In 2016, the Georgia General Assembly passed, and Governor Nathan Deal signed into law, Senate Bill 258, legislation that, effective January 1, 2017, awards Georgia income tax credits to individual and corporate taxpayers who contribute to qualified rural hospital organizations (“RHOs”) located in Georgia.
On May 8, 2017, Governor Deal signed Senate Bill 180, an amendment to the SB 258 Georgia Rural Hospital Organization Expense tax credit that, effective retroactively to January 1, 2017, enhanced the original legislation.
On May 2, 2018, Governor Deal signed House Bill 769, which effective July 1, 2018, enhances the Georgia Rural Hospital Organization Expense tax credit by increasing the tax credit percentage for contributions to RHOs from 90% to 100%, by allowing owners of pass-through entities to qualify as eligible contributors, and by removing the maximum credit limits on non-corporate contributions to rural hospitals after June 30 of each year, through 2021.
During the 2019 legislative session, two bills related to the Qualified Rural Hospital Organization Expense (“QRHOE”) program were passed: HB 186 and HB 321. Both bills were signed by Governor Brian Kemp on April 25, 2019, at which time they became effective.
Following is a summary of the provisions from both bills related to the QRHOE program:
- The Department of Community Health (DCH) shall create an operations manual for identifying RHOs and ranking them in order of financial need
- DCH shall post in a prominent location on its website the list of eligible RHOs, the operations manual, the Rural Hospital Tax Credit Donation and Expenditure Form, the total amount received by any third party that participated in soliciting, administering, or managing donations, and a link to the DOR’s website containing relevant QRHOE information
- Any third party that participates in soliciting, advertising, or managing donations shall provide the complete list of RHOs eligible to receive the tax credit, including their ranking in order of financial need as determined by DCH, to any potential donor, whether or not a contractual relationship with the RHO exists
- DOR shall post on its website detailed information related to the QRHOE program, including a list on its website all eligible RHOs and their ranking in order of financial need, and a monthly progress report containing:
- Total approved by RHO and in total
- Total contributions received by RHO and in total
- Total of tax credits available
- List of approved contributions made to an unspecified or undesignated RHO and the RHO that received such contributions
- The Department of Audits and Accounts shall annually conduct an audit of the program, including amount and recipient RHO of all contributions made, all tax credits received by individual and corporate donors, and all amounts received by third parties that solicited, administered, or managed donations
- For any donor who desires to make an unspecified or undesignated contribution, such donation shall be attributed to the RHO ranked with the highest financial need that has not yet received the maximum contributions for that taxable year
- In 2017 and 2018, Georgia HEART allocated undesignated funds equally among all participating hospitals; as a result, each of the 53 hospitals partnered with HEART in 2018 received approximately $400,000 in contributions which were “undesignated”
- Per HB 321, any undesignated application must be allocated to the rural hospital organization with the greatest financial need, according to the DCH list, until that hospital receives the maximum dollar amount of contributions for which it is eligible for that taxable year, regardless of whether a third party has a contractual relationship or agreement with such rural hospital organization
- The two bills which were signed into law contain conflicting provisions relating to the deadline for donating, with HB 186 permitting 180 days, and HB 321 preserving 60 days. The Office of Legislative Counsel has chosen to apply the 180 day payment deadline for all contributions made to a rural hospital, instead of the 60 day payment deadline.
- The program has been extended from 2021 to 2024.
On May 9, 2022, Governor Brian P. Kemp signed House Bill 1041, which increases the cap on rural hospital tax credits to $75 million annually, beginning in 2023.
On April 19, 2024, Governor Brian P. Kemp signed House Bill 1339, which effective January 1, 2025, includes an increase in the Rural Hospital Organization Tax Credit annual cap to $100 million and extends the program for an additional five years, ensuring its continuity through 2029.
Georgia Department of Revenue Rule 560-7-8-.57 relating to the Georgia Rural Hospital Organization Expense Credit, which Georgia HEART Hospital Program administers on behalf of all of the participating rural hospitals.
On April 19, 2024, Governor Brian P. Kemp signed House Bill 1339, which includes in Section 11 the following amendments to O.C.G.A. § 48-7-29.20 – Tax credits for contributions to rural hospital organizations – effective January 1, 2025:
- Program is extended for five additional years – from original sunset date of 12/31/24 to 12/31/29.
- Annual aggregate amount of tax credits allowed is increased from $75 million to $100 million.
- Individual owner of a pass-through entity (member of a limited liability company duly formed under state law, a shareholder of a Subchapter ‘S’ corporation, or a partner in a partnership) is able to contribute up to $25,000 (increased from $10,000) in the first six months of the year. (Contributions from this taxpayer type are unlimited in the second half of the year, as always.)
- Payment deadlines for applicants are revised, as follows:
- A taxpayer preapproved by the DOR on or before September 30 shall make the contribution within 180 days after DOR preapproval, but not later than October 31.
- This means that applicants preapproved by April 30 will have 180 days to make payment.
- Applicants preapproved between May 1st and September 30th will have until October 31st to make payment.
- A taxpayer preapproved by the DOR after September 30 shall make the contribution on or before December 31.
- Applicants preapproved after September 30th will have until December 31st to make payment.
- A taxpayer preapproved by the DOR on or before September 30 shall make the contribution within 180 days after DOR preapproval, but not later than October 31.
Note that the revised payment deadlines should help ensure that all available tax credits are utilized, eliminating the instances in which non-payment of amounts due on the last day of the year go unfunded, without sufficient time to allocate them to other interested taxpayers.