560-7-8-.33 Payment and Reporting of Withholding Tax.

(1) Purpose. The purpose of this regulation is to provide guidance concerning the payment and reporting of withholding tax required under O.C.G.A. §§ 48-2-32, 48-7-101, 48-7- 103, 48-7-105, and 48-7-106, and the withholding penalties imposed by subsection (c) of O.C.G.A. § 48-7-126. (2) Definitions. (a) "Annual payer" means an employer who withholds or is required to withhold $800.00 or less in the aggregate for the lookback period. (b) "Business day" means every day except Saturday, Sunday, or any holiday observed by the Federal Reserve Bank or the State of Georgia. (c) "EFT" means the payment by electronic funds transfer as provided and required by Rule 560-3-2-.26. (d) "Lookback period" means the twelve month period ending June 30th of the preceding calendar year. For example, the lookback period for calendar year 2016 is the period from July 1, 2014 through June 30, 2015. (e) "Monthly payer" means an employer who withholds or is required to withhold $50,000 or less in the aggregate for the lookback period and who is not an annual payer or a quarterly payer. (f) "Payday" means the date on the employee's check or the first day the employee is able to tender the check for cash or other consideration, whichever is earlier. (g) "Quarterly payer" means an employer who withholds or is required to withhold $200.00 or less per month during the lookback period and who is not an annual payer. (h) "Semi-weekly payer" means an employer who withholds or is required to withhold more than $50,000 in the aggregate during the lookback period. (i) "Withholding tax" means the tax withheld or required to be withheld from an employee's wages pursuant to O.C.G.A. § 48-7-101. (3) Payment of Withholding Tax. (a) Determination of Taxpayer Status. An employer will be deemed a semi-weekly, monthly, quarterly, or annual payer based upon an annual calculation of the employer's aggregate amount of withholding tax reported for the lookback period. 1. In determining the withholding tax amount for the lookback period, the Department shall determine the total amount of withholding tax liabilities reported or required to be reported per the taxpayer's withholding tax quarterly returns (Forms G-7) for the four quarters constituting the lookback period. 2. Because an employer may have multiple Georgia withholding tax identification numbers, an employer must include all withholding tax liabilities incurred under the same federal employer identification number (FEIN) when calculating its aggregate amount of withholding tax liabilities. For example, a business may have five locations and each location remits and reports withholding tax under a different state withholding tax number yet all locations operate under the same FEIN. The calculation of the withholding tax for the lookback period must include the withholding tax of all five business locations. 3. An employer who does not possess a withholding tax history in Georgia will be required to file on a monthly basis until the employer has established a withholding tax history. 4. In determining the total amount of withholding tax for each quarter in the lookback period, the Department will not include adjustments made on a corrected Form G-7 quarterly return filed after the return's due date. However, adjustments made on line 2 of Form G-7 filed by the return's due date will be taken into consideration. (b) Semi-weekly payer 1. Unless a payer falls under subparagraph (3)(g) of this regulation, a semi- weekly payer for a calendar year must remit withholding tax via EFT on either the Wednesday or Friday following the payday as discussed below. (i) For paydays occurring on a Wednesday, Thursday, or Friday the withholding tax is required to be remitted via EFT on or before the following Wednesday. If the following Wednesday is not a business day, the tax must be remitted on or before the next business day thereafter. (ii) For paydays occurring on a Saturday, Sunday, Monday, or Tuesday the withholding tax is required to be remitted via EFT on or before the following Friday. If the following Friday is not a business day, the tax must be remitted on or before the next business day thereafter. 2. All semi-weekly payers must remit withholding tax via EFT. See O.C.G.A. § 48-2-32 and Rule 560-3-2-.26 for additional information and requirements. 3. Payroll checks issued between scheduled paydays will be deemed to have been issued for the next scheduled payday. For example, a company normally pays its employees on the 15th and last day of the month. However, an employee is issued a supplemental check on the 6th of the month due to a miscalculation of his earnings. For withholding tax purposes, the supplemental check is deemed to have been issued on the 15th. The related withholding tax from the supplemental check shall be sent via EFT along with the withholding tax related to the payday scheduled for the 15th of the month. 4. Employers with two or more payroll periods (i) An employer with two or more payroll periods in which the paydays fall on different dates shall remit the related withholding tax for each payday on the respective payment due dates pursuant to subparagraph (3)(b)1. of this regulation. (ii) Example. An employer pays its hourly employees every Friday and its salaried employees on the 15th and last day of the month. (I) April 15th falls on a Friday; therefore, the withholding tax for the salaried employees will be remitted the following Wednesday, April 20th along with the withholding tax related to the hourly employees. In this case, the employer has a single remittance obligation for both paydays. (II) April 15th falls on a Tuesday; therefore, the withholding tax for the salaried employees will be remitted the following Friday, April 18th. The withholding tax related to the hourly employees' Friday, April 11th payday will be remitted the following Wednesday, April 16th. In this case, the employer has two remittance obligations for two separate paydays. (c) Monthly payer. An employer that is determined to be a monthly payer must remit withholding tax with respect to payments made during a calendar month on or before the 15th day of the following month. (d) Quarterly payer. An employer that is determined to be a quarterly payer must remit withholding tax with respect to payments made during the calendar quarter on or before the last day of the month following the end of the calendar quarter. (e) Annual payer. An employer that is determined to be an annual payer must remit withholding tax with respect to payments made during the calendar year on or before the last day of January of the following year in which the tax was required to be withheld. (f) Monthly, quarterly, and annual payers shall submit their payments via EFT if required to do so by regulation 560-7-3-.26. (g) One-Day Rule 1. Notwithstanding subparagraphs (b) through (f) of this paragraph, withholding tax totaling more than $100,000 for the payday must be remitted via EFT by the next business day after the payday. For example, an employer is required to withhold $120,000 in tax related to the payroll checks dated Monday, May 15th. Therefore, the employer must remit the withheld tax to the Department via EFT on Tuesday, May 16th. (4) Reporting of Withholding Tax. (a) Semi-weekly Payer 1. Every employer who qualifies as a semi-weekly payer shall file a "G- 7/SchB Quarterly Return for Semi-Weekly Payer" on or before the last day of the month following the end of the calendar quarter in which the withholding tax was required. 2. The return shall reflect the withholding tax liability for the calendar quarter less credit for any withholding tax payments made pursuant to subparagraph (3)(b) of this regulation during the calendar quarter. Any outstanding withholding tax reflected on the return shall be remitted via EFT on or before the due date of the return. Such amount shall be subject to the penalties provided in paragraph (6) as well as interest. (b) Monthly Payers 1. Every employer who qualifies as a monthly payer shall file a "G-7 Quarterly Return for Monthly Payer" on or before the last day of the month following the end of the calendar quarter in which the withholding tax was required. 2. The return shall be accompanied by payment of the amount of any tax due for such calendar quarter less credit for any withholding tax payments required under subparagraph (3)(c) of this regulation during the calendar quarter. Such amount shall be subject to the penalties provided in paragraph (6) as well as interest. (c) Quarterly Payers 1. Every employer who qualifies as a quarterly payer shall file a "G-7 Quarterly Return for Quarterly Payer" on or before the last day of the month following the end of the calendar quarter in which the withholding tax was required. 2. The return shall be accompanied by payment of the amount of tax due for such calendar quarter less credit for any withholding tax payments made under subparagraph (3)(d) of this regulation during the calendar quarter. (d) Annual Payers 1. Every employer who qualifies as an annual payer shall file the fourth quarter "G-7 Quarterly Return for Quarterly Payer" on or before January 31st of the following year in which the withholding was required. 2. The return shall be accompanied by payment of the amount of tax due for the year less credit for any withholding tax payments made under subparagraph (3)(e) of this regulation during the calendar year. (e) Withholding Tax Statements 1. For calendar years beginning on or before December 18, 2015, on or before February 28th of each calendar year, an employer or other withholding taxpayer must file with the Department copies of the previous year's withholding tax statements. 2. The February 28th filing date stated within subparagraph (4)(e)1. shall continue to apply for calendar years beginning after December 18, 2015, with respect to Forms 1099 where Georgia withholding occurred and where such forms are required to be filed for any reason other than to report nonemployee compensation. 3. For calendar years beginning after December 18, 2015, on or before January 31 of each year for the preceding calendar year, an employer or other withholding taxpayer must file with the Department copies of the previous year's Form W-2 withholding tax statements. 4. For calendar years beginning after December 18, 2015, the January 31 filing date stated within subparagraph (4)(e)3. shall also apply with respect to Forms 1099 where Georgia withholding occurred and where such forms are required to be filed to report nonemployee compensation. 5. The Form G-1003 return must accompany the withholding tax statements. The Department may require a different G-1003 return for different types of withholding tax statements. 6. In most cases, the Department will only grant a 30 day extension to file Form G-1003 and all associated withholding tax statements if the Internal Revenue Service issues an extension. 7. Every employer required by the United States Social Security Administration or the Internal Revenue Service to submit withholding tax statements electronically shall similarly submit the Form G-1003 return and all associated withholding tax statements electronically to the Department. Additionally, taxpayers that remit withholding tax payments by electronic funds transfer, whether on a mandatory or voluntary basis, must file the Form G-1003 return and all associated withholding tax statements electronically. 8. Withholding tax statements include Forms 1099, W-2, G2-A, etc. Forms 1099 are only required to be submitted if Georgia income tax is withheld (except 1099-K). (f) Termination of business or change in business status. 1. An employer must report, only by using the Department's Georgia Tax Center, the termination of the business or change in business status relating to ownership, address, entity structure, or any other significant change relating to withholding tax responsibilities. 2. An employer is required to file its final withholding tax form and pay all withholding tax due by the earlier of the due date or 30 days after the close of the business or change in business entity or ownership. 3. Copies of the withholding tax statements must be filed along with the Form G-1003 return within 30 days after the close of the business or change in business entity or ownership. (g) Withholding tax statement penalties. (i) If a withholding tax statement is not furnished to a person by the required date, the person required to furnish such statement shall be assessed a late penalty in the amount of: (I) Ten dollars per statement furnished up to 30 calendar days after the date such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $50,000.00; (II) Twenty dollars per statement furnished at least 31 calendar days, but not more than 210 calendar days after the date such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $100,000.00; or (III) Fifty dollars per statement furnished 211 calendar days or more after such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $200,000.00. (ii) If a withholding tax statement is not filed with the Department by the required date, the person required to file such statement shall be assessed a late penalty in the amount of: (I) Ten dollars per statement filed up to 30 calendar days after the date such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $50,000.00; (II) Twenty dollars per statement filed at least 31 calendar days, but not more than 210 calendar days after the date such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $100,000.00; or (III) Fifty dollars per statement filed 211 calendar days or more after such statement is due, provided that the total amount imposed on a person pursuant to this subparagraph shall not exceed $200,000.00. (iii) A person may be subject to more than one category of the penalties imposed by subparagraphs (4)(g)(i) and (4)(g)(ii). (5) Certification of Software Vendors. At such time that the Department starts its certification program, the electronic filing of withholding returns and withholding tax statements must be completed by utilizing a software vendor that is approved by the Department. (6) Withholding Penalties. The withholding penalties imposed by subsection (c) of O.C.G.A. § 48-7-126 shall be applied as follows (see subparagraph (6)(e) for examples): (a) The addition of the $25 late penalty assessed on a withholding period may only occur once per quarter. Such $25 penalty shall be added to the first instance of either the late filing penalty or the late payment penalty. (b) Five (5) percent late filing penalty will be assessed starting on the first business day after the due date of the return, and then five (5) percent will be assessed on the first day of each month thereafter. Any payments or credits as well as amounts on the adjustment lines on the Forms G-7 will for purposes of the late filing penalty calculation be ignored; this will be calculated using the tax withheld before application of any payments or credits and any adjustments listed on the Forms G-7. (c) For all but quarterly and annual payers, late payment penalty will be assessed based on five (5) percent of the separate months the tax is due for the period of time prior to the return due date. Thereafter, it will be assessed at five (5) percent of the aggregate of the unpaid balance on the 16th of the month. For quarterly and annual payers it will be assessed at five (5) percent of the unpaid balance on the 1st of each month after the return due date. (d) If at any time the amount of the late filing penalty plus the late payment penalty charged would exceed $25 plus twenty-five (25) percent of the total tax due for the period, the amount necessary to reach this threshold will be assessed and no further late payment penalty or late filing penalty will be assessed. Any payments or credits as well as amounts on the adjustment lines on the Forms G-7 will for purposes of this threshold be ignored; this will be calculated using the tax withheld before application of any payments or credits and any adjustments listed on the Forms G-7. (e) Examples: 1. Example 1: Monthly Payer Owes: $5,000 January $6,000 February $7,000 March Filing Due: 4/30/2009 Actual Filing: 5/10/2009 Pays in Full: 5/10/2009 Late Payment Penalties: April 16th, 2009: $25 + ($5,000 * 15%)=$775 ($6,000 * 10%)=$600 ($7,000 * 5%)=$350 Late Filing Penalty: May 1st, 2009: ($18,000 * 5%)=$900 Total Penalty: $2,625 2. Example 2. Monthly Payer Owes: $50,000 January $75,000 February $75,000 March Pays in full on time. Filing Due: 4/30/2009 Actual Filing: 6/15/2009 Late Payment Penalties: None. Late Filing Penalty: May 1st, 2009 $25 + ($200,000 * 5%)=$10,025 June 1st, 2009 ($200,000 * 5%)=$10,000 Total Penalty: $20,025 3. Example 3. Monthly Payer Owes: $50,000 January $75,000 February $75,000 March Pays $100,000 February 20th $50,000 March 20th Filing Due: 4/30/2009 Actual Filing: 7/15/2009 Late Payment Penalties prior to Filing Due Date: Feb 16th, 2009: $25 + 5% of $50,000 from January=$2,525 Feb 20th payment of $100,000 pays the $50,000 January amount due and $50,000 of February amount due which leaves $25,000 owed from February. Mar 16th, 2009: 5% of $25,000 from February=$1,250 Mar 20th payment of $50,000 pays for remainder of the $25,000 owed from February and pays $25,000 of the amount due from March which leaves $50,000 owed from March. Apr 16th, 2009: 5% of $50,000 from March=$2,500 Total Late Payment Penalty before Filing Due Date=$6,275 Penalty after Filing Due Date: Tax Balance Unpaid=$50,000 Maximum Penalty Threshold=$25 + 25% of $200,000=$50,025 Late Filing Penalty May 1st, 2009 ($200,000 * 5%)=$10,000 Late Payment Penalty May 16th, 2009 ($50,000 * 5%)=$2,500 Late Filing Penalty June 1st, 2009 ($200,000 * 5%)=$10,000 Late Payment Penalty June 16th, 2009 ($50,000 * 5%)=$2,500 Late Filing Penalty July 1st, 2009 ($200,000 * 5%)=$10,000 Filed July 15th, Stop Late Filing Penalty Late Payment Penalty July 16th, 2009 ($50,000 * 5%)=$2,500 Late Payment Penalty Aug 16th, 2009 ($50,000 * 5%)=$2,500 Late Payment Penalty Sep 16th, 2009 ($50,000 * 5%)=$2,500 Late Payment Penalty Oct 16th, 2009 ($50,000 * 5%)=$2,500, however reduced to $1,250 due to threshold Threshold Met, Stop All Additional Late Penalty Total Penalty=$50,025 Authority: O.C.G.A. §§ 48-2-12, 48-2-32, 48-7-54, 48-7-101, 48-7-103, 48-7-105, 48-7-106, 48-7-126. History. Original Rule entitled "Payment and Reporting of Income Tax Withheld" adopted. F. June 29, 1972; eff. July 19, 1972. Amended: F. Aug. 13, 1973; eff. Sept. 2, 1973. Repealed: New Rule of same title adopted. F. Dec. 9, 1998; eff. Dec. 29, 1998. Repealed: New Rule entitled "Payment and Reporting of Withholding Tax" adopted. F. Jan. 16, 2004; eff. Feb. 5, 2004. Repealed: New Rule of same title adopted. F. Nov. 24, 2009; eff. Dec. 14, 2009. Amended: F. Nov. 3, 2016; eff. Nov. 23, 2016. Amended: F. Nov. 21, 2019; eff. Dec. 11, 2019. Rule 560-7-8-.34. Withholding on Nonresident Members of Partnerships, S Corporations, and Limited Liability Companies; Composite Return Alternative. (1) Definitions. As used in this regulation, the following terms are defined as follows: (a) Taxable income sourced to this state. The term "taxable income sourced to this state" means the entity's income allocated or apportioned to Georgia pursuant to Code Section 48-7-31 or as otherwise provided by law. The entity's income shall include the sum of the following items: 1. The nonresident member's share of the Georgia separately stated income, guaranteed payments, loss, deduction or expense of the entity; and 2. The nonresident member's share of the Georgia nonseparately stated income, loss, deduction or expense of the entity; (b) Entity. The term "entity" shall mean a Subchapter 'S' corporation, a partnership, or a limited liability company which is treated as a partnership or Subchapter 'S' corporation for Federal income tax purposes and which is required to file a partnership or Subchapter 'S' corporation return. However, the term "entity" does not include a Subchapter 'S' corporation that is treated as a 'C' corporation for Georgia purposes. (c) Nonresident. The term "nonresident" shall mean an individual or fiduciary member who resides outside this state and all other members whose headquarters or principal place of business is located outside this state. Such nonresident determination shall be made on the last day of the tax year of the entity. (d) Individual. The term "individual" shall mean a natural person. (2) Withholding. (a) Withholding Requirements. Withholding is required at the rate of 4 percent with respect to the nonresident member's share of taxable income sourced to this state, unless exempted by this regulation or O.C.G.A. § 48-7-129. The filing of estimated tax payments by the member does not relieve the entity from the responsibility of the withholding requirement. (b) Certain Retirement Accounts. A member which is an individual retirement account as defined by Internal Revenue Code §§ 408(a) and 408(b), a Roth IRA as defined by Internal Revenue Code § 408A, or a qualified employer plan as defined by Internal Revenue Code § 409A(d)(2) is not subject to withholding. On a one time basis, the administrator of such retirement account or plan must certify to the entity in writing using Form NRW-Exemption, that this exception applies. Such certification must be attached to the entity's income tax return each year. (c) Annual Income Less than $1,000.00. An entity is not required to withhold tax for a nonresident member if the aggregate annual nonresident member's share of taxable income sourced to this state is less than $1,000.00. (d) Withholding Under other Provisions of Law, Ordering, etc. The nonresident member's share of taxable income sourced to this state is not subject to withholding under O.C.G.A. § 48-7-129 if such income is subject to withholding under other provisions of Georgia law. The nonresident member's share of taxable income sourced to this state shall not include payments to a member in a capacity other than as a member (e.g., salaries from Subchapter 'S' corporations, rents, or royalties). (e) Exempt Organizations. The nonresident member's share of taxable income sourced to this state of an exempt organization which results in unrelated business taxable income, as defined by Internal Revenue Code § 512, will be subject to withholding. The nonresident member's share of taxable income sourced to this state of an exempt organization that does not result in unrelated business taxable income is not subject to withholding. In such latter case, the exempt organization shall annually certify in writing to the entity using Form NRW-Exemption, that the nonresident member's share of taxable income sourced to this state does not result in unrelated business taxable income. Such certification must be attached to the entity's income tax return each year. (f) Insurance Companies. An insurance company which actually pays a tax to Georgia on its premium income is not subject to Georgia income tax and the withholding requirements under O.C.G.A. § 48-7-129. In this case, the insurance company shall annually certify in writing to the entity using Form NRW- Exemption, that this applies. Such certification must be attached to the entity's income tax return each year. (g) C-Corporation, Individual, or Fiduciary Members. 1. Withholding is not required for the nonresident member's share of taxable income sourced to this state for a C-Corporation, an individual, or a fiduciary member which meets the conditions listed below. On a one time basis and on or before the due date (without extension) for filing the entity's income tax return for the taxable year for which the withholding is required, such member must certify to the entity in writing that this exception applies. Such certification must be attached to the entity's income tax return each year. Such member must: (i) Agree to be subject to personal jurisdiction in this State for all income tax purposes, file returns, and pay all Georgia tax liabilities due, for the current year and future years in which it is a member and the entity owns property in Georgia, does business in Georgia, or otherwise derives income from Georgia sources; and (ii) Will make estimated income tax payments if required. 2. In the event such member certifies to such entity and such member fails to satisfy the requirements of subparagraph (g)1. of this paragraph, then withholding will be due as originally required as if such certification had not been made for the year or years of such failure. 3. Entities except Subchapter 'S' corporations shall provide the certification required by subparagraph (g)1. of this paragraph on Form NRW-Exemption. Subchapter 'S' corporations shall use Form 600S-CA. A Subchapter 'S' corporation that has already obtained the Form 600S-CA for purposes of the Georgia Subchapter 'S' corporation election shall not be required to obtain the form a second time. (h) Partnerships and Limited Liability Companies. See paragraph (4) relating to "Tiered Situations" and paragraph (5) relating to "Exception in Tiered Situations" for additional rules applicable to partnerships and limited liability companies (treated as partnerships for Federal income tax purposes) that are members of entities subject to this regulation. (3) Composite Returns. (a) Alternative to Withholding. In lieu of withholding, the entity may elect to file a composite income tax return for one or all of its nonresident members using Form IT-CR. The filing of the composite return shall constitute the election. Such election shall be irrevocable and must be made by the due date of the composite return (including extensions, if approved). Once the due date has expired, the composite return shall not be amended to include or exclude members. However the return must be amended to exclude members who, pursuant to subparagraph (d) of this paragraph, were not eligible to be included on the composite return (i.e. members having income within Georgia from sources other than the entity). The computation of tax is done by creating a schedule as described in subparagraph (b) of this paragraph. Individuals, corporations, partnerships, limited liability companies, estates, trusts, Qualified Subchapter S Trusts, and Electing Small Business Trusts may be included on the composite return. However, a corporation is still required to file a separate net worth tax return to pay the net worth tax that is due to Georgia. Nonresident members whose aggregate annual share of taxable income sourced to this state is less than $1,000.00 may also be included on the composite return. (b) Creating a Schedule. The entity will create its own schedule following the examples on Form IT-CR showing the name, address, and identification number, and amount of income as provided in subparagraph (c) of this paragraph for each member included in the computation. The schedule must also include the name, address, identification number, and amount of the nonresident member's share of taxable income sourced to this state of any nonresident member not included in the computation of the composite return. (c) Computing the Tax. Using the schedule created pursuant to subparagraph (b) of this paragraph, the members shall compute the tax as indicated in subparagraphs 1. and 2. of this subparagraph. The election of options may be changed annually; however, such election shall not be changed after the filing of the return. The member's income from the entity's business done in Georgia shall be the nonresident member's share of taxable income sourced to this state adjusted as provided in this subparagraph. Deductions will not be allowed on the composite return for items of loss, deduction or expense which are subject to other limitations imposed on computing either Federal taxable income, Federal adjusted gross income, or Georgia taxable income, or are otherwise limited by the Internal Revenue Code or the O.C.G.A., such as charitable contributions, investment interest expense, I.R.C. § 179 expense, casualty losses, capital losses, etc. Also, deductions based on self-employment, self-employed health insurance, Keogh or SEP or other deductions normally allowed in computing Adjusted Gross Income are not allowed on a composite return. 1. The following three options shall be available for individual members. Option 1 and Option 2 are only available for nonresident individual members not having income within Georgia from sources other than the entity: (i) Option 1 - Filing Status. For tax years beginning prior to January 1, 2024, the entity may elect to compute the tax by multiplying the member's income from the entity's business done in Georgia by the applicable tax rate. The "applicable tax rate" shall be that rate provided in O.C.G.A. § 48-7-20 which applies to each individual member based on the individual member's filing status. For tax years beginning on or after January 1, 2024, the entity may elect to compute the tax by multiplying the member's income from the entity's business done in Georgia by the tax rate provided in O.C.G.A. § 48-7-20 regardless of filing status. (ii) Option 2 - Standard Deduction and Dependents. For tax years beginning prior to January 1, 2024, the entity may elect to compute the tax by reducing the member's income from the entity's business done in Georgia by the personal exemption and credit for dependents as provided below and then multiplying such income by the applicable tax rate. The "applicable tax rate" shall be that rate provided in O.C.G.A. § 48-7-20 which applies to each individual member based on the individual member's filing status. Under this option, the member is allowed to take a standard deduction and a personal exemption and credit for dependents; however, the member should apportion these adjustments so that adjustments are allowed only to the extent that they apply to Georgia income. For tax years beginning on or after January 1, 2024, the entity may elect to compute the tax by reducing the member's income from the entity's business done in Georga by the member's standard deduction and credit for dependent and multiplying such income by the tax rate provided in O.C.G.A. § 48-7-20 regardless of filing status. (iii) Option 3 - Highest Marginal Tax Rate. If the above Option 1 and Option 2 are not available for use by the entity in computing the tax due for an individual member who has income within Georgia from sources other than the entity or if the entity otherwise elects for such individual, a composite return may be filed using this third option. In such case the individual member shall be allowed to be included on the composite return provided the highest marginal tax rate provided in O.C.G.A. § 48-7-20 for tax years beginning prior to January 1, 2024 is applied to the member's income from the entity's business done in Georgia to determine the amount of the tax. For tax years beginning on or after January 1, 2024 the specified tax rate provided in O.C.G.A. § 48-7-20 shall be used. Should such individual member be required to otherwise file a Georgia return, then the income that was included using Option 3 shall be excluded from the individual member's return. (iv) For each individual member for whom the entity uses either Option 1 or Option 2 in computing the tax liability, the entity must obtain a signed statement each year from the respective individual member, using Form CR-AFF, verifying that the member does not have income from sources within Georgia other than the entity and verifying the individual member's Georgia filing status. 2. All non-individual members shall apply the tax rate provided in subsection (a) of O.C.G.A. § 48-7-21 to the member's income from the entity's business done in Georgia to determine the amount of tax. (d) Members Excluded from the Composite Return. Any nonresident member excluded from the composite return is subject to the withholding provisions and is required to file a Georgia income tax return, unless otherwise exempted by this regulation or O.C.G.A. § 48-7-129. Likewise, any nonresident member included in the computation of a composite return is not subject to the withholding provisions and is not required to file a Georgia income tax return to report the entity's income. Except as provided in subparagraph (c)(1)(iii) of this paragraph, nonresident members having income within Georgia from sources other than the entity may not be included in the entity's composite return and shall be subject to the withholding tax imposed by O.C.G.A. § 48-7-129, unless otherwise exempted by this regulation or O.C.G.A. § 48-7-129. (e) Composite Return Due Date. The due date of the composite return of a calendar year entity is the same as for a calendar year individual. Extension dates are the same as for individuals. A fiscal year entity should file its return on a fiscal year basis and should file its return by the 15th day of the fourth month after the fiscal year end. Estimated tax payment dates are the same as for individuals. A fiscal year entity shall adjust its estimated payment dates and extension dates as if it is an individual filing a fiscal year return. Form IT-303 (application for extension) should be used if an extension of time to file is needed. Form IT-303 only extends the time to file. Accordingly, any tax that is due should be remitted by the original due date of the composite return on Form IT560C. Tax remitted at the time the IT- CR is due should be remitted along with the payment voucher (Form CR-PV). (f) Amended Composite Returns. Except as prohibited by subparagraph (a) of this paragraph, amended composite returns may be filed during the same periods as individual returns, and may be filed by using the Form IT-CR and checking the amended box. (g) Consent Agreements. When filing a composite return for shareholders, it is not necessary to include copies of the consent agreements required by O.C.G.A. § 48- 7-27(d)(2). However, consent agreements must be attached to the S Corporation return as provided in such code section. (h) Composite Return Net Operating Losses. The following shall apply with regard to net operating losses: 1. A net operating loss computed on a composite return may be carried forward to another composite return year for each member. A net operating loss computed on a composite return may not be carried back. For an individual member, the income for the year or years that the loss is being carried to, must be recomputed using the option (as specified in subparagraph (3)(c)1.) that was used for the loss year before the loss is carried to that year. 2. A net operating loss cannot be carried from a year whereby the member was excluded on the composite return to a year whereby the member is included on the composite return. 3. A net operating loss must be carried forward from a year where the member was included on the composite return to a year the member files the member's own tax return. 4. Any limitations included in the Internal Revenue Code of 1986 on the amount of net operating loss that can be used in a taxable year shall be applied for each member; provided, however, that such limitations, including, but not limited to, the 80 percent limitation, shall be applied to the income computed pursuant to this paragraph. (4) Tiered Situations. Except as provided in paragraph (5), in situations whereby the nonresident member is an entity, or where such nonresident member is owned by subsequent entities, the following shall apply: (a) Withholding is only required by an entity that: 1. Does business in Georgia on its own and not as a result of being a member; or 2. Owns property in Georgia on its own and not as a result of being a member; (b) Any withholding that occurs may be passed through each tier by attaching the G- 2-A, of the entity in the tiered situation that was required to withhold pursuant to subparagraph (4)(a), and providing a schedule which allocates such withholding tax between the members at each tier based upon the profit/loss percentage. Failure to include this documentation will result in the disallowance of the withholding credit. A composite return may be completed at any level. However, if the composite return is not filed by the entity meeting either condition 1. or 2. of subparagraph (a) of this paragraph, withholding is still required by such entity, unless otherwise exempted by this regulation or O.C.G.A. § 48-7-129. Tax withheld at one level can be claimed on a composite return at another level. (c) A member which is an entity or a corporation must include its pro rata share of the entity's gross receipts in its own single factor apportionment formula in determining how much of its income is Georgia income. In determining its income, the member includes its share of the entity's income before the entity apportions and allocates its income. (d) In determining whether withholding is required, only the members that directly own an interest in the entity subject to withholding shall be considered. For example: 1. An entity that is subject to the nonresident withholding requirements has several members. One nonresident member is also a member in several other entities that are subject to the withholding requirements. Each of the entities must withhold on that nonresident member whether or not the total income/loss from all the entities would result in a net loss for that member. A loss from one entity cannot be used to offset the income in another entity for that member. 2. Company A is subject to the nonresident withholding requirements and is in a tiered situation. Company B is a nonresident member of Company A. Company B has nonresident members, of which one is an exempt organization called Company C. Company A is required to withhold on all of Company B's share of taxable income sourced to this state. (5) Exception in Tiered Situations. (a) Nonresident withholding shall not be required for a member which is also an entity provided such entity on an annual basis in writing: 1. Elects to withhold at the rate of 4 percent with respect to its nonresident members' shares of taxable income sourced to this state in the same manner and subject to the same requirements, exceptions (including the exception provided in this paragraph but excluding the exception provided in subparagraph (2)(c)), etc. as if such entity itself was subject to O.C.G.A. § 48-7-129 and this regulation; 2. Agrees to be subject to personal jurisdiction in this State for all income tax purposes including the withholding required by O.C.G.A. § 48-7-129, together with related interest and penalties; and 3. Provides such election and such agreement in writing to the entity in which it is a member, using Form NRW-Exemption, on or before the due date (without extension) for filing the entity's income tax return for the taxable year for which the withholding is required. Form NRW-Exemption must be attached to the entity's income tax return each year. (b) In the event such entity makes the election as provided in subparagraph (a)1. of this paragraph and such entity does not withhold at the rate of 4% if required to do so, then such exception shall not apply and withholding will be due as originally required as if such election had not been made. (c) Each entity in subsequent tiers shall be entitled to make such election and such agreement provided the entity in which it is a member makes such election. However, failure by any entity in any tier to withhold at the rate of 4% if required to do so shall cause withholding to be due as originally required and as if such elections were not made by any entity in any tier. (6) Withholding Procedures. (a) Registration. All entities required to withhold taxes under O.C.G.A. § 48-7-129 must register with the Georgia Department of Revenue by completing Registration Application CRF-002. Registration for withholding requirements is to be separate and apart from the registration required for the payment of payroll taxes. (b) Payment of Taxes. 1. With respect to the nonresident member's share of taxable income sourced to this state, payment of taxes withheld shall be due on or before the due date for filing the income tax return for the partnership, Subchapter 'S' corporation, or limited liability company as prescribed in subsection (a) of O.C.G.A. § 48-7-56 without regard to any extension of time for filing such income tax return. Payment should be remitted with the required Form G-7- NRW. (c) Withholding Statement. A Form G-2-A (Withholding on Nonresident Members Share of Taxable Income Sourced to Georgia) showing the amount of the nonresident member's share of taxable income sourced to this state, the nonresident member's name, address, tax identification number, the amount of the Georgia tax withheld, and any other information the Commissioner requires must be furnished to the nonresident member and filed in duplicate with the Commissioner on or before the earlier of the date the income tax return is filed or the due date for filing the income tax return of such partnership, Subchapter 'S' corporation, or limited liability company as prescribed in subsection (a) of O.C.G.A. § 48-7-56 without regard to any extension of time for filing such income tax return. The duplicate Form G-2-A must be submitted to the Department of Revenue along with Form G-1003 (transmittal form) and Forms G2-RP and G2- LP, if applicable, for such taxable year. (d) Credit for Withholding; Tax Year for Which Credit can be Claimed. Nonresident members are required to submit a copy of Form G-2-A with their Georgia Income Tax Return in order to receive credit for any Georgia income taxes withheld. Tax withheld from an on resident member's share of taxable income sourced to this state must be claimed as a credit for the member's tax year in which the withholding tax year of the entity ends. For example: 1. Calendar Year Taxpayers. A calendar year S Corporation withholds for the 2012 calendar year. An individual shareholder may claim a credit on the shareholder's 2012 individual income tax return (generally filed on or before April 15, 2013) for the 2012 taxes withheld by the S Corporation on the shareholder's behalf. 2. Other than Calendar Year Member. A calendar year partnership remits with holding taxes for 2012 during 2013 and has a corporate partner with a March 31 year end. The corporate partner may claim a credit in its entirety on its corporate income tax return for the year ended March 31, 2013 (generally filed on or before June 15, 2013) for the 2012 taxes withheld by the partnership on its behalf. 3. Other than Calendar Year Entity. An S Corporation with a January 31, 2012 year end remits withholding taxes on behalf of its nonresident shareholders. A calendar year end shareholder may claim a credit on the shareholder's 2012 individual income tax return (generally filed on or before April 15, 2013) for the taxes withheld by the S Corporation on the shareholder's behalf. (7) Undue Hardship. (a) Establishing Undue Hardship. To qualify for undue hardship, the entity must be experiencing a significant hardship. The entity must establish undue hardship and each determination will be considered on a case-by-case basis. A written petition must be filed with the Commissioner or his/her delegate requesting an exemption from withholding for an entity based on undue hardship. The petition shall be made at least sixty (60) days prior to the day on which the withholding tax is due and shall be accompanied by a full and complete explanation of the hardship incurred. This sixty (60) day period may be modified or waived by the Commissioner for reasonable cause. The Commissioner or his/her delegate will carefully consider the basis of the hardship and notify the entity in writing whether the petition is accepted or rejected. An accepted petition is valid for one year only, and petitions for undue hardship must be requested annually. Failure to receive the Commissioner's notice shall not relieve the entity from withholding in the manner prescribed by O.C.G.A. § 48-7-129. (b) Circumstances Which do not Qualify. The following circumstances will not be considered to constitute undue hardship: 1. Inability to pay; 2. Additional cost of record keeping; 3. Paperwork too cumbersome; 4. Missing K-1 data, such as social security number, address, etc.; 5. Unfamiliarity of the filing requirements; or 6. Inadequate records. (8) Anti-avoidance Clause. If the Commissioner reasonably determines that a transaction or payment has been entered into for the purpose of avoiding the provisions of this regulation and O.C.G.A. § 48-7-129, he or she may characterize any payment, or portion thereof, made by the entity to its member so as to reflect the true substance of the transaction. (9) Effective Date. The provisions set forth in this regulation will apply to taxable years beginning on or after January 1, 2024. Taxable years beginning before January 1, 2024 will be governed by the regulations of Chapter 560-7 as they exist before January 1, 2024 in the same manner as if the amendments thereto set forth in this regulation had not been promulgated. Authority: O.C.G.A. §§ 48-2-12, 48-7-129. History. Original Rule entitled "Withholding on Distributions to Nonresident Members of Partnerships, S Corporations, and Limited Liability Companies" adopted. F. Dec. 15, 1993; eff. Jan. 4, 1994. Amended: F. Feb. 6, 2001; eff. Feb. 26, 2001. Repealed: New Rule of same title adopted. F. Dec. 19, 2005; eff. Jan. 8, 2006. Repealed: New Rule entitled "Withholding on Distributions to Nonresident Members of Partnerships, S Corporations, and Limited Liability Companies; Composite Return Alternative" adopted. F. Dec. 29, 2008; eff. Jan. 18, 2009. Amended: Rule retitled "Withholding on Nonresident Members of Partnerships, S Corporations, and Limited Liability Companies; Composite Return Alternative." F. Aug. 13, 2012; eff. Sept. 2, 2012. Amended: F. Nov. 29, 2018; eff. Dec. 19, 2018. Amended: F. May 22, 2026; eff. June 11, 2026. Rule 560-7-8-.35. Withholding on Sales or Transfers of Real Property and Associated Tangible Property by Nonresidents of Georgia. (1) Nonresidents of Georgia. The term "Nonresident of Georgia" shall include individuals, trusts, partnerships, corporations, and unincorporated organizations. For purposes of O.C.G.A. Section 48-7-128, the following persons are Nonresidents of Georgia and are therefore subject to the withholding tax requirements: (a) Individual - Any individual having his or her principal residence outside Georgia at the time of closing, unless he or she otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of this Revenue Rule to be deemed a resident. (b) Corporation - Any corporation whose principal place of business is located outside Georgia, unless it otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of this Revenue Rule to be deemed a resident. (c) Partnership - Any partnership whose principal place of business is located outside Georgia, unless it otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of this Revenue Rule to be deemed a resident. (d) Trust - Any trust that is being administered by a nonresident fiduciary if the gain from the sale will be taxed to the trust or that has nonresident beneficiaries if the gain from the sale will be taxed to the beneficiaries, unless it otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of this Revenue Rule to be deemed a resident. (e) Limited Liability Company - Any limited liability company whose principal place of business is located outside Georgia, unless it otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of the Revenue Rule to be deemed a resident. (f) Limited Liability Partnership - Any limited liability partnership whose principal place of business is located outside Georgia, unless it otherwise meets the requirements of O.C.G.A. Section 48-7-128(a) and subparagraph (4)(d) of this Revenue Rule to be deemed a resident. (2) Co-owners. If two or more persons sell real property which they own as joint tenants with right of survivorship or as tenants in common, their respective status as to residence will be determined separately. Withholding is required only on the amount realized or gain recognized by the nonresident co-owner(s). (3) Calculation of tax. (a) Withholding requirement and tax rate. Nonresidents who sell or transfer Georgia real property are subject to a 3% withholding tax. The withholding tax is to be computed by applying the 3% rate to the purchase price. As an alternative, if the seller provides the buyer with a completed affidavit of gain (Form IT-AFF2 or equivalent) swearing to the amount of the gain, the withholding may be computed by applying the 3% rate to the amount of recognized gain. (b) Threshold. Withholding will not be required on transactions where the purchase price is less than $20,000. If the purchase price exceeds $20,000 and the tax liability is less than $600, the seller may provide the buyer with a completed affidavit of gain (Form ITAFF2 or equivalent), swearing to the amount of the gain, and the buyer will not be required to withhold. (c) Installment transactions. Every buyer or transferee of real property which is sold on the installment basis and who is required to deduct and withhold the withholding tax imposed by subsection (b) of O.C.G.A. Section 48-7-128 shall file the required return and remit payment of the tax to the Department in the following manner. 1. Initial return and initial payment. The initial required return and the initial tax payment shall be remitted on or before the last day of the calendar month following the calendar month within which the sale or transfer giving rise to the withholding tax occurred. The initial payment is calculated by taking 3 percent of the purchase price less the installment note. Or if the seller elects to base the withholding on the gain, 3 percent of the gain that would be recognized as a result of the proceeds received at the time of the closing. 2. Subsequent return and subsequent payments. For each subsequent return and subsequent payment, the amount of with- holding is calculated by taking 3 percent of the principal amount included in each payment. Or if the seller elects to base the withholding on the gain, 3 percent of the amount of each principal payment which represents the gain. The buyer shall file the required return and remit the payment to the Department on or before the last day of the calendar month following the calendar month within which the cumulative amount withheld for the year, less any payments already made to the Department for the year, exceeds $300. If the cumulative amount withheld for the year, less any payments already made to the Department for the year, does not exceed $300 for the calendar year, the buyer shall file the required return and remit the payment to the Department on or before the last day of the month following the end of the calendar year within which the tax was withheld. 3. Threshold. The threshold as described in subparagraph (3)(b) is completed based on the total purchase price or total gain as if the property were not sold on the installment basis, not on each separate principal payment or the amount of the principal payment which represents gain. (4) Forms. (a) Return. Unless otherwise exempted, every buyer or transferee of real property and associated tangible property from a nonresident seller or transferor must file a return and remit payment to the Department. Form G-2RP may be used as a return and remittance form; however, if the buyer has or creates a form that provides the sales date, buyer's and seller's names, addresses, identification numbers, total amount of the sales price or the gain recognized and the amount of withholding to be remitted, such form may be used instead. The buyer or transferee is required to provide the seller with a copy of the G-2RP or other form for the seller to file with the seller's income tax return. (b) Other document as substitute for return. The buyer, in substitution for the G- 2RP, may use the closing statement, transfer tax statement or other document showing all the information in (4)(a) above. The information should be contained in one page, and that page should be clearly designated at the top "Georgia Withholding Tax Return for Real Estate Transfer". The designation may be handwritten or typed, so long as it is clear and legible. (c) Statement of withholding. If the transaction is subject to withholding, the buyer shall provide to the seller a copy of the Form G-2RP (or the document used in lieu of that form) as a statement of tax withheld. A copy of the statement shall be filed with the seller's Georgia Income Tax Return in order that the seller may receive credit for the tax withheld on the transaction. (d) Affidavit of sellers' residence. O.C.G.A. Section 48-7-128(a) provides conditions under which a seller may be deemed a resident of Georgia for purposes of the withholding requirements. In order to be deemed a resident, the seller must provide the buyer with an affidavit swearing that the conditions in the statute and this rule are met. Form IT-AFF1 has been prepared by the Commissioner as an example of the information which must be provided in the seller's affidavit in order to document that the seller is a resident or a deemed resident and that, therefore, the buyer is not required to withhold. Please note that IT-AFF1 is only required by law where a seller is a nonresident but meets the conditions under which the seller may be deemed a resident; however, it may also be used by the buyer to document the seller's representation of Georgia residence if the parties so desire. Copies of Form IT-AFF1 may be obtained from any Department of Revenue office. (e) Affidavit of seller's gain. O.C.G.A. Section 48-7-128(c) allows a seller to provide a buyer with an affidavit swearing to the gain required to be recognized on a transaction so that withholding may be based on the gain rather than the purchase price. Form IT-AFF2 has been prepared by the Commissioner as an example of an affidavit swearing to the gain on a transaction. The seller may use this affidavit or may execute an alternate affidavit that contains substantially the same information. This affidavit should be sent to the Department of Revenue at the same time as the Form G-2RP if the balance is due. Documentation of the cost basis, depreciation, and selling expenses should be retained by the seller and only be provided to the Department when requested. Copies of Form IT-AFF2 may be obtained at any Department of Revenue office. (5) Exemptions. Although there are no filing requirements under law in exempt transactions, the Commissioner has prepared a Certificate of Exemption (Form IT-AFF3) as an example of a form which may be executed and provided to the parties for record keeping purposes. This form, or a similar document executed by the seller and provided to the buyer, may be used to document the buyer's reliance on the seller's representation that the sale transaction is exempt. Copies of the Certificate of Exemption form may be obtained from any Department of Revenue office. Authority: O.C.G.A. Secs. 48-2-12, 48-7-128. History. Original Rule entitled "Withholding on Sales or Transfers of Real Property and Associated Tangible Property by Nonresidents of Georgia" adopted. F. Jan. 31, 1994; eff. Feb. 20, 1994. Repealed: New Rule of same title adopted. F. Dec. 26, 2001; eff. Jan. 15, 2002.