The Georgia Department of Revenue has issued a policy bulletin to provide guidance on the new interest rate and new tax refund procedures for state taxes under H.B. 960, Laws 2016. (TAXDAY, 2016/05/10, S.9) The bulletin also discusses sales and use tax refunds of local significance and the obligation of political subdivisions to certify designees to receive confidential information regarding such refunds.
Interest Rate Change
Effective July 1, 2016, past due taxes and interest-bearing refunds will bear interest at an annual rate equal to the bank prime loan rate as posted by the Board of Governors of the Federal Reserve System in statistical release H. 15 or any publication that may supersede it, plus 3%, to accrue monthly. Such annual interest rate will be determined for each calendar year based on the first weekly posting of statistical release H. 15 on or after January 1 of each calendar year. Thus, the interest rate for 2016 will be 6.5% beginning July 1, 2016.
Electronic Refund Claims
Additionally, beginning July 1, 2016, taxpayers are required to file refund claims electronically if required to file returns electronically. The department will reject all paper form claims filed on or after October 1, 2016, if such claims are required to be filed electronically.
Sales and Use Tax
In addition to taxpayers being required effective July 1, 2016, to file refund claims electronically if they are required to file their returns electronically, sales and use tax taxpayers must begin on that date to break down the local sales and use tax part of their refund claim, even if they file a refund claim using paper Form ST-12. If the local sales and use tax breakdown is not included in a refund claim as of July 1, 2016, the claim will be rejected. However, a taxpayer can refile a rejected refund claim within the three-year limitations period.
Further, effective July 1, 2016, within 30 business days after the Georgia Department of Revenue receives a “refund claim of local significance,” it will notify in writing each affected political subdivision’s designee that the refund claim has been received and will furnish the taxpayer with a copy of this notification. These designees are the chief officer or officers selected by a political subdivision and identified by the political subdivision to the department. “Refund claim of local significance” means at least 10% of the total yearly average of aggregate sales and use tax distributions to any single political subdivision based on the average of the three most recent calendar years. These claims can consist of more than one pending refund claim filed by a taxpayer.
Policy Bulletin ADMIN-2016-01 and Policy Bulletin SUT-2016-02, Georgia Department of Revenue, July 1, 2016, ¶201-075