Compilation of Rules and Regulations of the State of Georgia › Department 560 - RULES OF DEPARTMENT OF REVENUE › Chapter 560-7 - INCOME TAX DIVISION › Subject 560-7-8 - RETURNS AND COLLECTIONS › Rule 560-7-8-.57 - Qualified Rural Hospital Organization Expense Tax Credit

Current through Rules and Regulations filed through June 27, 2024
(1)
Purpose.
The purpose of this
				regulation is to provide guidance concerning the administration of the tax
				credit under O.C.G.A. §
									48-7-29.20.
(2)
Coordination of Agencies.
The Georgia Department of Community Health is the state agency responsible for
				approving rural hospital organizations and administering O.C.G.A. §
									31-8-9.1.
				The Department of Community Health shall maintain a current list of approved
				rural hospital organizations on its website.
(3)
Definitions.
As used in this
				regulation, the terms "qualified rural hospital organization expense" and
				"rural hospital organization" shall have the same meaning as in O.C.G.A. §
									48-7-29.20.
(4)
Credit Amount.
From January
				1 to June 30 of each calendar year of the credit, the amount of qualified rural
				hospital organization expense tax credit allowed a taxpayer shall be as
				follows:
(a) For an individual taxpayer, the
				credit amount shall not exceed the actual amount expended or $5,000, whichever
				is less.
(b) For an individual
				taxpayer filing married filing separate, the credit amount shall not exceed the
				actual amount expended or $5,000, whichever is less.
(c) For individual taxpayers filing married
				filing joint, the credit amount shall not exceed the actual amount expended or
				$10,000, whichever is less.
1. Example:
				Taxpayers, married couple filing joint, request preapproval for the qualified
				rural hospital organization expense tax credit for calendar year 2023 by
				electronically submitting Form IT-QRHOE-TP1 through the Georgia Tax Center. On
				Form IT-QRHOE-TP1 Taxpayers' intended contribution for 2023 is $7,100,
				therefore the Department preapproves Taxpayers for $7,100. Taxpayers make a
				$3,000 donation to the rural hospital organization within 180 days of receiving
				preapproval from the Department and before the end of 2023 (this is the only
				amount contributed by taxpayers to an approved rural hospital organization in
				2023). When taxpayers file their 2023 Georgia income tax return, Taxpayers can
				only claim $3,000 qualified rural hospital organization expense tax credit
				(which is the actual amount contributed), and the extra $4,100 that was
				preapproved but not contributed cannot be claimed by Taxpayers and cannot be
				carried forward. Any amount of the $3,000 qualified rural hospital organization
				expense tax credit claimed but not used on the taxpayers' 2023 Georgia income
				tax return shall be allowed to be carried forward to apply to the taxpayer's
				succeeding five years' tax liability.
(d) For an individual taxpayer who is a
				member of a limited liability company duly formed under state law (including a
				member who owns a single member limited liability company that is disregarded
				for income tax purposes), a shareholder of a Subchapter 'S' corporation, or a
				partner in a partnership, the credit is limited to the lesser of the actual
				amount expended or $10,000 per tax year, whichever is less; provided, however,
				that the tax credits shall only be allowed for the Georgia income on which such
				tax was actually paid by such member of a limited liability company,
				shareholder of a Subchapter 'S' corporation, or partner in a partnership. In
				determining such Georgia income, the shareholder, partner, or member shall
				exclude any income that was subtracted on their Georgia return because the
				entity paid tax at the pass-through entity level in Georgia as provided in
				Regulation
				 560-7-3-.03. If the individual
				taxpayer is a member, partner, or shareholder in more than one pass-through
				entity, the total credit allowed cannot exceed $10,000; the individual taxpayer
				decides which pass-through entities to include when computing Georgia income
				for purposes of the qualified rural hospital organization expense tax credit.
				All Georgia income, loss, and expense from the taxpayer selected pass-through
				entities will be combined to determine Georgia income for purposes of the
				qualified rural hospital organization expense tax credit. Such combined Georgia
				income shall be multiplied by the applicable marginal tax rate to determine the
				tax that was actually paid. If the taxpayer is filing a joint return, the
				taxpayer's spouse may also claim a credit for their ownership interests and
				shall separately be eligible for a credit as provided in this subparagraph. If
				the taxpayer is preapproved for an amount that exceeds the amount that is
				calculated as allowed when the return is filed, the excess amount cannot be
				claimed by the taxpayer and cannot be carried forward.
1. Example: Taxpayer, an individual taxpayer,
				is the sole shareholder of A, Inc, an S corporation, Taxpayer is also a 50%
				partner, in BC Company, a partnership, and Taxpayer is also a 20% member of a
				limited liability company, XYZ Company, which is taxed as a partnership.
				Taxpayer requests preapproval for the qualified rural hospital organization
				expense tax credit for calendar year 2023 by submitting Form IT-QRHOE-TP1. On
				Form IT-QRHOE-TP1, Taxpayer estimates that the taxpayer's Georgia income from
				A, Inc. is $120,000, and that Taxpayer's share of Georgia income from BC
				Company is $60,000, Taxpayer chooses not to include any income from XYZ Company
				when estimating Georgia income for purposes of the qualified rural hospital
				organization expense tax credit; therefore the Department preapproves Taxpayer
				for $10,000 qualified rural hospital organization expense tax credit (since
				$10,000 is less than $10,350 (5.75% of $180,000)), the applicable marginal tax
				rate for 2023 is 5.75%. Taxpayer makes a $10,000 donation to the rural hospital
				organization within 180 days of receiving preapproval from the Department and
				before the end of 2023. When Taxpayer files Taxpayer's 2023 Georgia income tax
				return, Taxpayer received a salary from A, Inc. of $50,000 and A, Inc's actual
				Georgia income is $60,000; Taxpayer's actual share of Georgia income from BC
				Company is $20,000 and Taxpayer received a guaranteed payment from BC Company
				of $15,000; Taxpayer's actual share of Georgia income from XYZ Company is
				$5,000 (the Taxpayer can choose to include this company even though it was not
				considered at the time of preapproval), Taxpayer can only claim $8,625
				qualified rural hospital organization expense tax credit (which is 5.75% of the
				$150,000 actual income from Taxpayer's selected pass-through entities), and the
				extra $1,375 cannot be claimed by Taxpayer and cannot be carried forward. Any
				amount of the $8,625 qualified rural hospital organization expense tax credit
				claimed but not used on the taxpayer's 2023 Georgia income tax return shall be
				allowed to be carried forward to apply to the taxpayer's succeeding five years'
				tax liability.
(e) For a
				corporation taxpayer, fiduciary taxpayer, an S corporation that makes the
				election to pay tax at the entity level under O.C.G.A. §
										48-7-21, or a partnership that makes the election to pay tax at the entity level under
				O.C.G.A. §
										48-7-23, the credit amount shall not exceed the actual amount expended or 75 percent of
				the corporation's, fiduciary's, electing S corporation's, or electing
				partnership's income tax liability, whichever is less. S corporations and
				partnerships that elect to pay taxes at the entity level cannot pass the credit
				through to their members, partners, or shareholders. Fiduciary entities cannot
				pass the credit through to their beneficiaries.
1. Example: Taxpayer, a corporation, requests
				preapproval for the qualified rural hospital organization expense tax credit
				for calendar year 2023 by electronically submitting Form IT-QRHOE-TP1 through
				the Georgia Tax Center. On Form IT-QRHOE-TP1 Taxpayer's intended contribution
				for 2023 is $100,000; and Taxpayer's estimated income tax liability for the
				2023 tax year is $150,000; therefore, the Department preapproves Taxpayer for
				$100,000 qualified rural hospital organization expense tax credit for calendar
				year 2023. Taxpayer makes a $100,000 donation to the rural hospital
				organization within 180 days of receiving preapproval from the Department and
				before the end of 2023. When Taxpayer files its 2023 Georgia income tax return,
				Taxpayer's income tax liability for tax year 2023 is $80,000, Taxpayer can only
				claim $60,000 of qualified rural hospital organization expense tax credit
				($60,000 is 75% of its actual Georgia income tax liability for tax year 2023,
				which is less than $100,000), and the extra $40,000 cannot be claimed by
				Taxpayer and cannot be carried forward. Any amount of the $60,000 qualified
				rural hospital organization expense tax credit claimed but not used on the
				taxpayer's 2023 Georgia income tax return shall be allowed to be carried
				forward to apply to the taxpayer's succeeding five years' tax
				liability.
2. Example: Taxpayer, a
				S corporation electing to pay tax at the entity level, requests preapproval for
				the qualified rural hospital organization expense tax credit for calendar year
				2023 by electronically submitting Form IT-QRHOE-TP1 through the Georgia Tax
				Center. On Form IT-QRHOE-TP1 Taxpayer's intended contribution for 2023 is
				$100,000; and Taxpayer's estimated income tax liability for the 2023 tax year
				is $150,000; therefore, the Department preapproves Taxpayer for $100,000
				qualified rural hospital organization expense tax credit for calendar year
				2023. Taxpayer makes a $100,000 donation to the rural hospital organization
				within 180 days of receiving preapproval from the Department and before the end
				of 2023. When Taxpayer files its 2023 Georgia income tax return, Taxpayer's
				income tax liability for tax year 2023 is $80,000. Taxpayer can only claim
				$60,000 of qualified rural hospital organization expense tax credit ($60,000 is
				75% of its actual Georgia income tax liability for tax year 2023, which is less
				than $100,000), and the extra $40,000 cannot be claimed by Taxpayer and cannot
				be carried forward. Any amount of the $60,000 qualified rural hospital
				organization expense tax credit claimed but not used on the taxpayer's 2023
				Georgia income tax return shall be allowed to be carried forward to apply to
				the taxpayer's succeeding five years' tax liability but shall not be allowed to
				be passed through to and used by the shareholders.
(f) Except as provided in subparagraph (4)(e)
				of this regulation, when the taxpayer is a pass-through entity which has no
				income tax liability of its own, the tax credits will be considered earned by
				its members, shareholders, or partners based on their profit/loss percentage at
				the end of the year and the limitations of subparagraph (4)(d) of this
				regulation. The expenditure is made by the pass-through entity but all credit
				forms (preapproval, claiming, and reporting) will be filed in the name of its
				members, shareholders, or partners and the credit can only be applied against
				the shareholders', members', or partners' tax liability on their income tax
				returns. The pass-through entity shall provide all necessary information to the
				rural hospital organization so that the preapproval, claiming and reporting
				forms can be filed in the name of its members, shareholders, or
				partners.
(g) From July 1 to
				December 31 of each calendar year of the credit, the amount of qualified rural
				hospital organization expense tax credit allowed a taxpayer shall be as
				follows:
1. For an individual taxpayer, the
				credit amount shall not exceed the actual amount expended.
2. For an individual taxpayer filing married
				filing separate, the credit amount shall not exceed the actual amount
				expended.
3. For individual
				taxpayers filing married filing joint, the credit amount shall not exceed the
				actual amount expended.
4. For an
				individual taxpayer who is a member of a limited liability company duly formed
				under state law (including a member who owns a single member limited liability
				company that is disregarded for income tax purposes), a shareholder of a
				Subchapter 'S' corporation, or a partner in a partnership, the credit is
				limited to the actual amount expended per tax year; provided, however, that the
				tax credits shall only be allowed for the Georgia income on which such tax was
				actually paid by such member of a limited liability company, shareholder of a
				Subchapter 'S' corporation, or partner in a partnership. In determining such
				Georgia income, the shareholder, partner, or member shall exclude any income
				that was subtracted on their Georgia return because the entity paid tax at the
				pass-through entity level in Georgia as provided in Regulation
				 560-7-3-.03. From July 1 to December
				31, the option to indicate pass-through entity ownership is not available on
				the Georgia Tax Center, since the credit is not limited for individual
				taxpayers during this time period. Regardless, such members may choose to apply
				the pass-through entity provisions when claiming the credit or such provisions
				are applied if subparagraph (4)(g)6. of this regulation applies.
5. For a corporation taxpayer, fiduciary
				taxpayer, an S corporation that makes the election to pay tax at the entity
				level under O.C.G.A. §
											48-7-21, or a partnership that makes the election to pay tax at the entity level under
				O.C.G.A. §
											48-7-23, the credit amount shall not exceed the actual amount expended or 75 percent of
				the corporation's, fiduciary's, electing S corporation's, or electing
				partnership's income tax liability, whichever is less. S corporations and
				partnerships that elect to pay taxes at the entity level cannot pass the credit
				through to their members, partners, or shareholders. Fiduciary entities cannot
				pass the credit through to their beneficiaries. See examples in subparagraph
				(4)(e) of this regulation.
6.
				Except as provided in subparagraph (4)(g)5. of this regulation, when the
				taxpayer is a pass-through entity which has no income tax liability of its own,
				the tax credits will be considered earned by its members, shareholders, or
				partners based on their profit/loss percentage at the end of the year and the
				limitations of subparagraph (4)(g)4. of this regulation. The expenditure is
				made by the pass-through entity but all credit forms (preapproval, claiming,
				and reporting) will be filed in the name of its members, shareholders, or
				partners and the credit can only be applied against the shareholders',
				members', or partners' tax liability on their income tax returns. The
				pass-through entity shall provide all necessary information to the rural
				hospital organization so that the preapproval, claiming, and reporting forms
				can be filed in the name of its members, shareholders, or partners.
(h) A taxpayer may apply to make a
				donation to multiple rural hospital organizations or may apply to make multiple
				donations to the same rural hospital organization or may apply to make a
				donation both before and after July 1; provided, however, each donation must be
				applied for separately.
(i)
				Unspecified or undesignated contributions will be treated as provided in
				O.C.G.A. §
										48-7-29.20.