Georgia Research & Development (R&D) credit eligible against payroll withholding taxes – 30 day and 120 day rules

Most calendar year companies that have extended their Georgia income tax return already know whether or not they are able to use the Georgia R&D credit to offset 50% of the entity’s taxable income.  If the company knows that they cannot use the Georgia R&D credit against taxable income then that company should seriously consider filing Form IT-WH, Notice of Intention to Claim Withholding Benefit, as soon as possible to ensure the company does not miss an important due date.  This form must be filed at least thirty (30) days prior to the due date of the Georgia income tax return including extensions or at least thirty (30) days prior to the filing of the income tax return, whichever occurs first.  For calendar year companies filing their 2012 income tax return with an extension on the last due date of September 15th then form IT-WH must be filed by August 16, 2013.  However, if your company plans to file prior to the final due of September 15, 2013, then caution needs to be taken to make sure Form IT-WH is filed at least 30 days prior to the submission of your return.

The two company profiles that should consider filing Form IT-WH to monetize the Georgia R&D credit are:

  1. Companies that are profitable and have maximized the amount of all Georgia tax credits but cannot use the Georgia R&D credit.  The R&D credit is the last credit to be utilized and can only offset 50% of total Georgia taxable income.
  2. Companies that are in a net operating loss position in Georgia.  This includes start-up companies that have Georgia employees and mature companies that have situations that have caused them to be in losses for the current period and have Georgia employees.

Once Form IT-WH is filed Georgia regulations allow the Department of Revenue one hundred and twenty days (120) from the date the income tax return claiming the tax credit is received to review the credit and make a determination of the amount eligible to be used against withholding taxes.

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