HB 100 Proposes Creation of Georgia Tax Court

Following the report of the Special Council on Tax Reform and Fairness for Georgians, there should be a number of important state tax proposals in the Georgia legislature during the 2011 session. One highly-anticipated proposal—a bill proposing to create a specialized court for Georgia tax cases—has arrived with bipartisan support in the form of HB 100. It should be noted that, as proposed, the Tax Court would have to be approved by the Judicial Council of Georgia this year in order to receive a vote for passage during the 2012 session. In its current form, HB 100 proposes the following:

Jurisdiction and Judges

  • The Georgia Tax Court is proposed as a 10-year pilot project under the Georgia constitution, set to expire in 2021 absent passage of a referendum authorizing its permanent creation;
  • The Tax Court would have concurrent jurisdiction with the state’s superior courts to hear tax disputes involving the Georgia Department of Revenue (the “Department”), including appeals, refund claims, declaratory judgment actions and other proceedings that may currently be taken to superior court under Title 48 of the Georgia Code;
  • The Tax Court judge (or judges) would be appointed by the governor, and any appointed judge must be licensed to practice law in Georgia and have “substantial knowledge of and experience in state tax law”; and
  • The court’s principal offices will be located in Fulton County, but the judge may hold hearings in any other Georgia county.

Proceedings and Procedures

  • In a change to the current procedure, all Tax Court and superior court cases—including appeals from official assessments—would require the petitioner to file a complaint and the commissioner to file an answer; discovery procedures under the bill are similar to discovery in any other superior court action;
  • For proceedings in Tax Court, the bill would eliminate the current prerequisite for appealing an assessment that requires a taxpayer to post a bond or show that it owns property in the state of a value exceeding that of the appealed assessment;
  • Unlike in superior court—where either party may demand a jury trial—all cases in the Tax Court would be tried de novo, without a jury; and
  • Appeals may be taken to the Court of Appeals or Supreme Court, as appropriate, just as they are currently taken from cases decided in superior court.

Small Claims Division

  • The bill also creates a “Small Claims Division” of the Tax Court, to which taxpayers may elect to take their cases if the amount-in-controversy falls below a threshold to be determined by the Tax Court;
  • The proceedings in a Small Claims case would follow the more informal evidentiary rules of the magistrate court (as opposed to the superior court procedures applicable to “normal” Tax Court proceedings), and the proceedings would not be on the record; and
  • Decisions of the Small Claims Division would be binding and could not be appealed.

Department Withdraws Proposed Regulation Authorizing Forced Combination

Last fall, the Georgia Department of Revenue proposed revisions to Regulation 560-7-8-.07, the regulation governing “Shifting of Income.” In large part, the proposed amendment was an uncontroversial update to make the language of the regulation track the current language of O.C.G.A. § 48-7-58, the statute on which the regulation is based.

However, rather than stop at the language of the statute, the Department proposed to add an unprecedented provision authorizing it to “combine the income of any affiliates in order to compute the net income properly attributable to” Georgia. The proposed “forced combination” regulation provided no guidelines regarding how such combination would be computed, which group members would be included or when the Department could invoke such authority.

Not surprisingly, taxpayers and taxpayer representatives strongly objected to the proposed regulation. On January 28, 2011, the Department issued notice that it was withdrawing the proposal. Even more encouragingly, the notice stated that “[t]he Department does not expect to take further action with respect to this rule in the near future.”


The proposals discussed in this SALT advisory present a rare dose of good news for Georgia taxpayers: a step in the right direction (the creation of a specialized forum for tax cases) has been proposed, while a proposed step in the wrong direction (the forced combination regulation) has been withdrawn. We hope to present such good news in all of our SALT advisories.