The Georgia House voted Thursday in favor of a bill that one lawmaker said will help maintain the state’s business friendly reputation.
House Bill 846, proposed by Rep. John Corbett, R-Lake Park, will reduce the interest rate on tax refunds to taxpayers who pay sales and use taxes directly to the Department of Revenue.
Corbett told fellow members of the House on Thursday the bill encourages investment and job creation in the state.
Georgia received top rankings in September and November from two business-centered publications, Area Development and Site Selection Magazine, for its good business climate.
HB 846 would lower the interest rate on refund payments from the DOR to taxpayers who file their taxes with a direct pay permit.
Direct pay permits can be issued to taxpayers who have purchased more than $2 million in tangible personal property 12 months before filing or have purchased an annual average amount of $2 million over three years.
Most manufacturing companies use direct pay permits because the taxable gain cannot be determined by manufacturers at the time of the purchase of the product, Corbett said. The bill received approval from Georgia Association of Manufacturers.
“The purpose behind the direct pay permit program is to increase the accuracy and tax reporting by businesses that make substantial purchases of items whose taxability at the time of purchase is unknown, but basically if an item is used in the manufacturing process, it is not taxable,” he said. “But if it’s used in a part of the plant, say shipping, it would be taxable and the manufacturer is in the best position to determine the taxability of an item.”
Under current Georgia law, taxpayers are refunded for any overpayment of taxes or fees at the prime bank rate plus 3 percent.
If HB 846 becomes law, the interest would be reduced to just the prime rate. A new provision added to the bill would allow the DOR to pay the refund in installments after a review by a political subdivision, such as a local government.
HB 846, which passed on a 148-3 vote, now heads to the Senate for review. Reps. David Wilkerson, D-Powder Springs; Matt Gurtler, R-Tiger; and Dexter Sharper, D-Valdosta, voted against the bill.
