TAXPAYER SERVICES DIVISION

New Withholding Tax Changes Pursuant to Georgia House Bill 43

The 2003 Georgia Legislature passed House Bill 43 (“HB 43”) on March 25, 2003. This bill contains several provisions amending Georgia’s withholding tax remittance procedures as set forth in O.C.G.A. §§48-2-32 and 48-7-103. Outlined below are the major withholding tax provisions of HB 43 that take effect for all calendar quarters beginning on or after April 1, 2004.

Overview

HB 43 establishes withholding tax remittance schedules similar but not identical to those of the Internal Revenue Service. O.C.G.A. §§48-2-32 and 48-7-103 were amended to create a new withholding tax remittance schedule entitled “semi-weekly” and a new Electronic Funds Transfer (EFT) requirement for certain taxpayers. (The Department of Revenue continues to encourage all taxpayers that are not required to remit taxes via EFT to establish an EFT account and remit tax liabilities electronically.)

All employers will be classified on an annual basis as semi-weekly, monthly, quarterly, or annual payers for Georgia withholding tax purposes. The new semi-weekly remittance schedule is fashioned after federal employment tax laws as set forth in the Internal Revenue Code. The due date and method of payment will depend upon the employer’s classification for Georgia withholding tax purposes. House Bill 43 also established a “one-day rule” for withheld taxes over $100,000 as discussed below.

Withholding Tax Requirements Summary Effective April 1, 2004

EFT Registration and Information

SEMI-WEEKLY PAYERS
O.C.G.A. §48-2-32 was amended by House Bill 43 and created a new withholding schedule entitled “semi-weekly” that certain employers must follow. Employers who withheld more than $50,000 in the aggregate for the “lookback period” are classified as semi-weekly payers and must remit withholding taxes via EFT. Please note there is a “One-Day Rule” described below for any employer withholding more than $100,000 for the pay period that takes priority over all other remittance requirements.

For withholding tax purposes, the “lookback period” is defined as the 12-month period that ended the previous June 30th. The lookback period for calendar year 2004 is the period from July 1, 2002 through June 30, 2003. Therefore, any employer who was required to withhold more than $50,000 from July 1, 2002 through June 30, 2003 must remit their withholding taxes via EFT beginning April 1, 2004 using the semi-weekly schedule outlined below:

Semi-weekly payers who have a payday occurring on Wednesday, Thursday, or Friday are required to remit the taxes via EFT on or before the following Wednesday. If the Wednesday is a Federal Reserve bank holiday then the taxes must be remitted on or before the next banking day.

Semi-weekly payers who have a payday occurring on Saturday, Sunday, Monday, or Tuesday are required to remit the taxes via EFT on or before the following Friday. If the Friday is a Federal Reserve bank holiday then the taxes must be remitted on or before the next banking day.

For withholding tax purposes, “payday” is defined as the date reflected on the payroll checks or the first date the employee is able to tender the check for cash or other consideration, whichever is earlier. Employers who have more than one payday may be required to remit withholding taxes on more than one day during the calendar week based on the relevant paydays.

The due date of the withholding tax is dependent upon the day of the week the employer issues payroll checks. Therefore, the day of the week an employer is required to remit withholding taxes (Wednesday or Friday) may change from payday to payday.

Method of Payment for Semi-Weekly Payers

HB 43 amended O.C.G.A. 48-2-32 to require employers meeting the definition of a semi-weekly payer to remit withheld taxes to the Department of Revenue via EFT. There is a 10% penalty that will be applied to the amount of tax due for any timely made payment that is not submitted via EFT. The EFT filing requirement will be strictly enforced. Therefore, it is very important for all employers meeting the $50,000 rule referenced above to register as soon as possible for electronic funds transfer with the State of Georgia if they are not currently registered. To obtain an EFT packet and other important information go to:www.etax.dor.ga.gov/eft/index.aspx

When electronically filing your semi weekly payment, enter the last date of the month for the month you are paying.  If you have more than one payday during a period and the paydays fall in different months, you will need to make separate deposits for each liability.  For example, if you have a payday on Thursday, May 31^st and Friday, June 1^st the due date for both payments will be Wednesday, June 6^th, two separate deposits would be required even though the due dates are the same.  Additionally, the May 31^st payment would have the tax period/end date of 05/31/YY and the June 1^st payment would have the tax period/end date of 06/30/YY.

Filing Requirements for Semi-Weekly Payers

Due to the withholding tax changes imposed by HB 43, semi-weekly payers will be required to file a quarterly reconciliation report entitled "Semi-Weekly Form G-7/Schedule B" and must include relevant information regarding the payday dates during the quarter. The quarterly reconciliation report is due by the last day of the month after the end of the quarter. For example, the Semi-Weekly Form G- 7/Schedule B is due by July 31st for the second calendar quarter.

The Department of Revenue will send taxpayers classified as semi-weekly payers filing information and forms in December 2003. For informational purposes only, the Semi-Weekly Form G-7/Schedule B will be available on our web site by November 2003.   As of May 1, 2006 it is mandatory for business customers who are required to submit tax payments via electronic funds transfer to file their returns electronically.

MONTHLY PAYERS

The dollar threshold for employers required to remit withholding taxes on a monthly basis under O.C.G.A. 48-7-103(b) was also amended by HB 43. Beginning April 1, 2004, employers who were required to withhold $50,000 or less for the lookback period will be classified as monthly payers. Employers required to withhold $200.00 or less per month will continue to be treated as either quarterly or annual payers (see below). Taxpayers who are classified as monthly payers must continue to remit the withheld taxes by the 15th day of the following month along with Form GA-V. Employers remitting payment via EFT should not file Form GA-V.

Filing Requirements for Monthly Payers
No changes were made to the due date for filing returns under O.C.G.A. §48-7-103(b). Form G-7Quarterly Return for Monthly Filer will continue to be due by the last day of the month following the end of the quarter. For example, Form G-7 is due by July 31st for the second calendar quarter.

QUARTERLY PAYERS

HB 43 did not make any changes to the quarterly filing and remitting requirements under O.C.G.A. §48- 7-103(a). Employers who are required to withhold $200.00 or less per month will continue to remit payment along with Form G-7Quarterly Return for Quarterly Filer to the Department of Revenue by the last day of the month following the end of the quarter. For example, Form G-7 is due by July 31st for the second calendar quarter. Employers who choose to remit payment via EFT must still file Form G-7 by the last day of the month following the end of the quarter.

ANNUAL PAYERS

HB 43 did not make any changes to the annual filing remitting requirements. Georgia Rule 560-7-8-.33 states that employers who are required to withhold $800 or less per year shall file and remit taxes on an annual basis. Annual payers must remit payment with the fourth quarter Form G-7 Quarterly Return for Quarterly Filer on or before January 31st of the following year. Employers who choose to remit payment via EFT must still file the fourth quarter Form G-7 by January 31st of the following year.

“ONE-DAY RULE”

House Bill 43 added an additional remittance requirement for employers. For calendar quarters beginning on or after April 1, 2004, employers who are required to withhold more than $100,000 in taxes for the payday must remit those taxes by the next banking day after payday. This rule takes priority over
all other remittance requirements and is applicable to all employers regardless of their normal payment schedule (i.e. semi-weekly, monthly or quarterly).

Any employer that triggers the one-day rule immediately becomes a semi-weekly payer and is subject to the semi-weekly payment and reporting rules for the remainder of the current calendar year and the entire following calendar year.

PENALTIES

No changes were made to the current law regarding the imposition of penalties and interest. Under O.C.G.A. §48-7-126, employers who fail to report and/or remit the tax required to be withheld in a timely manner are subject to a penalty of $25.00 plus five percent (5%) of the tax for each month or fraction of a month outstanding, up to 25% of the tax. Additionally, the 10% penalty described in O.C.G.A. §48-2-32 for remitting payment in other than immediately available funds will be imposed, if applicable.

INTEREST

If the tax imposed on employers by this article is not paid on or before the date prescribed by law, interest will be added to the outstanding balance at the rate specified in O.C.G.A. §48-2-40.

DOR CONTACTS
For additional information and questions regarding EFT registration, please contact the EFT Unit:

Georgia Department of Revenue
EFT Section
1800 Century Center Boulevard NE, Suite 17235
Atlanta, GA 30345

Phone: 404-417-2220 or 800-659-1855
FAX: 404-417-2237 or 404-417-2238
e-mail: doreft@dor.ga.gov

For additional information and questions regarding withholding tax, please contact the Withholding Tax Unit:

Georgia Department of Revenue
Withholding Tax Unit 
P.O. Box 49432
Atlanta, GA 30359-1432

Phone: 404-417-2311 or 877-602-8477
FAX: 404-417-2396
e-mail: taxpayer.services@dor.ga.gov

The Department of Revenue has 12 regional offices that are available for taxpayers to contact by phone or in person. Taxpayers can obtain assistance with Georgia taxes, including withholding tax at these offices and at the Century Center Office. For a list of the office locations and phone numbers, go to:

www.etax.dor.ga.gov/doroff.aspx

OTHER RESOURCES

A copy of House Bill 43 can be downloaded from www.legis.state.ga.us/legis/2003_04/search/hb43.htm.

The Georgia Department of Revenue anticipates issuing regulations in the near future that will provide additional information on the new requirements to file and remit withholding taxes imposed by House Bill 43.

Click here for House Bill 43 Frequently Asked Questions.