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A policy statement issued by the Georgia Department of Revenue provides guidance on the application and calculation of the reciprocal use tax credit for taxes paid to other states. This use tax is enforced on non-exempt tangible personal property that is bought or rented outside of the state for use in Georgia, including, distribution, consumption, and storage. The reciprocal use tax credit applies when the other state or local jurisdiction provides reciprocal credit for Georgia tax paid. The consumer must have legally owed and paid sales or use tax and has no right to receive a refund or credit. Furthermore, the reciprocal credit is applicable if the taxes due to Georgia are higher than the amount of taxes paid to the other state. The reciprocal tax credit for state tax “only applies to outside state taxes paid prior to Georgia state tax becoming due and not to taxes subsequently paid in destination states.” However, the reciprocal tax credit for local tax purposes “applies to taxes paid to a local jurisdiction in Georgia, and to taxes paid to an out-of-state local jurisdiction.” (Policy Statement SUT 2008-10-10, Georgia Department of Revenue, October 10, 2008)

(02/16/2009)

Governor Sonny Perdue has issued an executive order suspending the collection of sales and use tax on prescription drug samples distributed on or after September 1, 2008. The order applies to those controlled substances and dangerous drugs, as defined by section 16-13-1, which require a prescription and are distributed free of charge by a pharmaceutical manufacturer or distributor to physicians, dentists, clinics, hospitals, or any other person or entity located in Georgia. The order also applies to those controlled substances and dangerous drugs lawfully dispensed and distributed free of charge for the purposes of human clinical trials when such trials are approved by an Institutional Review Board accredited by the Association for the Accreditation of Human Research Protection Program. This order will be in effect until the General Assembly acts upon it in the next legislative session. (Executive Order, Governor Sonny Perdue, August 29, 2008; Georgia Sales and Use Tax Informational Bulletin, Georgia Department of Revenue, September 2, 2008)

(10/07/2008)

A 2007 Georgia Court of Appeals ruling, Owens Corning v. Ga. Dept. of Revenue, 285 Ga. App. 158 (645 SE2d 644) (2007), was reversed by the Georgia Supreme Court, April 21, 2008. The ruling had entitled a taxpayer to a sales tax refund on purchases of manufacturing machinery repair and replacement parts under the 1997 version of the exemption statute because it unambiguously stated that such sales were exempt from tax. In reversing the ruling, the court held that the language in the 1997 version of the statute that exempted machinery and “components thereof” created ambiguity as to whether machinery repair and replacement parts were also exempt. The court also stated that the legislative intent behind the 2000 amendment of the statute made it clear that no exemption for manufacturing machinery repair and replacement parts existed under the 1997 version of the statute. (Georgia Department of Revenue v. Owens Corning, Supreme Court of Georgia, No. S07G1297, 2008 Ga. LEXIS 356, April 21, 2008)

(09/05/2008)

The Supreme Court of Georgia reversed a 2007 Georgia Court of Appeals ruling that the 1997 version of an exemption statute created an exemption for manufacturing machinery replacement and repair parts. Although the added phrase “including components thereof” created ambiguity as to the inclusion of repair and replacement parts, the court held that it did not create a clear and unambiguous exemption. Further, the court asserted that in the case of ambiguity, the statute must be interpreted in favor of the tax, not the exemption. The court also noted that historically, the Legislature has explicitly declared repair parts subject to tax, and that the express legislative intent to phase in an exemption with the 2000 amendment of the statute further clarifies that no intended exemption for replacement and repair parts existed under the 1997 version of the statute. (Georgia Department of Revenue v. Owens Corning, Supreme Court of Georgia, No. S07G1297, 2008 Ga. LEXIS 356, April 21, 2008)

(08/07/2008)

Effective January 1, 2009, Georgia has expanded its manufacturing sales and use tax exemption to include all machinery, equipment, and replacement parts which are “necessary and integral to” the manufacture of tangible personal property. Previously, eligible items had to be “used directly in” the manufacturing process to qualify for the exemption. As before, the purchase must replace or upgrade existing machinery or equipment, or be used as additional machinery or equipment for the first time in a manufacturing plant presently located in Georgia in order to qualify. (H.B. 237, Laws 2008, Effective January 1, 2009)

(07/07/2008)

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