Georgia legislature enacts reduced credit carryforward limitations

In detail 

The following significant credit programs, which previously had a credit carryforward period of 10 years, have now been reduced to a period of five years:  

• Research Tax Credit 
• Job Tax Credit 
• Retraining Tax Credit 
• Investment Tax Credit 
• Port Activity Tax Credit 

The following significant credit programs, which previously had a credit carryforward period of five years, have now been reduced to a period of three years: 

• Film Tax Credit 
• Postproduction Tax Credit 
• Rural Zone Tax Credit 
• ax Credit for Depository Financial Institutions 

Observation: In all, under the new Act, 37 credits had their carryforward period reduced. However, based on our experience, the most significant and commonly claimed tax credit programs have been listed above. 

Observation: Taxpayers establishing the Job Tax Credit, Research Tax Credit, and Film Tax Credit may have an option to elect to use these credits to offset payroll withholding tax. This election potentially could alleviate the burden of the reduced credit carryforward period for certain taxpayers. It is important to note that this election must be made within 30 days of filing the original return. 

Note that there may be special circumstances surrounding claiming the withholding tax benefit.  For example, in the case of the Job Tax Credit, the business enterprise must be located in a specially designated zone (such as one of the 40 most economically distressed counties), an Opportunity Zone, a Military Zone, or a Less Developed Census Tract.  

Additionally, the Film Tax Credit can be transferred or sold to a third party if the new credit carryforward limitation presents a utilization issue for the taxpayer.