Georgia Tax Legislation Enacted in 2011
The Georgia General Assembly opened the 2011 legislative session with the goal of overhauling the state’s tax code, but it settled for passing only a handful of much less ambitious bills. By way of background, in 2010, the General Assembly commissioned a Special Council to propose significant reforms to Georgia’s tax laws. After conducting an extensive study of Georgia’s existing taxation and revenue structure, the Special Council presented its recommendations to the General Assembly, which were then incorporated into several different comprehensive bills introduced during the 2011 session. However, a final, stripped-down version of the reform bill failed to pass the House of Representatives before the end of the session. Each version of the bill remains viable for the 2012 legislative session, but it remains to be seen whether the numerous factors that led to the breakdown of the reform package this year can be overcome a year from now.
Among the bills that were signed into law this year include the following:
- HB 168 – Conforms the Georgia tax code to the Internal Revenue Code enacted as of January 1, 2011, with specified exceptions. The bill also updates several sales and use tax definitions for purposes of maintaining Georgia’s compliance with the Streamlined Sales and Use Tax Agreement; and
- HB 322 – Extends the sunset for the jet fuel sales tax exemption from July 1, 2011 to July 1, 2013.
Among the bills that were passed but are still awaiting the Governor’s signature are:
- HB 234 – Extends the sunset date for the sales tax exemption on aircraft parts from June 30, 2011 to June 30, 2013. Also provides discretion to the governor to allow new tourist attractions to keep a portion of the sales tax generated on site;
- HB 325 – Expands the cap for tax credits for donations to private school scholarship organizations. The cap, currently at $50 million, will grow by the rate of inflation each year until 2018; and
- HB 346 – Extends the sunset date for the clean energy facilities tax credit from December 31, 2012 to December 31, 2014, and raises the cap on such credits from $2.5 million to $5 million. That bill also makes the tax credits for donation of real property for conservation purposes transferable.
Property Tax Reforms Passed During 2010 are Now in Effect; Most Georgia Property Owners Should Have Received the Newly-Required Assessment Notices
The comprehensive property tax reform legislation passed during the 2010 legislative session is now in effect. As a reminder, that reform package requires:
- O.C.G.A. § 48-5-306 now requires that county boards of tax assessors provide an annual notice of that year’s property tax assessment to every taxpayer. (Previously, the statute required such notice only if the board made corrections or changes to a taxpayer’s return.)
- In addition to basic information regarding the property and the assessment history, the annual notice must also contain a statement of the taxpayer’s right to an appeal and an estimate of the current year’s taxes for all levying authorities.
- The statute requires that annual notices be mailed no later than July 1. Property owners should have already received those notices or should receive them soon:
- Cobb County – assessment notices for commercial properties were mailed on April 8, 2011, while residential notices were scheduled to be mailed on May 6, 2011.
- DeKalb County – residential and commercial notices are scheduled to be mailed in mid-May 2011.
- Fulton County – assessment notices for residential and commercial properties went out last week. The notices sent to many taxpayers included a vastly overstated total estimate for the taxes due this year; the county stated that it may send corrected notices.
- Gwinnett County – assessment notices were mailed out on or before April 15, 2011.
Right to Appeal
- O.C.G.A. § 48-5-311 now provides that taxpayers have 45 days from the date of the mailing of the annual notice to file a notice of appeal with the county board of tax assessors. Upon receiving a taxpayer’s notice of appeal, the board has the option of making changes or corrections to the assessment. If the board makes no changes, it must forward the appeal directly to the county board of equalization. If, however, the board of assessors does make changes, it must send a notice of the changes or corrections to the taxpayer explaining the taxpayer’s right to appeal to the county board of equalization. The taxpayer has 30 days from the date of mailing of such notice to appeal to the board of equalization.
- Section 48-5-311 also provides that, in an appeal to the superior court from a decision of the board of equalization, taxpayers (but not the county) may elect to have the appeal tried by the court or to a jury.
- Further, section 48-5-311 provides that for any appeal of an assessment, the taxpayer and county may, by mutual agreement, waive the board of equalization appeal and have the appeal go directly to superior court. The taxpayer (but not the county) may also elect a binding arbitration within 45 days of receiving the board of assessors’ annual notice. Such arbitration would not be subject to appeal by the taxpayer to the board of equalization or to superior court.
New Definition of “Arm’s Length, Bona Fide Sale”
- Finally, O.C.G.A. § 48-5-2’s definition of “arm’s length, bona fide sale” is expanded to include “a distress sale.” Distress sales are defined as good faith transactions that include foreclosures, short sales, or bank sales. Based on this change, when arriving at fair market value of property, county boards of tax assessors would no longer be able to throw out distress sales as sales that are not indicative of fair market value.
- This provision adds additional force to section 48-5-2(3)(B), which requires the tax commissioner to consider foreclosures, bank, or other distress sales of comparable property when determining the fair market value of a property.