News and
Events

Stay current with developments at Parkway South and along the South Fulton Parkway Corridor. Click the icon at right to subscribe to an RSS feed of latest news.

Summary of Job Tax Credit Program for Businesses Locating in an Opportunity Zone

1. Georgia’s Opportunity Zone (“OZ”) law (Code Section 48-7-40.1) provides that a company
locating within an Opportunity Zone is granted a tax credit of $3500 for two or more jobs of any
kind created in the OZ or brought in from out of state. The credit is granted for five tax years
beginning with the year in which the job was established.

2. An OZ exists for ten years after the date on which it was established. Regardless of when the
job was established within the ten year existence of the OZ, the tax credit for the job is granted
across a five year period from the date the job was established, and unused credits carry forward
for ten years.

3. The credit may be taken against Georgia state income tax, or if the company does not owe that
much income tax, it may be taken by retaining employee withholding taxes otherwise payable to
the state.

4. Georgia law and Federal tax regulation generally exclude the Opportunity Zone tax credit from
state and federal income taxation. However, interpretations of tax law may vary and you should
consult a tax professional before relying upon any opinion of non-taxability (IRS Code Section
118). The employee's withholding account is reconciled by a book entry by the state, showing the
employee's withholding tax as paid. A company utilizing the withholding option can obtain the
withheld monies during every pay period in which the money is withheld.

5. Redemption of the credit is not tied to the specific employee's withholding account, i.e., the
pool of tax credits obtained by the business can be applied against the pool of withholding taxes.
This pooling flexibility allows a company with employees having higher salaries and a Georgia
withholding amount greater than $3500 per year to utilize unused credits from lower salaried
employees who may have less than $3500 a year in Georgia withholding.

6. The company is limited to taking $3500 per eligible job per year, i.e., several accumulated
annual credits for one given job cannot be taken in a lump sum in one year.

Here's an example scenario:
Company ABC moves 100 hundred jobs into the Opportunity Zone (OZ). Effective from the date
these 100 employees begin working in the OZ, Company ABC receives a $350,000 tax credit ($3500
times 100 jobs) each year for a total of five years. Company ABC can start cashing credits for a
given job against any income tax liability in the year the job is created. In addition, the Company
can use the tax credits for a 10 year period. If the company has less income tax liability than it has
credits, it can retain employee withholding taxes otherwise payable to the state, up to $350,000 per
year ($3500 times one hundred jobs). Should Company ABC have no income tax liability, and it
withholds only an average of $3000 per year from its one hundred employees, then, after five years,
Company ABC has a surplus of $250,000 in unused credits. At that point, Company ABC has five more
years to use that unused credit amount, applied against either income or withholding tax. The credits
in the example above assume that all 100 hundred jobs remain.

Sometime in 2017, two years before the expiration of the Union City OZ (Feb. 24th, 2019 in this
example), Company ABC creates twenty more jobs. For these twenty jobs, beginning on January
1, 2018, Company ABC will get an annual total of $70,000 in tax credits for another five years,
even though the prior one hundred job tax credits will expire. The credit earned from the new
twenty jobs can be taken from withholding taxes for any job, old or new.

 

 

Non-Stop to the World