Ga. Comp. R. & Regs. R. 560-7-8-.47 - Qualified Education Expense Credit
(1)
Purpose. The purpose of this regulation is to provide guidance
concerning the administration of O.C.G.A. §
48-7-29.16, which provides a
credit for qualified education expenses. Other provisions and conditions
regarding student scholarship organizations and the qualified education expense
credit are set forth in O.C.G.A. §
48-7-29.16 and Chapter 2A of Title
20.
(2)
Definitions.
(a) "Qualified Education Expense Credit"
means the credit allowed pursuant to O.C.G.A. §
48-7-29.16.
(b) "Fiscal Year" means the taxable year of
the SSO.
(c) "Calendar Year Report"
means the annual informational report that must be prepared on a calendar year
basis and submitted to the Department of Revenue.
(d) "Audit Report" means the annual audit
report that is prepared by an independent certified public accountant after
completing the annual audit that is required by O.C.G.A. §
20-2A-2.
(e) "SSO" means a student scholarship
organization as defined in O.C.G.A. §
20-2A-1.
(f) "Expenditure of Funds" means the
expenditure of lawful money of the United States and does not include other
intangible assets such as stocks, bonds, etc.
(g) "Federal Poverty Level" means the poverty
guidelines issued each year in the Federal Register by the Department of Health
and Human Services.
(h) "Form 990"
means the annual information returns and electronic notices of the Federal Form
990 series filed with the Internal Revenue Service including Form 990, Form
990-EZ, and Form 990-N.
(i)
"Business Enterprise" means an insurance company or the headquarters of an
insurance company as defined in O.C.G.A. §
48-7-29.16.
(3)
Coordination of Agencies.
(a) Each SSO must annually submit notice to
the Department of Education, in accordance with the Department of Education's
guidelines, concerning their participation as an SSO.
(b) The Department of Education will maintain
on its website a current list of all SSOs that have provided notice.
(c) The Office of Commissioner of Insurance
and Safety Fire is the state agency that administers the gross premium
tax.
(4)
Audit
Report.
(a) O.C.G.A. §
20-2A-2 requires that an audit be
conducted annually by an independent certified public accountant in accordance
with generally accepted auditing standards. The audit shall be completed and
the audit report issued within 120 days after the end of the SSO's fiscal
year.
(b) The audit report must
verify that the SSO has complied with all requirements of O.C.G.A. §
20-2A-2.
(c) As is required by O.C.G.A. §
20-2A-3, the audit report shall be
submitted to the Department of Revenue within sixty days following completion
of the audit report.
(d) Each SSO
shall submit with the audit report a signed declaration certifying that it has
complied with and is in compliance with all legal and regulatory requirements
imposed by state or federal law. The signed declaration shall be signed by the
SSO's president, chief executive officer, or authorized
representative.
(5)
Form 990. Each SSO must submit a copy of its most recent Form 990
to the Department of Revenue through the Georgia Tax Center.
(6)
Calendar Year Report.
(a) The calendar year report shall be
submitted by the SSO by January 12 of the year following the immediately
preceding calendar year, subject to the time limits provided for in O.C.G.A.
§
20-2A-2 and paragraph (4) of this
regulation. See paragraph (7) for examples on the timing of reports. Form
"IT-QEE-SSO2" shall be used to submit the report. The report shall be submitted
electronically in the manner specified by the Department.
(b) The calendar year report shall be
prepared on a calendar-year basis, regardless of the fiscal year of the
SSO.
(c) The calendar year report
shall include the following:
1. The total
number and dollar value of individual contributions and qualified education
expense credits preapproved - individual contributions include contributions
made by those filing income tax returns as single, head of household, married
filing separate, and married filing joint;
2. The total number and dollar value of
corporate, trust, S-corporation, and partnership contributions and qualified
education expense credits preapproved;
3. The total number and dollar value of
scholarships awarded to eligible students;
4. The total number of scholarship recipients
whose families' adjusted gross income falls:
(i) Under 125% of the federal poverty
level;
(ii) At or above 125% and
below or at 250% of the federal poverty level;
(iii) Above 250% and below or at 400% of the
federal poverty level; and
(iv)
Above 400% of the federal poverty level;
5. The total number of scholarship recipients
and the average scholarship dollar amount by each county within which any
scholarship recipient resides;
6.
The average scholarship dollar amount by adjusted gross income category as
provided in subparagraph (c)4. of this paragraph. For scholarships awarded in a
particular calendar year, the SSO shall use that calendar year's federal
poverty level. The SSO shall consider the number of persons in the scholarship
recipient's family when making the determination under subparagraph (c)4. of
this paragraph;
7. A list of donors
(which includes each donor's name and address), including the dollar value of
each donation and the dollar value of each preapproved qualified education
expense credit;
8. A copy of the
last audit report as required under subparagraph (4)(c); and
9. The amount of the fees or assessments
retained by the SSO during the calendar year.
(d) The Department of Revenue shall post on
its website the information received from each SSO under subparagraphs (c)1.
through (c)6. and (c)8. of this paragraph, except for any confidential taxpayer
information received pursuant to subparagraph (c)8. of this paragraph and
paragraph (4) of this regulation.
(7)
Examples of the Timing of
Reports.
(a) An SSO's first year begins
on January 1, 2023, and ends on December 31, 2023. By January 12, 2024, the SSO
must submit the required calendar year report for the calendar year that ended
December 31, 2023. No audit report will need to be submitted for this first
year since the due date for completing the audit report falls after the
deadline of January 12, 2024. The SSO must complete the audit by April 29, 2024
and submit the audit report and signed declaration within sixty days of
completion of the audit. The audit report submitted on or before January 12,
2025, will include the results of the audit for the year ending December 31,
2023.
(b) An SSO's first fiscal
year begins on May 1, 2023, and ends on April 30, 2024. By January 12, 2024,
the SSO must submit the required calendar year report for the calendar year
that ended December 31, 2023. No audit report will need to be submitted for
this first year since the due date for completing the audit report falls after
the deadline of January 12, 2024. The SSO must complete the audit by August 28,
2024 and submit the audit report and signed declaration within sixty days of
completion of the audit. The audit report submitted on or before January 12,
2025, will include the results of the audit for the fiscal year ending April
30, 2024.
(c) An SSO's first fiscal
year begins on December 1, 2023, and ends on November 30, 2024. By January 12,
2024, the SSO must submit the required calendar year report for the calendar
year that ended December 31, 2023. No audit report will need to be submitted
for this first year since the due date for completing the audit report falls
after the deadline of January 12, 2024. By January 12, 2025, they must submit
the required calendar year report for the calendar year that ended December 31,
2024. No audit report will need to be submitted for this second year since the
due date for completing the audit report falls after the deadline of January
12, 2025. The SSO must complete the audit by March 30, 2025 and submit the
audit report and signed declaration within sixty days of completion of the
audit. The audit report submitted on or before January 12, 2026, will include
the results of the audit for the fiscal year ending November 30,
2024.
(8)
Failure
of the Audit Report to Verify or Failure to Submit the Audit Report as Required
under O.C.G.A. §
20-2A-2. Notwithstanding
O.C.G.A. §§
20-2A-7,
48-2-15,
48-7-60,
48-7-61 and paragraph (9) of this
regulation, if the audit report submitted by the SSO fails to verify: that the
SSO obligated its annual revenue received from donations for scholarships or
tuition grants, including any interest earned on deposits and investments of
such funds, as required under O.C.G.A. §
20-2A-2; that obligated revenues
were designated for specific student recipients within the time frame required
under O.C.G.A. §
20-2A-2; and that all obligated
and designated revenue distributed to a qualified school or program for the
funding of multiyear scholarships or tuition grants complied with this
regulation; then the Department shall post on its website the details of such
failure to verify. If the audit report is not submitted by the required time,
the SSO shall be deemed to have failed all three requirements. Until the
noncompliant SSO submits an amended audit (or the required audit report in the
case of a failure to submit the audit report by the required time), which to
the satisfaction of the Department contains the verifications required under
O.C.G.A. §
20-2A-2, the Department shall not
preapprove any contributions to the noncompliant SSO.
(9)
Failure to Report and
Confidentiality. Any SSO that does not submit the audit report or
calendar year report as required under this regulation or receives a qualified
opinion or a disclaimer on their audit report from an independent certified
public accountant or otherwise fails to comply with the requirements of Chapter
2A of Title 20 shall be given written notice of their failure and shall have
ninety days from receipt of such notice to correct all deficiencies.
(a) If the SSO fails to correct all
deficiencies within ninety days of receipt of notice from the Department, such
SSO shall:
1. Be immediately removed from the
Department of Education's list of approved SSOs.
2. Be required to cease all operations as an
SSO and transfer all scholarship account funds to a properly operating SSO
within thirty calendar days of receipt of notice from the Department of removal
from the approved list; and
3. Have
all applications for preapproval of tax credits under O.C.G.A. §
48-7-29.16 rejected by the
Department on or after the date that the Department of Education removes the
SSO from its list of approved SSOs.
(b) Except for the audit report information
posted under subparagraph (d) of paragraph (6), information reported under
subparagraphs (c)1. through (c)6. of paragraph (6) of this regulation, and
details of any failure to report and verify under paragraph (8) of this
regulation, all information or reports provided by SSOs to the Department shall
be confidential taxpayer information, governed by O.C.G.A. §§
48-2-15,
48-7-60, and
48-7-61.
(10)
Credit Limitations for Individuals
and Corporations. The amount of qualified education expense credit
granted to a taxpayer shall not exceed:
(a)
For an individual taxpayer, except as otherwise provided in this paragraph, the
credit is limited to the lesser of the actual amount expended or the dollar
amount provided in O.C.G.A. §
48-7-29.16.
(b) For an individual taxpayer filing a
married filing separate return, the credit is limited to the lesser of the
actual amount expended or $2,500.00 per tax year.
(c) 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 $25,000 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 of a partnership. In
determining such Georgia income, the shareholder, partner, or member shall
exclude any income that was subtracted on their individual 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 $25,000; the individual taxpayer
decides which pass-through entities to include when computing Georgia income
for purposes of the qualified education expense credit. All Georgia income,
loss, and expense from the taxpayer's selected pass-through entities will be
combined to determine Georgia income for purposes of the qualified education
expense 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(s) chooses to be
preapproved pursuant to this subparagraph, for all purposes of claiming the
credit, they shall be subject to the provisions of this subparagraph and shall
not be entitled to claim any other amounts provided in O.C.G.A. §
48-7-29.16 and this regulation. 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 education expense credit for
calendar year 2023 by submitting Form IT-QEE-TP1. On Form IT-QEE-TP1, Taxpayer
estimates that Taxpayer's Georgia income from A, Inc. is $300,000, and that
Taxpayer's share of Georgia income from BC Company is $150,000. Taxpayer
chooses not to include any income from XYZ Company when estimating Georgia
income for purposes of the qualified education expense credit; therefore, the
Department preapproves Taxpayer for $25,000 qualified education expense credit
(since $25,000 is less than $25,875 (5.75% of $450,000)). The applicable
marginal tax rate for 2023 is 5.75%. Taxpayer makes a $25,000 donation to the
SSO within sixty 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 $100,000 and A, Inc.'s actual
Georgia income is $100,000. Taxpayer's actual share of Georgia income from BC
Company is $100,000 and Taxpayer received a guaranteed payment from BC Company
of $45,000. Taxpayer's actual share of Georgia income from XYZ Company is
$5,000 (Taxpayer can choose to include this company even though it was not
considered at the time of preapproval). Taxpayer can only claim $20,125
qualified education expense credit (which is 5.75% of the $350,000 actual
income from Taxpayer's selected pass-through entities), and the extra $4,875
cannot be claimed by Taxpayer and cannot be carried forward. Any amount of the
$20,125 qualified education expense credit claimed but not used on the
taxpayer's 2023 Georgia income tax return shall be allowed to be carried
forward to apply to Taxpayer's succeeding five years' tax liability.
(d) For a corporate 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 is limited to
the lesser of the actual amount expended or 75 percent of the corporation's,
fiduciary's, electing S corporation's, or electing partnership's income tax
liability. S corporations and partnerships that elect to pay taxes at the
entity level cannot pass the credit through to their shareholders or partners.
Fiduciary entities cannot pass the credit through to their beneficiaries.
1. Example: Taxpayer, a Corporation, requests
preapproval for the qualified education expense credit for calendar year 2023
by submitting Form IT-QEE-TP1. On Form IT-QEE-TP1, Taxpayer estimates its
income tax liability for the 2023 tax year to be $100,000; therefore, the
Department preapproves Taxpayer for $75,000 qualified education expense credit
for calendar year 2023. Taxpayer makes a $75,000 donation to the SSO within
sixty 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 education expense credit (which is 75% of its actual income tax
liability for tax year 2023), and the extra $15,000 cannot be claimed by
Taxpayer and cannot be carried forward. Any amount of the $60,000 qualified
education expense 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
education expense credit for calendar year 2023 by submitting Form IT-QEE-TP1.
On Form IT-QEE-TP1, Taxpayer estimates its income tax liability for the 2023
tax year to be $100,000; therefore, the Department preapproves Taxpayer for
$75,000 qualified education expense credit for calendar year 2023. Taxpayer
makes a $75,000 donation to the SSO within sixty 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 education expense credit
(which is 75% of its actual income tax liability for tax year 2023), and the
extra $15,000 cannot be claimed by Taxpayer and cannot be carried forward. Any
amount of the $60,000 qualified education expense 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.
(e) Except
as provided in subparagraph (10)(d) 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 (10)(c) 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 student scholarship organization
so that the preapproval, claiming, and reporting forms can be filed in the name
of its members, shareholders, or partners.
(11)
Credit and Credit Limitations
Specific to Business Enterprises. The amount of qualified education
expense credit granted to a business enterprise against its gross premium tax
liability owed pursuant to O.C.G.A. §
33-8-4 is limited to the lesser of
the actual amount expended or 75 percent of the business enterprise's gross
premium tax liability. Such credit shall not exceed one million
dollars.
(12)
Credit
Cap. In no event shall the total amount of tax credits allowed under
O.C.G.A. §
48-7-29.16 exceed:
(a) One hundred million dollars per year for
calendar years beginning on or after January 1, 2019, and ending on or before
December 31, 2022; and
(b) One
hundred twenty million dollars per year for calendar years beginning on or
after January 1, 2023.
(c) In no
event shall the aggregate amount of tax credits allowed under this paragraph to
all business enterprises for gross premium tax liability owed exceed six
million dollars.
(13)
Reporting the Availability of the Credit. The Department shall
post on its website the current amount of qualified education expense credits
available.
(14)
Preapproval
of the Contribution.
(a) The taxpayer
must electronically submit Form IT-QEE-TP1 through the Georgia Tax Center to
request preapproval of the qualified education expense credit from the
Department of Revenue. The Department will not preapprove any qualified
education expense credit where the Form IT-QEE-TP1 is submitted or filed in any
other manner. Each SSO shall be registered with the Department to facilitate
the web-based preapproval process for Form IT-QEE-TP1.
(b) The contributor should not submit Form
IT-QEE-TP1 to the Department of Revenue until the contributor's recipient SSO
is listed on the Department of Education's website. If the contributor's
recipient SSO is not listed on the website at the time that the Department of
Revenue attempts to verify the SSO's listing, the Department of Revenue shall
deny the request. If at a later date the contributor's recipient SSO becomes
listed, it will be necessary for a new Form IT-QEE-TP1 to be submitted by the
contributor to the Department of Revenue.
(c) The electronic Form "IT-QEE-TP1" shall
include the following information:
1. The name
of the SSO listed on the Department of Education's website to which the
contribution will be made. The SSO should be listed on the Department of
Education's website before the Form "IT-QEE-TP1" is filed with the Department
of Revenue;
2. The taxpayer
identification number of the SSO to which the contribution will be
made;
3. The name, address and
taxpayer identification number of the contributor;
4. The type of taxpayer;
5. If the contributor is an individual, the
filing status;
6. If the
contributor is an individual filing a joint return, the name and identification
number of the joint filer;
7. The
intended contribution amount;
8. If
the contributor is a corporation, fiduciary, electing S corporation, or
electing partnership, 75% of the estimated income tax liability the
corporation, fiduciary, electing S corporation, or electing partnership expects
for the tax year of the corporation, fiduciary, S corporation, or partnership
in which the contribution will be made;
9. If the contributor is a business
enterprise requesting preapproval for credit against its gross premium tax
liability, 75% of the estimated gross premium tax liability the business
enterprise expects for the tax year of the business enterprise in which the
contribution will be made;
10. Tax
year end of the contributor;
11.
Calendar year in which the contribution will be made;
12. Any other information the Commissioner of
the Department of Revenue may require; and
13. Certification that all information
contained on the Form "IT-QEE-TP1" is true to his/her best knowledge and belief
and is submitted for the purpose of obtaining preapproval from the
Commissioner.
(d) The
qualified education expense credit shall be allowed on a first-come,
first-served basis. The date the Form IT-QEE-TP1 is electronically submitted
shall be used to determine such first-come, first-served basis.
(e) The Department will notify each taxpayer
and the taxpayer's selected SSO of the tax credits preapproved and allocated to
such taxpayer within thirty days from the date the Form IT-QEE-TP1 was
received.
(f) On the day any Form
IT-QEE-TP1 is received for a calendar year that causes the calendar year limit
in paragraph (12) of this regulation to be reached, the remaining tax credits
shall be allocated among the applicants who submitted the Form IT-QEE-TP1 on
the day the calendar year limit was exceeded on a pro rata basis based upon the
amounts otherwise allowed by O.C.G.A. §
48-7-29.16 and this regulation.
Only credit amounts on Form IT-QEE-TP1(s) received on the day the calendar year
limit was exceeded shall be allocated on a pro rata basis.
(g) The contribution must be made by the
taxpayer within sixty days of the date of the preapproval notice received from
the Department and within the calendar year in which it was
preapproved.
(h) In the event it is
determined that the contributor has not met all the requirements of O.C.G.A.
§
48-7-29.16, then the amount of the
qualified education expense credit shall not be preapproved or the preapproved
qualified education expense credit shall be retroactively denied. With respect
to such denied credit, tax, interest, and penalties shall be due if the
qualified education expense credit has already been claimed.
(i) Notwithstanding any laws to the contrary,
the Department shall not take any adverse action against donors to SSOs if the
Commissioner preapproved a donation for a tax credit prior to the date the SSO
is removed from the Department of Education list pursuant to O.C.G.A. §
20-2A-7, and all such donations
shall remain as preapproved tax credits subject only to the donor's compliance
with O.C.G.A. §
48-7-29.16(f)(3).
(j) Once the calendar year limit is reached
for a calendar year, taxpayers shall no longer be eligible for a credit
pursuant to O.C.G.A. §
48-7-29.16 for such calendar year.
If any Form IT-QEE-TP1 is received after the calendar year limit has been
reached, then it shall be denied and not be reconsidered for preapproval at any
later date.
(15)
Letter of Confirmation. Form IT-QEE-SSO1 shall be provided by the
SSO to the taxpayer to confirm the contribution.
(16)
Claiming the Credit. A
taxpayer claiming the qualified education expense credit, unless indicated
otherwise by the Commissioner, must submit Form IT-QEE-TP2 with the taxpayer's
Georgia tax return when the qualified education expense credit is claimed. A
software program's Form IT-QEE-TP2 that is electronically filed with the
Georgia income tax return in the manner specified by the Department satisfies
this requirement.
(a) A business enterprise
claiming the qualified education expense credit against its gross premium tax
liability must claim the credit in the manner required by the Office of
Commissioner of Insurance and Safety Fire.
(17)
E-filing Attachment
Requirements. If a taxpayer claiming the credit electronically files
their tax return, the Form IT-QEE-SSO1 shall be required to be attached to the
return only if the Internal Revenue Service allows such attachments when the
data is transmitted to the Department. In the event the taxpayer files an
electronic return and such information is not attached because the Internal
Revenue Service does not, at the time of such electronic filing, allow
electronic attachments to the Georgia return, such information shall be
maintained by the taxpayer and made available upon request by the
Commissioner.
(18)
Carry
Forward. Any credit which is claimed but not used in a taxable year
shall be allowed to be carried forward to apply to the taxpayer's succeeding
five years' tax liability. However, any amount in excess of the credit amount
limits in paragraphs (10) and (11) of this regulation shall not be eligible for
carryforward to the taxpayer's succeeding years' tax liability nor shall such
excess amount be claimed by or reallocated to any other taxpayer.
(19)
Taxpayer Must Add Back Portion of
Federal Deduction on State Return if Taxpayer Takes State Credit.
O.C.G.A. §
48-7-29.16(h)(1)
provides that no qualified education expense credit shall be allowed under
O.C.G.A. §
48-7-29.16 with respect to any
amount deducted from taxable net income by the taxpayer as a charitable
contribution to a bona fide charitable organization qualified under Section
501(c)(3) of the Internal
Revenue Code. If the taxpayer is allowed the state income tax deduction in
place of the charitable contribution deduction as allowed by the Internal
Revenue Service, for purposes of this paragraph such deduction shall be
considered a charitable contribution to the extent such deduction is allowed
federally. Accordingly, the taxpayer must add back to Georgia taxable income
that part of any federal deduction taken on a federal return for which a
Georgia qualified education expense credit is allowed under O.C.G.A. §
48-7-29.16.
(a) If a taxpayer's itemized deductions are
limited federally (and therefore limited for Georgia purposes) because their
Federal Adjusted Gross Income exceeds a certain amount, the taxpayer is only
required to add back to Georgia taxable income that portion of the federal
charitable deduction that was actually deducted pursuant to the following
formula. The federal charitable deduction that must be added back to Georgia
taxable income shall be the amount of the federal charitable contribution
relating to the qualified education expense credit multiplied by the following
ratio. The numerator is the amount of the itemized deductions subject to
limitation and allowed as itemized deductions after the limitation is applied.
The denominator is the total itemized deductions that are subject to limitation
before the limitation is applied.
1. For
example. A taxpayer has a $2,500 charitable contribution relating to the
qualified education expense credit and has property taxes of $1,500 both of
which are subject to limitation. The taxpayer also has mortgage interest
expense of $10,000 (which is not limited). Accordingly, the taxpayer's total
itemized deductions before limitation are $14,000. After applying the federal
limitation, the taxpayer is allowed $13,000 in itemized deductions. As such
only $3,000 ($13,000 less the $10,000 mortgage interest expense which is not
limited) of the original $4,000 charitable deduction and property taxes are
allowed to be deducted. Applying the ratio from the subparagraph above, the
taxpayer must add back $1,875 of the charitable contribution to their Georgia
taxable income ($2,500) X ($3,000 / $4,000)).
(20)
Scholarships.
(a) For all scholarships, including
multi-year scholarships, the SSO shall either:
1. Deliver the scholarship check directly to
the qualified school or program selected as a result of the private choice of
the parent or guardian of the child to whom the scholarship was awarded. The
parent or guardian shall come to such qualified school or program and
restrictively endorse the check to such qualified school or program;
or
2. Cause such scholarship to be
restrictively endorsed electronically in a secure manner by the parent or
guardian to the school or program. The applicable financial institution
providing for the secure electronic endorsement and transfer of funds shall
provide a signed statement to the SSO attesting to the fact that the electronic
restrictive endorsement has the same legal effect as a physically endorsed
check.
(b) The qualified
school or program shall not be allowed to endorse the scholarship award over to
a different qualified school or program.
(c) In the event an SSO awards a multi-year
scholarship, the SSO may disburse the entire scholarship at the time the
scholarship is awarded.
(d) For all
scholarships, including multi-year scholarships, the qualified school or
program shall separately account for each scholarship awarded. Additionally,
the income earned on the portion of the scholarship which has not yet been
applied to tuition shall be separately accounted for and used to provide
tuition for such eligible student. The scholarship shall be applied to tuition
on the same due dates as the general population of students of such
school.
(e) In making a multi-year
distribution to a qualified school or program, the SSO shall require that if
the designated student becomes ineligible or for any other reason the qualified
school or program elects not to continue disbursement of the multi-year
scholarship or tuition grant to the designated student for all the projected
years, then the qualified school or program shall immediately return the
remaining funds and the income earned on such portion to the SSO. Upon receipt
of such returned scholarship, such SSO shall allocate and obligate such money
for scholarships or tuition grants on or before the end of the following
calendar year; 100% of such returned money (including the remaining funds and
the income earned on such portion) shall be allocated and obligated. Once a
qualified school or program receives such returned money and such income earned
on such returned money, 100% of such amounts received shall be used for an
eligible student.
1. Once the student
scholarship organization designates obligated revenues for specific student
recipients, in the case of multiyear scholarships or tuition grants for which
the student scholarship organization distributes the obligated and designated
revenues to a qualified school or program annually rather than the entire
amount, if the designated student becomes ineligible or for any other reason
the student scholarship organization elects not to continue disbursement for
all years, then the student scholarship organization shall designate any
remaining previously obligated revenues for a new specific student recipient on
or before the end of the following calendar year.
(21)
Designation of
Contributions. The tax credit shall not be allowed if the taxpayer
directly or indirectly designates the taxpayer's qualified education expense
for the direct benefit of any particular individual, whether or not such
individual is a dependent of the taxpayer.
(a)
In soliciting contributions, an SSO shall not represent, or direct a qualified
school or program to represent, that in exchange for contributing to the SSO, a
taxpayer shall receive a scholarship for the direct benefit of any particular
individual, whether or not such individual is a dependent of the taxpayer.
Their status as an SSO shall be revoked for any such organization which
violates this subparagraph and as such the SSO shall be removed from the
Department of Education's list of approved SSOs. The Department shall not
preapprove any contributions to such SSO.
(22)
Effective Date. This rule
is applicable to years beginning on or after January 1, 2023. Years beginning
before January 1, 2023 will be governed by the regulations of Chapter 560-7 as
they existed before January 1, 2023 in the same manner as if the amendments
thereto set forth in this regulation had not been promulgated.
Notes
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