifying the manner in which localities can impose the excise tax on energy used in manufacturing, as well as the manner in which that tax may be collected. HB 304 modifies Georgia’s Freeport exemption, which applies “only to tangible personal property which is substantially modified, altered, or changed in the ordinary course of the taxpayer’s manufacturing, processing, or production operations” in Georgia, by clarifying the language related to the remanufacture of aircraft engines and by adding to the exemption that the “blending of fertilizer bulk materials into a custom mixture” is considered a “substantial modification” activity for purposes of the Freeport exemption. Lastly, HB 266 alters the sales and use tax standards associated with a vendor’s acceptance of a resale certificate to reestablish the “good faith” standard, under which the resale certificate must be properly completed, “taken in good faith”, and taken before the transaction has occurred.
If you have any questions or for further information on how this legislation may impact you or your company, please contact us.
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