Certified Public Accountants

Transcription

1 James A. Beal IV, CPA, CFP Debra C. Yonz, CPA James S. Rivers III, CPA, CFP Larry G. Taylor, CPA Certified Public Accountants 1 BYRT Way 722 S. Main Street 105 East Dame Avenue 102 Lee Avenue Alma, GA Baxley, GA Homerville, GA Waycross, GA Phone: Phone: Phone: Phone: Fax: Fax: Fax: Fax: Gate Cards Dear Client, We wanted to inform you that the 2019 GATE card application period is now open. If you believe you would qualify you should visit the GA Dept. of Agriculture website at to log in and begin steps to process your account. The Dept. of Agriculture only accepts online applications; mailed application are not accepted. You will be asked to provide one of three tax identification numbers (Use the same tax identification number that is associated with your farm on your federal tax return).. In-state residents will need to provide one of the following items: 1. Georgia Sales and Use Tax number 2. Georgia Corporate Income Tax number (The EIN# of your farm) 3. Georgia Individual Income Tax Number (your Social Security number) a. This would be used if you do not have a separate EIN# for your farm and you file your farm on the Sch. F of your Form Out-of-State residents will need to provide either: 1. Social Security number or 2. Federal Employee Identification Number. The GA Dept. of Revenue will match these numbers to the tax returns you have on file with the State of Georgia. We ve attached additional information and frequently asked questions provided by the GA Dept. of Agriculture. We hope this information helps you understand the Gate Card. Please call us if you wish to discuss your particular tax situation and if you qualify. Very truly yours,

2 Georgia Department of Agriculture 19 Martin Luther King Jr. Drive SW Atlanta, Georgia Gary W. Black Commissioner Executive Summary Georgia Agricultural Tax Exemption (GATE) Program In 2012, the Georgia General Assembly adopted sweeping tax reform legislation that made a number of modifications to the State s tax code and how certain programs would be administered moving forward. Included in these changes was the adoption of the Georgia Agricultural Tax Exemption, or GATE, program which took effect on January 1, The GATE program allows for certain state and local sales tax exemptions on eligible agricultural purchases for qualified agricultural producers. The GATE program is coordinated through partnership with the Georgia Department of Revenue and the Georgia Department of Agriculture. The Georgia Department of Agriculture is charged with the administration of the program and to determine if an agricultural producer meets certain eligibility requirements. If an applicant is approved our Customer Service Center will issue the client a GATE certification card. The card will contain an identification number, an effective use date, the name of the primary card holder and the physical address of the business. The sales and use tax exemptions for the GATE program may fall under three general categories as outlined in the Georgia Department of Revenue s, Rule , Agriculture Exemptions, to include agricultural inputs, farm machinery and equipment, and energy used in agriculture. Individual product exemptions will depend upon the type of farming operation and how the primary card holder qualifies for the program. Any person making a sale of an eligible product must collect sales and use tax unless the purchaser furnishes the seller with a valid GATE card. It is highly recommended that individuals review all program details prior to application. Any unauthorized use of the GATE certificate may result in criminal prosecution. Effective for 2014, in addition to meeting the eligibility requirements, all new GATE applications will required to submit verification of lawful presence as required by O.C.G.A This statewide requirement applies to any public benefit issued by the State of Georgia and includes certifications, license and registrations. Applicants will be required to complete a notarized affidavit and provide one form of acceptable documentation, such as a photo copy of driver s license, for verification. We, at the Georgia Department of Agriculture, take our role in stewarding public resources very seriously. We remain committed to providing superior customer service and have established a full service Customer Service Center to assist clients with questions and to help in determining program eligibility. For more information please visit the GATE website at For assistance, call the Customer Service Center at You can also send an to farmtax@agr.georgia.gov

3 Georgia Department of Agriculture (GDA) Frequently Asked Questions about the GATE Program Q: How do I apply for the GATE Certificate? The Georgia Department of Agriculture accepts online applications. To apply online, visit Cooperative Extension offices and County Farm Bureau offices will often assist farmers in completing a GATE application online. Visit or call your nearest office for more details. A list of Georgia Farm Bureau offices is available at A list of county Extension Offices is available at If you have any questions regarding the GATE Program application and renewal process, or need further assistance, you can the Georgia Department of Agriculture at farmtax@agr.georgia.gov or call FARM-TAX. Q: Why is there a certification fee for the GATE card? The Georgia General Assembly provided that an application fee be collected in order to cover the costs associated with administration of GATE program. Q: How do I know if I am signing up for a 1, 2, or 3-year GATE certificate? All new GATE certificates are for the 3-year period. As program changes are being implemented, renewals will be phased in to cover one year, two years, or three years. The period is determined automatically and cannot be selected by the applicant. The length of your GATE Certificate is determined by your renewal amount. 1-year card = $50 2-year card = $100 3-year card = $150 All GATE certificates renewed after 2020 will last 3 years. Q: When does my GATE Certificate expire? New GATE Certificates last for a 3-year period, and 2019 renewals may last for a 1-year, 2-year, or 3-year period. The expiration date for this period is always December 31 of the final year, regardless of what month the certificate was issued.

4 The actual card is valid for a single calendar year. You will receive a new card each year. There is no additional cost to cardholders for receiving the new cards. Q: What do I need to do to replace a lost or stolen card? You can request a replacement card for $30 from the GATE website. Q: If I am renewing, will my information auto-populate into the application/renewal page once I enter my GATE card number? Cardholders renewing will get a mailed letter and an ed letter containing a password. They will use their GATE# and password to access the system. User info will auto populate, but you will have to verify qualifications and requirements. Q: How do I change my mailing address on my GATE card? If you are renewing your GATE card, you can modify your mailing address and contact information while you are renewing. All GATE cardholders should review their personal information for accuracy at the time of renewal. You can also update the mailing address and contact information on an active GATE card at any time from the GATE web page. You will need your password in order to log in and change this information. We encourage you to keep your mailing address, , and phone number current in the GATE system so that you can receive updates and information from GDA. Q: Can retailers check someone s GATE status? Yes, from the GATE webpage. Q: The GATE application requires me to choose a NAICS code. What is a NAICS code and where can I find more information about what they mean? NAICS stands for the North American Industry Classification System and defined by the United States Census Bureau. These codes identify virtually every type of business practice or service performed in the U.S. Under the GATE program only certain types of business or farming practices are allowed for participation. The eligible codes are listed in the official GATE Rules and Regulations.

5 Q: I farm several different crops and qualify under several different NAICS codes, how do I know which code to choose? Many of our farmers could potentially qualify for GATE under different NAICS codes. For application purposes it is required to pick one NAICS code that best describes your farm s primary agricultural commodity. If you farm cotton, peanuts and soybeans for example we encourage you to pick the one NAICS code that best describes your operation. If cotton farming comprises the bulk of your farming operation then you would want to select Cotton Farming Q: Where can I find more information about a specific NAICS code? Additional information and full descriptions of each NAICS code can be found on the U.S. Census Bureau s website located at The GATE program is based upon the 2017 NAICS codes and you can research each specific code to determine which one best describes your business or farm operation. Q: What Taxpayer ID should I use as my state taxpayer identification number? The state taxpayer identification number submitted must be the tax number associated with your federal tax return which reflects your farm revenues and is needed by tax revenue officials to match the qualifying information on your application to the tax documentation held on file with the State of Georgia. The system will accept the following types of taxpayer ID s: Georgia Sales and Use Tax number Georgia Corporate Income Tax number (FEIN - Federal Employee Identification #) Georgia Individual Income Tax number (Social Security number) Out-of-state will use either SS# or FEIN Applicants can identify their appropriate tax number by registering with the Georgia Tax Center website: Q: Can I use my GATE card for all of my farm purchases? You can only use your GATE card for qualifying agriculture related products that you will use for your own operations on your farm. An Exemption Guide with detailed information on which agricultural products are qualified is available at the GATE website. Q: My application was denied. How do I appeal this decision? What is the appeal process?

6 If you are denied certification, then you will be given a reason for the denial and the licensing fee will be returned to the to you. Any denial may be appealed to the Georgia Agriculture Tax Exemption Advisory Board in writing within 30 days of denial. Appeals should be sent to the Georgia Agriculture Tax Exemption Program at 19 Martin Luther King Jr. Drive, Suite 601, Atlanta GA Q: Can I qualify for a GATE card if I don t have timber income every year? Yes, timber growers can qualify under the long-term income provision assuming you can generate an average of $5,000/yr. Q: I clear cut my timber last year. I plan to have it replanted this year. I don t intend to cut it for 15 years. Am I eligible for a GATE Card? Ultimately, the size of your timber tract/s will determine if you are eligible. In the example above, the tract/s of timber would need to be able to produce $75,000 of revenue if harvested 15 years from the time of planting. Q: Can I qualify for a GATE card if I am involved in irrigation sales and service? Specifically, can I qualify under the NAICS code 11511, Support Activities for Crop Production? An irrigation business could not qualify because they would be considered a contractor. Q: I just retired and want to get some cows. Will I be able to use a GATE Card? Sales tax are not normally charged on cattle purchases. You can qualify for the GATE card if you show that you will be making an excess of $5,000 a year in your cattle business. Q: Does rent for my farm count toward income? Yes 17. I rent my land out and the rent is over $5, Can I get a GATE Card? Yes Q: I operate a cotton gin, do I qualify?

7 Yes. GDA rules include any agribusiness that meets one of the qualifications for an agricultural producer as well as having an NAICS code listed in the rules will qualify. Cotton gins have an NAICS code , so if a producer meets the qualifications, he or she would qualify. Q: I am in the furniture industry; do I qualify as an agricultural producer? Sorry, but you do not qualify for the GATE Program. Q: I operate a sawmill; do I qualify as an agricultural producer? Sorry, but you do not qualify for the GATE Program. Q: I ordered $6,000 worth of fertilizer and it was delivered and spread on my farm. I had to pay sales tax as I did not have a GATE card. I have now applied and received my card. Can I get my tax money back on that fertilizer purchase? No, the GATE Card must be acquired before someone may receive the sales and use tax exemption. Q: I am a farmer with multiple meters used for poultry/irrigation under different LLCs. Do I need a separate card for each LLC? Yes. Sales tax exemptions are granted to separate legal entities that would be subject to separate registration for tax purposes. If a farmer has multiple legal entities operating under separate legal names, who each own/operate exempt machinery, equipment, or receive exempt energy through meters they would need to apply for separate GATE cards. If you have separate meters your utility provider(s) may require a GATE addendum for Metered Energy Sold to A Qualified Agriculture Producer. You can locate the GATE addendum from the GATE website. Q: I had severe loss in my pecan orchard and it may take me longer than 10 years to produce a good crop. Can I still get a GATE Card? In the example above, the pecan orchard would need to be able to produce at least $50,000 of revenue from the orchard 10 years after the time of loss. If you have any other specific question regarding the GATE Program, please the Georgia Department of Agriculture at farmtax@agr.georgia.gov or call FARM-TAX.

8 To qualify for the GATE program you must also file one of the following tax forms with the Federal Internal Revenue Service; 1040 Schedule F (Profit Loss from farming), IRS Form 4835 (Farm Rental Income and Expense), 1040 Schedule E (Supplemental Income and Loss), IRS Form 4797 (Sales of Business Property), IRS Form 1065 (Return of Partnership Income), or IRS Form 1120 or 1120(s) (Corporate Tax Return). These tax forms will be used to verify that you meet the eligibility requirement of at least $5,000 in farm production or eligible farm services provided from the previous year. If you do not file one of the required tax forms listed, you do not qualify for the GATE program. Once approved, you will be provided with either a one-year, two-year, or threeyear GATE card. The phased-in implementation will be done alphabetically, and payment will vary based upon the terms of the card received. A three-year registration will be $150, a two-year registration will be $100, and a one-year card will cost $50. This staggered approach will balance the annual registration workload for our agency and allow us to provide enhanced customer service to our farmers. All future renewals will be for a full three-year term at $150. Mastercard, Visa and Automatic Check Handling will be accepted. If you are having trouble accessing your account online, we encourage you to visit your local County Farm Bureau or Cooperative Extension Office. Be sure to take all needed paperwork so they can better assist you. For additional information contact the Customer Support Center at (855) FARMTAX, or (855) , Monday through Friday during normal business hours. The GATE system is continually monitored at Farmtax@agr.georgia.gov.

9 RULES OF GEORGIA DEPARTMENT OF AGRICULTURE CHAPTER GEORGIA AGRICULTURE TAX EXEMPTION TABLE OF CONTENTS Definitions Application for Authorization to Attain a Georgia Agriculture Tax Exemption (GATE) Certificate Renewal Process Denial of Certification for the Georgia Agriculture Tax Exemption (GATE) Certificate Revocation of Certification

10 Definitions (1) Agricultural product Items produced by agricultural operations. (2) Agricultural operations Used synonymously with agricultural purposes and means the following activities: raising, growing, harvesting, or storing of crops, including, but not limited to, soil preparation and crop production services such as plowing, fertilizing, seed bed preparation, planting, cultivating, and crop protecting services; feeding, breeding, or managing livestock, equine, or poultry; producing or storing feed for use in the production of livestock, including, but not limited to, cattle, calves, swine, hogs, goats, sheep, equine, and rabbits, or for use in the production of poultry, including, but not limited to, chickens, hens, ratites, and turkeys; producing plants, trees, fowl, equine, or other animals; producing aquacultural, horticultural, viticultural, silvicultural, grass sod, dairy, livestock, poultry, egg, and apiarian products; processing poultry; post-harvest services on crops with the intent of preparing them for market or further processing, including but not limited to crop cleaning, drying, shelling, fumigating, curing, sorting, grading, packing, ginning, canning, pickling, and cooling; slaughtering poultry and other animals; and manufacturing dairy products. Agricultural operations does NOT include constructing, installing, altering, repairing, dismantling, or demolishing real property structures or fixtures, including, but not limited to, grain bins, irrigation equipment, and fencing. (3) Animal Synonymous with livestock and means living organisms that are commonly regarded as farm animals, organisms that produce tangible personal property for sale, or organisms that are processed, manufactured, or converted into articles of tangible personal property for sale. The term does not include living organisms that are commonly regarded as domestic pets or companion animals. (4) Georgia Agriculture Tax Exemption (GATE) Certificate An agricultural sales and use tax exemption certificate issued by the Georgia Department of Agriculture that identifies its user as a qualified agriculture producer. (5) Georgia Tax Exemption Advisory Board A board appointed by the Commissioner in accordance with the Official Code of Georgia, Title 48, Chapter 8, Section 3.3. (6) Commissioner The Commissioner of the Georgia Department of Agriculture, or his designee. (7) Department The Georgia Department of Agriculture. (8) On Farm Where an agricultural product is produced or harvested. Authority: O.C.G.A History: New Rule entitled Definitions adopted: F. Oct. 30, 2012; eff. Nov. 19, Amended: F. Sep. 4, 2013; eff. Sep. 24, 2013.

11 Rule Application for Authorization to Attain a Georgia Agriculture Tax Exemption (GATE) Certificate (1) No person or entity shall utilize a GATE Certificate unless prior application for certification or licensing has been made to the Department and permission to make such use has been granted by the Commissioner. (2) Only Qualified Agriculture Producers are authorized to use the GATE Certificate. (3) 'Qualified Agriculture Producer' includes producers of agricultural products or services who meet one of the following criteria: (a) (b) (c) (d) The person or entity is the owner or lessee of agricultural land or other real property from which $5, or more of agricultural products in aggregate were produced and sold during the year, including payments from government sources; The person or entity is in the business of performing agricultural operations and has provided $5, of such services during the year; The person or entity is in the business of producing long-term agricultural products from which there might not be annual income, including, but not limited to, timber, pulpwood, orchard crops, pecans, livestock, and horticultural or other multiyear agricultural or farm products. Applicants must demonstrate that sufficient volumes of such long-term agricultural products will be produced which have the capacity to generate in aggregate at least $5, in annualized sales in the future; or The person or entity must establish, to the satisfaction of the Commissioner of Agriculture, the person or entity is actively engaged in the production of agricultural products and has or will have created sufficient volumes to generate in aggregate at least $5, in annualized sales. (4) The person or entity seeking a GATE Certificate may be regarded as an agriculture producer under one or more of following NAICS codes. North American Industry Classification System (NAICS) Codes can be found online at and shall be used by applicant to determine which code the person or entity may fall under for purposes of eligibility when applying for a GATE Certificate: 2017 NAICS US Code 2017 NAICS US Title Soybean Farming Oilseed (except Soybean) Farming Dry Pea and Bean Farming Wheat Farming Corn Farming

12 11116 Rice Farming Other Grain Farming 1112 Vegetable and Melon Farming Other Vegetable (except Potato) and Melon 1113 Fruit and Tree Nut Farming Berry (except Strawberry) Farming 1114 Greenhouse, Nursery, and Floriculture Production Nursery and Tree Production Tobacco Farming Cotton Farming Sugarcane Farming Hay Farming Sugar Beet Farming Peanut Farming All Other Miscellaneous Crop Farming Beef Cattle Ranching and Farming, including Feedlots Dairy Cattle and Milk Production Dual-Purpose Cattle Ranching and Farming 1122 Hog and Pig Farming Chicken Egg Production Broilers and Other Meat Type Chicken Production Turkey Production Poultry Hatcheries Other Poultry Production Other Poultry Production 1124 Sheep and Goat Farming 1125 Aquaculture Other Aquaculture Apiculture Horses and Other Equine Production Fur-Bearing Animal and Rabbit Production All Other Animal Production All Other Animal Production

13 1131 Timber Tract Operations 1132 Forest Nurseries and Gathering of Forest Products 1133 Logging Support Activities for Crop Production Cotton Ginning Soil Preparation, Planting, and Cultivating Crop Harvesting, Primarily by Machine Postharvest Crop Activities (except Cotton Ginning) Farm Management Services 1152 Support Activities for Animal Production 1153 Support Activities for Forestry Animal Food Manufacturing Fruit and Vegetable Canning, Pickling, and Drying* 3115 Dairy Product Manufacturing* Animal (except Poultry) Slaughtering* Poultry Processing Wineries* Farm Product Warehousing and Storage IF ON FARM* (5) Applications for the GATE Certificate shall be made online at For application assistance, applicants may contact the GATE Service Center at or 855-Farm Tax. (6) The applicant must disclose the following information in order to be deemed eligible by the Department: (a) (b) (c) The name and address of the farm, ranch, timber operation, or other business owned or operated by the applicant in relation to the production of agricultural products or the custom agricultural service; and An authentic and active address. Applicant must provide the name of the primary certificate holder and the names of no more than (2) authorized users. Commissioner has the authority to increase the number of authorized users, at his discretion.

14 (7) Applicant must check boxes on the application which apply and attest that the information provided is true and accurate. The information provided by the applicant will be shared with the Georgia Department of Revenue. (8) The Commissioner shall not issue or renew an agricultural sales and use tax exemption until the agricultural producer requesting such certificate has provided the Commissioner with a valid state taxpayer identification number obtained through, or recognized by, the Department of Revenue s Georgia Tax Center ( (9) The Commissioner shall require applicants to acknowledge and produce, upon request, at least one of the following forms to determine eligibility: (a) (b) (c) (d) (e) (f) (g) IRS schedule F (Profit or Loss from Farming) IRS form 4835 (Farm Rental Income and Expenses) IRS schedule E (Supplemental Income and Loss) IRS form 4797 (Sales of Business Property) IRS form 1065 (U.S. Return of Partnership Income) IRS form 1120 (U.S. Corporation Income Tax Return) IRS form 1120S (U.S. Income Tax Return for an S Corporation) (10) If an applicant does not file any of the forms provided for in paragraph (9) but claims eligibility for the exemption certificate pursuant to the criteria specified in paragraph (3) of this Rule, the applicant shall provide to the Commissioner any documentation, tax returns, forms, or sales receipts required by the Commissioner, and the Commissioner of Revenue, in his or her discretion, shall determine if the applicant has met such eligibility requirements in determining whether to issue or deny the issuance of the certificate. (11) Any agricultural sales and use tax exemption certificate issued or renewed on or after January 1, 2019, shall be valid for three years except as provided in the schedule set forth below. A certification fee of $150 will be required to obtain a GATE certificate. All fees shall be paid online at (a) In order to have staggered renewal dates for such three-year certificates, the Commissioner of Agriculture will establish a renewal schedule of existing certificates and prorate said renewals. The following schedule has been created for the 2019 Active GATE Certificate year. (i) The first 1/3 of active GATE certificate holders, determined alphabetically according to the last name of the primary account holder, will renew for three years and will be assessed the full fee of $150.

15 (ii) (iii) The next 1/3 of active GATE certificate holders, determined alphabetically according to the last name of the primary account holder, will renew for two years and will be assessed the prorated fee of $100. The final 1/3 of active GATE certificate holders, determined alphabetically according to the last name of the primary account holder, will renew for one year and will be assessed a renewal fee of $50. (12) Upon completion of the application and receipt of the certification fee online, a certificate, including a unique certification number and a wallet sized certification card, will be mailed to the mailing address provided by the applicant as confirmation of certification. The Department may also issue a key-chain sized certification card, which shall also be acceptable confirmation of certification. Replacement cards may be requested online. A fee of $30 will be assessed for each replacement card. All certification information will be forwarded to the Department of Revenue. (13) Certificate holders shall maintain records of purchases of qualified agricultural products exempt from sales and use tax and shall, upon request, furnish such records the Commissioner and/or Commissioner of Revenue. (14) The GATE Certificate is non-transferable. (15) Certificate holders shall comply with all applicable laws and regulations and obtain all appropriate governmental approval pertaining to the selling, advertising, marketing, packaging, manufacturing, or other commercial handling of agriculture products. (16) Any unauthorized use of the GATE Certificate may result in criminal prosecution. Authority: O.C.G.A Rule Renewal Process (1) The GATE Certificate must be renewed every three years, except as provided in the renewal schedule identified in Rule (11)(a). The procedure for renewal by certificate holders previously authorized to use the GATE Certificate is as follows: (a) Certificates expire December 31. The Department will begin accepting renewal applications on November 1, prior to the new calendar year. (b) Renewals shall be made online at For renewal assistance, applicants may contact the GATE Service Center at or 855- FarmTax.

16 (c) The renewal fee is $150. The renewal fee shall be paid online at (d) Failure to remit the renewal fee and application by the expiration date shall result in the Certificate being designated as inactive and therefore ineligible for GATE benefits. (e) All information required in the application process will be reviewed, updated where needed, and attested to by applicant. Authority: O.C.G.A Rule Revocation of Certification (1) Authorization to use the GATE Certificate may be suspended or revoked at any time if the certificate is misused or if the owner fails to operate as a Qualified Agriculture Producer. (2) Misuse of the GATE Certificate includes, but is not limited to, the following: (a) The use of the Agriculture Tax Exemption Certificate for purchasing taxable items that will be used in a manner that does not qualify for the exemptions found in O.C.G.A or the Rules and Regulations promulgated by the Georgia Department of Revenue. (b) The use of the Agriculture Tax Exemption Certificate by individuals or entities that fail to meet the standards of a Qualified Agricultural Producer. (c) Use of the Agriculture Tax Exemption Certificate by a person or entity other than the specified certificate holder. (3) Any evidence of misuse of the GATE Certificate or use of the Certificate by an ineligible person or entity may be referred to the Georgia Agriculture Tax Exemption Advisory Board or to the Department of Revenue for investigation and/or prosecution regarding misuse of the certificate. (4) The Department of Revenue shall be forwarded all information obtained by the Department of Agriculture for the purposes of review, audit, and possible prosecution of violations. (5) Authorization to use the GATE Certificate may be suspended or revoked pursuant to a finding of misuse and/or a recommendation of revocation from the Department of Revenue.

17 Revocation pursuant to a finding of misuse and/or recommendation from the Department of Revenue will be conducted through the Department of Agriculture. (a) If an agricultural producer knowingly uses a tax exemption certificate unlawfully, the Commissioner, after verifying the unlawful use of the tax exemption certificate, and subject to notice and a hearing in accordance with Chapter 13 of Title 50, the Georgia Administrative Procedure Act, shall suspend the certificate for up to one year. (b) If a subsequent unlawful use is knowingly made within five years following the end of the suspension, the Commissioner, after notice and hearing, shall determine if the certificate should be revoked. Any agricultural producer who has had his or her certificate revoked pursuant to this paragraph shall not be eligible for the issuance of a new tax exemption certificate until three years from the date of such revocation. Authority: O.C.G.A