Ga. Comp. R. & Regs. R. 560-7-8-.38 - Child Care Credit, Definitions and Description
(1) Definitions. As used in this
regulation:
(a)
Child. The term
"child" means a person under the age of 13 when the child care is provided who
is a dependent of an employeeand for whom the employee can claim an exemption
for Georgia income tax purposes.
(b)
Cost of Operation. The term
"cost of operation" means the reasonable, direct, operational costs incurred by
an employer as a result of providing employer provided or employer sponsored
child care facilities for such employer's employees. Such costs include, but
are not limited to, salaries, supplies, rent, food, transportation, educational
and special activities, and payments made to a qualified child care facility
pursuant to a contractual arrangement. Such costs, however, do not include the
cost to the employer of any property that is qualified child care
property.
(c)
Employee.
"Employee" means any person employed full-time or part-time by an
employer, whose actions are directed by the employer and who is subject to the
payroll tax provided for in Article 5 of Chapter 7 of Title 48.
(d)
Employer. "Employer" means
any employer upon whom a Georgia income tax is imposed or who is otherwise
required to file a Georgia income tax return.
(e)
Employer Provided. The term
"employer provided" refers to child care provided by the employer, offered to
employees of the employer, and provided on the premises of the employer.
However, the term "employer provided" does not include child care provided on
the premises owned by the employer which are in turn leased to a third party
providing the child care.
(f)
Employer Sponsored. The term "employer sponsored" refers to child
care provided for by the employer and offered to employees of the employer
pursuant to a contractual arrangement between the employer and a party which
operates a qualified child care facility in Georgia but only if the cost of the
child care is paid for by the employer directly to the entity providing the
child care.
(g)
Premises of
the Employer. The term "premises of the employer" means a location in
Georgia which constitutes the workplace premises of the employer providing the
child care or one of the employers providing the child care in the event that
the child care property is owned jointly or severally by the taxpayer employer
and one or more other employers. The term may also include a facility located
within a reasonable distance from the workplace premises of the employer if
such workplace premises are deemed by the Commissioner after application by the
employer to be impracticable or otherwise unsuitable for the on-site location
of the qualified child care facility. Factors to be considered in making this
determination may include, but shall not be limited to:
1. The relative size of the qualified child
care facility when compared to the size of the workplace premises
site;
2. The presence of hazardous
substances or other dangerous conditions, materials or structures on or near
the workplace premises; or
3. Any
other factor deemed relevant by the Commissioner to the safety and well-being
of the children for whom the care is provided.
(h)
Qualified Child Care Facility.
The term "qualified child care facility" means any child-caring
institution as defined under O.C.G.A. Section
49-5-3 which is licensed or
commissioned as a "child welfare agency" by the Georgia Department of Human
Services pursuant to O.C.G.A. Section
49-5-12, or approved by any
successor agency having regulatory authority over child care services. This
definition includes state regulated after school programs.
(i)
Qualified Child Care Property.
The term "qualified child care property" means all real and tangible
personal property purchased or acquired on or after July 1, 1999, or which
property is first placed in service on or after July 1, 1999, for use
exclusively in the construction, expansion, improvement, or operation of an
employer provided child care facility and for which applicable depreciation has
been claimed for federal income tax purposes (except that depreciation is not
required for any land that is qualified child care property). Such property may
include amounts expended on land acquisition, improvements, buildings, and
building improvements and furniture, fixtures, and equipment used for such
facility when the facility is either owned or leased by the employer. Where
property, previously owned by the taxpayer, is converted for use as a qualified
child care facility, only those costs involved in the conversion to such
qualified child care use shall be included. No such property shall be
considered "qualified child care property" unless:
1. The facility is licensed or commissioned
by the Department of Human Services pursuant to O.C.G.A. Section
49-5-12, or approved by any
successor agency having regulatory authority over child care
services;
2. At least 95 percent of
the children who use the facility are children of the employees of the taxpayer
and other employers if the child care property is owned jointly or severally by
the taxpayer and one or more other employers; or a corporation that is a member
of the taxpayer's "affiliated group" within the meaning of Section
1504(a) of the Internal
Revenue Code. For the purposes of meeting the 95% requirement contained in this
subparagraph, the number of children attending the facility should be
reasonably representative of each employer's capital contribution to the
facility; and
3. The taxpayer has
not previously claimed any tax credit for the cost of operation for such
qualified child care property placed in service prior to taxable years
beginning on or after January 1, 2000.
(j)
Recapture Amount. The term
"recapture amount" means, with respect to property as to which a recapture
event has occurred, an amount equal to the applicable recapture percentage of
the aggregate credits claimed under O.C.G.A. Section
48-7-40.6(d) for
all taxable years preceding the year of recapture, whether or not such credits
were used, which amount must be added back in the tax year in which the
recapture event occurs.
(k)
Recapture Event. The term "recapture event" refers to any
disposition by sale of qualified child care property by the taxpayer, or any
other event or circumstance under which property ceases to be qualified child
care property with respect to the taxpayer, except for:
1. Any transfer by reason of death;
2. Any transfer between spouses or incident
to divorce;
3. Any transaction to
which Section 381(a) of the Internal
Revenue Code applies;
4. Any change
in the form of conducting the taxpayer's trade or business so long as the
property is retained in such trade or business as qualified child care property
and the taxpayer retains a substantial interest in such trade or
business;
5. Any accident or
casualty; or
6. Any instance where
qualified child care property can no longer function because of its structural
or mechanical failure or its obsolescence.
(2) Tax Credit for Cost of Operation.
The credit to be claimed pursuant to O.C.G.A. Section
48-7-40.6(b) is
a tax credit against the Georgia income tax and it shall be granted to an
employer who makes available employer provided or employer sponsored child care
for employees of such employer.
(a)
Calculation of Credit. The amount of the credit granted to an
employer shall equal 75 percent of the cost of operation for an employer
provided or employer sponsored qualified child care facility for that taxable
year less any amounts paid to the employer by the employees for the child care.
(75% X (costs of operation less any reimbursements paid by employees to the
employer)). Where the qualified child care facility is jointly owned by the
taxpayer employer and one or more other employers, the amount of the cost
incurred by the taxpayer employer and eligible for the cost of operation tax
credit calculation may not exceed the taxpayer employer's pro rata share of the
total cost of operation of the facility measured by the number of children
served by the facility during any part of the taxable year that are children of
employees of the taxpayer employer when compared to the total number of
children served during any part of the taxable year by the facility.
(b)
Limitation. The amount of
the cost of operation tax credit granted to any employer shall not exceed 50
percent of the employer's Georgia income tax liability for the taxable year as
computed without regard to the application of any other credit including the
cost of qualified child care property tax credit provided under paragraph (3)
of this Regulation.
(c)
When
the Credit May be Taken. The cost of operation tax credit may be claimed
in the same taxable year in which the cost of operation is incurred. Any unused
credit may be carried forward for five years from the close of the taxable year
in which the cost of operation was incurred.
(d)
Certification. Employers
must maintain in their files records for certifying the cost of operation to
the Department. These records must include the names and social security
numbers of employees who utilize the facility; the names, ages, and social
security numbers (if age 1 or older) of children of employees utilizing the
facility; the name and federal identification number of the child care
provider; and such other information as may be required by the
Department.
(e)
Form
IT-CCC75. Employer Child Care Computation Form IT-CCC75 must be attached
to the Georgia Income Tax Return of the employer.
(3)
Tax Credit for Cost of Qualified
Child Care Property. The tax credit for the cost of qualified child care
property, pursuant to O.C.G.A. Section
48-7-40.6(d) is
a credit against the tax imposed under Article 2 of Chapter 7 O.C.G.A. which
may be claimed for the taxable year in which the taxpayer first places in
service qualified child care property and for each of the next succeeding nine
taxable years. The aggregate amount of the credit shall equal 100 percent of
the cost of all qualified child care property purchased or acquired by the
taxpayer and first placed in service during a taxable year and such credit may
be claimed at a rate of l0 percent per year for the ten year period.
(a)
Limitation. The amount of
the credit granted to any taxpayer employer may not exceed 50 percent of the
employer's Georgia income tax liability for the taxable year as computed
without regard to the application of any other credit including the tax credit
for cost of operation provided for in paragraph (2) of this
Regulation.
(b)
When the
Credit May be Taken. The credit may be claimed in the same year in which
the qualified child care property is acquired or placed in service. Any unused
credit in any taxable year may be carried forward for three years from the
close of the taxable year in which the credit is claimed.
(c)
Required Adjustments. If the
taxpayer claims the cost of qualified child care property tax credit, Georgia
taxable income shall be increased by the amount of any depreciation deductions
attributable to such property to the extent that such deductions are used in
determining federal taxable income or federal adjusted gross income.
(d)
Reporting Requirements. For
each year in which a taxpayer claims the tax credit for the cost of child care
property, the taxpayer shall attach to the taxpayer's Georgia income tax return
a properly completed form IT-CCC100 and a schedule setting forth the following
information with respect to such tax credit:
1. A description of the qualified child care
facility;
2. The amount of the
qualified child care property acquired during the taxable year and the cost of
such property;
3. The amount of tax
credit claimed for the taxable year;
4. The amount of qualified child care
property acquired in prior taxable years and the cost of such
property;
5. The amounts of any tax
credit utilized by the taxpayer in prior taxable years;
6. The amounts of tax credit carried over
from prior taxable years;
7. The
amount of tax credit claimed by the taxpayer for the current taxable
year;
8. The amount of tax credit
to be carried forward to subsequent taxable years; and
9. A description of any recapture event
occurring during the taxable year, a calculation of the resulting reduction in
tax credits allowable for the recapture year and future taxable years, and a
calculation of the resulting increase in tax for the recapture year.
(e)
Recapture. When a
recapture event, as defined herein, occurs with respect to any specific
qualified child care property, the tax credit for such property authorized by
paragraph (3) of this regulation for the recapture year and all subsequent tax
years shall be eliminated. All credits previously claimed by the taxpayer with
respect to such property shall be recaptured in accordance with the recapture
percentages provided for in O.C.G.A. Section
48-7-40.6(a)(9);
and the taxpayer's tax for the recapture year shall be increased in accordance
with O.C.G.A. Section
48-7-40.6(f).
(f)
Certification. Employers
must maintain records for certifying to the Department the amount of qualified
child care property acquired during any taxable year and the cost of such
property. Such records include the names and social security numbers of
employees utilizing the child care facility; the names, ages, and social
security numbers (if age 1 or older) of all children of employees for which the
child care is provided; the name and federal identification number of the child
care provider, and such other information as may be required by the
Department.
(4)
Pass-Through Entities. When the employer is a pass-through entity,
and has no income tax liability of its own, the tax credits will pass to its
members, shareholders, or partners based on the year ending profit/loss
percentage. The credit forms will initially be filed with the tax return of the
taxpayer to establish the amount of the credit available for pass through. The
credit will then pass through to its shareholders, members, or partners to be
applied against the tax liability on their income tax returns. The credits are
available for use as a credit by the shareholders, members, or partners for
their tax year in which the income tax year of the pass-through entity ends.
For example: A partnership earns the credit for its tax year ending January 31,
2009. The partnership passes the credit to a calendar year partner. The credit
is available for use by the partner beginning with the calendar 2009 tax year.
(a) Shareholders, members, or partners who
receive the credit from a pass-through entity under paragraph (4) of this
regulation shall also be subject to any disallowance, if taken erroneously, or
any recapture of those credits as provided for in this regulation.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.