In a recently released letter ruling (LR IT-2016-01), the Georgia Department of Revenue (“Department”) informed a taxpayer that it cannot use the Quality Jobs Tax Credits (QJTCs) carryforward of an acquired business. The Department explained that unlike other Georgia income tax credits, the QJTC statute, O.C.G.A. § 48-7-40.17, does not contain a provision that allows unused income tax credits to be transferred or continued by a transferee.
The taxpayer had acquired a business that had applied and qualified for the Georgia QJTC and the Georgia Jobs Tax Credits (JTCs). Because all of the taxpayer’s payroll-related activates were performed by a sister company, the taxpayer requested a ruling regarding the credits.
Although the QJTCs created by the acquired business did not transfer, the fact that the taxpayer used a related entity for payroll-related activities did not prevent the taxpayer from taking advantage of any newly created QJTCs. Further, the taxpayer was allowed to use the acquired business’s JTC carryforward, provided the taxpayer maintained the jobs and met all other applicable requirements in law and regulation.