TITLE 48 REVENUE AND TAXATION

Section 7. Income Taxes, 48-7-1 through 48-7-170.

ARTICLE 2 IMPOSITION, RATE, AND COMPUTATION; EXEMPTIONS

48-7-25. Exempt corporations and organizations; procedure for obtaining exempt status; revocation of exempt status; grounds; retroactivity; statute of limitations; information returns; unrelated business income; deductibility of death benefit payments.

The following organizations shall be exempt from taxation imposed by Code Section 48-7-21 as indicated:
1. Subject to subsections (b) and (c) of this Code section, those organizations which are exempt from federal income taxation pursuant to Section 501(c), 501(d), 501(e), 664, or 401 of the Internal Revenue Code of 1986 shall be deemed to have similar exempt status for purposes of Code Section 48-7-21; and
2. Insurance companies which pay to the state a tax upon premium income.
1. An organization's exempt status under paragraph (1) of subsection (a) of this Code section shall be subject to review and revocation by the commissioner in accordance with the provisions of paragraph (2) of this subsection.
2. 1. The commissioner may revoke the exempt status of any organization described in paragraph (1) of subsection (a) of this Code section when:
    1. The Internal Revenue Service revokes the exempt status of the organization;
    2. The organization ceases to be organized or operated in the manner in which it was organized or operated at the time the exempt status was granted;
    3. The organization engages in any prohibited transaction as set forth in the Internal Revenue Code of 1986; or
    4. There is any material change in the character or purpose of the organization or in the mode of operation of the organization.
  2. Revocation of an exempt status shall revoke the exempt status retroactively to the time of the occurrence of the disqualifying event or events. All exempt organizations shall immediately notify the commissioner in writing of the occurrence of any of the disqualifying events described in subparagraph (A) of this paragraph or of receipt by the organization of a notice of intent to terminate its exempt status by the Internal Revenue Service. The statute of limitations governing the assessment of any taxes determined to be due this state due to the revocation of exempt status shall be tolled as of the date of the occurrence of the disqualifying event or events described in subparagraph (A) of this paragraph. The commissioner at any time may require an organization which is exempt from taxation to file an information return stating the organization's gross income, receipts, disbursements, accumulation of income, and other data deemed necessary for the proper administration of this Code section.
1. A tax is imposed on income of an organization exempted pursuant to paragraph (1) of subsection (a) of this Code section when the income is derived from trade or business which is not related to exempt purposes of organizations described in paragraph (1) of subsection (a) of this Code section. This income shall be referred to as unrelated business income and shall be the income which is defined in Section 512 of the Internal Revenue Code of 1986. The tax imposed on unrelated business income shall be at the rate provided in Code Section 48-7-21.
2. If an organization is exempt under Section 501(c)(4) of the United States Internal Revenue Code of 1986, if the organization makes payments of death benefits as a result of the death of a member of the organization, and if payments have been made by the organization for at least five years prior to January 1, 1977, the payments shall be deductible from the unrelated business income tax which might be owed by the organization. The payment of such death benefits shall not operate to generate a rebate or a refund. If the amount of death benefits paid within the taxable year exceeds the unrelated business income tax owed for the same taxable year, the excess may be carried forward for a period of five years.

(Ga. L. 1931, Ex. Sess., p. 24, § 5; Code 1933, § 92-3105; Ga. L. 1937, p. 109, § 5; Ga. L. 1943, p. 320, § 1; Ga. L. 1950, p. 75, § 1; Ga. L. 1952, p. 273, § 3; Ga. L. 1955, Ex. Sess., p. 27, § 7; Ga. L. 1960, p. 249, § 1; Ga. L. 1961, p. 180, § 1; Ga. L. 1973, p. 924, § 3; Ga. L. 1975, p. 154, § 2; Ga. L. 1976, p. 405, § 9; Ga. L. 1976, p. 613, § 1; Ga. L. 1977, p. 1133, § 1; Code 1933, § 91A-3605, enacted by Ga. L. 1978, p. 309, § 2; Ga. L. 1979, p. 5, § 65; Ga. L. 1983, p. 1350, § 12; Ga. L. 1987, p. 191, § 2; Ga. L. 1988, p. 13, § 48; Ga. L. 2008, p. 898, § 5/HB 1151.)

Cross references.

- Authority of the Georgia Athletic and Entertainment Commission, § 43-4B-4.

Code Commission notes.

- Pursuant to Code Section 28-9-5, in 2008, a period was deleted preceding the semicolon at the end of paragraph (a)(1).

Editor's notes.

- Ga. L. 1983, p. 1350, § 15, not codified by the General Assembly, effective January 1, 1984, provides that, should subsection (e) of Code Section 48-6-93 or paragraph (b)(11) of Code Section 48-7-21 be declared invalid or unconstitutional, it is the intent of the General Assembly that the entire Act be held invalid and that the method of taxation affected by the Act revert to the method in effect prior to January 1, 1984.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, provides that this Act is applicable to taxable years ending on or after March 11, 1987, and that a taxpayer with a taxable year ending on or after January 1, 1987, and before March 11, 1987, may elect to have the provisions of that Act apply.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that tax, penalty, and interest liabilities and refund eligibility for prior taxable years shall not be affected by that Act.

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that provisions of the federal Tax Reform Act of 1986 and of the Internal Revenue Code of 1986 which as of January 1, 1987, were not yet effective become effective for purposes of Georgia taxation on the same dates as they become effective for federal purposes.

Ga. L. 2008, p. 898, § 13, not codified by the General Assembly, provides that the amendment to this Code section shall be applicable to all taxable years beginning on or after January 1, 2008.

U.S. Code.

- The Internal Revenue Code of 1986, referred to in this Code section, is codified at Title 26 of U.S.C.

Administrative Rules and Regulations.

- Corporations and organizations exempt from tax, Official Compilation of the Rules and Regulations of the State of Georgia, Department of Revenue, Income Tax Division, § 560-7-3-.09.

Law reviews.

- For article, "Why Captives, Lord, What Have They Ever Done?: The Georgia Captive Insurance Company Act," see 26 Ga. St. B. J. 119 (1990). For article, "Tackling the Social Determinants of Health: A Central Role for Providers," see 33 Georgia St. U.L. Rev. 217 (2017). For note on discriminatory charitable trusts in Georgia, with regard to application of the cy pres doctrine, in light of Evans v. Newton, 382 U.S. 296, 86 S. Ct. 486, 15 L. Ed. 2d 373 (1966), see 6 Ga. St. B. J. 428 (1970).

OPINIONS OF THE ATTORNEY GENERAL

What income of tax exempt corporation taxable.

- State can tax the unrelated business income of a tax exempt corporation, but when this tax exempt corporation is engaged in competitive commerce with a nonexempt business the corporation loses the corporation's tax exemption as to that portion of the corporation's net income attributable to such competitive commerce, notwithstanding the fact that all other businesses are excluded from the plants where this business is conducted, or that this business is only conducted within these plants. 1968 Op. Att'y Gen. No. 68-378.

Out-of-state university is exempt from payment of Georgia income taxes on the income derived from real property owned in Georgia in the name of the university so long as the university continues to operate exclusively for educational purposes and so long as no part of the university's earnings inure to the benefit of any private stockholder or individual. The university would of course be required to pay ad valorem property tax on the realty owned under these circumstances and should qualify to do business with the Secretary of State. 1967 Op. Att'y Gen. No. 67-13.

Medical College of Georgia exempt from ad valorem taxes.

- Medical College of Georgia Foundation, Inc., being a corporation established for educational purposes with no part of its proceeds or property capable of inuring to the benefit of private persons, is exempt from ad valorem taxes. 1962 Op. Att'y Gen. p. 503.

Limits on scope of exemption for banks and trust companies.

- Exemption for banks and trust companies doing a general banking business must be applied narrowly to only state or federally chartered companies doing such business and is not to be applied broadly to every enterprise engaged in the banking business. The General Assembly intends to treat private banks in the same manner as private individuals for income tax purposes and not like chartered banks. Private banks may not avail themselves of an exemption granted national and state banks under income tax provisions. 1954-56 Op. Att'y Gen. p. 693.

Applicability of state revenue laws to international banking corporation.

- International banking corporation whose sole contact with Georgia is the corporation's operation of an agency office licensed under O.C.G.A. Art. 5, Ch. 1, T. 7 is not a bank for purposes of state revenue laws. 1976 Op. Att'y Gen. No. 76-105.

RESEARCH REFERENCES

Am. Jur. 2d.

- 56 Am. Jur. 2d, Municipal Corporations, Counties, and Other Political Subdivisions, §§ 243, 244. 71 Am. Jur. 2d, State and Local Taxation, § 365 et seq.

C.J.S.

- 63 C.J.S., Municipal Corporations, §§ 924, 931, 962 et seq. 85 C.J.S., Taxation, § 1989 et seq.

ALR.

- Exemption from taxation of the property of a Y.M.C.A. or Y.W.C.A., 34 A.L.R. 1067; 81 A.L.R. 1453.

What is a social club within statute imposing tax on dues or membership fees, 80 A.L.R. 1296; 143 A.L.R. 1381.

Exemption from taxation of property of fraternal or relief associations, 83 A.L.R. 773.

Subjection to public supervision because of public service nature of business as basis of classification for purposes of taxation, 99 A.L.R. 1164.

Exemption of charitable organization from taxation or special assessment, 108 A.L.R. 284.

What is a municipal corporation within constitutional or statutory tax exemption provisions, 108 A.L.R. 577.

Tax on corporations as affected by fact that corporation is not actually engaged in or carrying on business for which it was incorporated, 124 A.L.R. 1109.

Hospital as within tax exemption provision not specifically naming hospitals, 144 A.L.R. 1483.

Exemption of chamber of commerce from taxation, 152 A.L.R. 181.

Tax exemption of property of religious, educational, or charitable body as extending to property or income thereof used in publication or sale of literature, 154 A.L.R. 895.

Tax exemptions and the contract clause, 173 A.L.R. 15.

Constitutionality, construction, and application provisions of state tax law for conformity with federal income tax law or administrative and judicial interpretation, 42 A.L.R.2d 797.

Legislative power to exempt from taxation property, purposes, or uses additional to those specified in constitution, 61 A.L.R.2d 1031.

State tax on trust income as affected by foreign elements, 5 A.L.R.3d 606.

Qualification of health care entities for federal tax exemption as charitable organization under 26 USCS § 501(c)(3), 134 A.L.R. Fed 395.

What constitutes trade or business under Internal Revenue Code (U.S.C.A. Title 26), 161 A.L.R. Fed. 245.

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