Anna's Summary of the IPT Georgia One-Day Tax Seminar
This November in my hometown of Atlanta, I attended the Georgia One-Day Tax Seminar, presented by the Institute for Professionals in Taxation (IPT) and the Georgia Department of Revenue.
The day began with opening comments from Lynne Riley, the GA State Revenue Commissioner. She was introduced by Staci Guest, Esq., Chief Tax Officer GA DOR.
Alex Sponseller, Esp., spoke about current litigation regarding both sales, income and property tax.
On the sales tax side, he discussed the case of Georgia Motor Trucking Ass’n vs. GA DOR. This case argues whether proceeds from the local sales and use tax on motor fuel are subject to earmark requirements and must be spent on road and bridge maintenance. The plaintive cites HB170. Currently, oral argument is scheduled for December 22, 2015 before Judge Robert McBurney.
Mr. Sponseller also talked about the Inglett & Stubbs int’l Ltd. vs. Riley case. This involved a contractor’s purchase of electrical equipment and supplies that are used at a construction project in another country. Were the equipment and supplies considered a sale for resale and not subject to GA sales and use tax? Inglett paid vendors sales tax for their purchases but subsequently requested a refund for about $1.9 million.
The GA Tax Tribunal affirmed the DOR’s denial of the refund. The Tribunal cited O.C.G.A. 48-8-63 and JW Meadors & CO v. State 89 Ga. App. 583 ( 1954 ) found that contractors buying supplies to perform construction contracts are deemed to be the end users of the supplies, regardless if the performance of the contract is outside the state. The current status is that the Superior Court affirmed the Tax Tribunal decision by Order on October 30, 2015. Inglett may file an application of discretionary appeal to the Court of Appeals.
Another sales tax case is Scholastic Book Club, Inv vs. Riley. This is still in the discovery period. The issue is whether the activities of the Petitioner in the GA thru the use of school teachers and other activities constitute a taxable nexus for sales and use tax purpose.
Scholastics was assessed over $1.8 million in sales use tax for the period of June 2008 thru May 2013. Scholastics appealed the assessment claiming that it was not a retailer or a dealer. Scholastics does not have constitutional nexus in GA and was not required to collect and remit sales tax.
The other case that was discussed was the Douglasville Hospitality, Inc. vs. Riley. The case issue was whether the statute of limitation to assess and collect sale and use taxes apply to a successor that purchases a business owing sales and use tax. The case was denied at the Tax Tribunal level. The predecessor company incurred sales and use tax liabilities from 2009 and 2011 and it filed a final tax return on September 2011. The GA DOR issued an assessment within 3 years of the final tax return to the petitioner. Without a receipt or certificate of good standing from the GA DOR, the petitioner was not able to claim successor safe harbor relief without proof of a tax clearance from the predecessor.
Also, there was an update on the Cingular Wireless vs. GA DOR case. This involves the sales tax collected by the carrier for internet access services. Oral arguments are scheduled January 2016.
Other cases discussed were income tax cases of a convicted felon’s jeopardy assessment for taxes, if another’s state’s franchise tax ( in lieu of state income tax ) was deductible from GA income tax, and if taxable nexus exists the contracts of affiliates.
Mr. Sponseller ended with 2 property tax cases; one is Southern LNG v. MacGinnitie where the petitioner seeks to compel the GA DOR to treat Southern as a public utility. The Superior Court found standing with Southern. The GA DOR filed an appeal and as of the meeting, the case has not been docketed yet.
The final case for property tax is currently in the discovery period. It is BellSouth Telecommunications, LLC v. Riley. The issue is may intangibles be deducted from a unit value.
After Mr. Sponseller’s presentation, the Honorable Judge Larry O’Neal, GA Tax Tribunal Chief Judge, spoke. He gave an overview of the department and said that since the Tribunal’s inception in 2012, there have been over 3K cases filed and over 290 opinion cases submitted. The Tribunal website is http://gataxtribunal.georgia.gov where a taxpayer may get forms, rules and see current decision posted.
Judge O’Neal encourages that tax professionals to participate in the Tribunal process with their clients. He said that he hopes that others will see that the services for the Tax Tribunal will make it simpler and economically feasible for a tax payer to petition the GA DOR for tax relief.
Just before lunch, our next speaker was Ronald Johnson, Jr. He is the Director of the Taxpayer Services Division. His presentation was around the technology the GA DOR is using to improve the efficiency of the processing center.
He highlighted the new version of the Georgia Tax Center ( GTC ) website https://gtc.dor.ga.gov. He said that the bulk tax filing process has become much better to allow 3rd party submissions. Mr. Johnson said that soon taxpayers would be able to track refunds on the GTC. The GTC is looking at ways to expand via smart phones. Mr. Johnson also said that, with planning, he would be more than happy to give tours of the processing center and customer center.
After lunch, we had a special guest – a black lab named Sid Seizure. Sid is the only GA DOR quad-ped on the payroll. He and his handler, an officer of Special Investigations, work the Atlanta Hartsfield Airport sniffing out illegal drugs and sometimes cash that have come in contact with drugs that have been carried by passengers going thru the airport. His handler explained how Sid’s training is more play for the canine. Sid is not limited to the interior area of the airport. He also works on the tarmac. This canine is well taken care of. During breaks or when he’s outside, he has an environmentally maintained SUV that texts his handler if the temperature is too hot inside for Sid.
Sid has been known to stop many illegal transactions from occurring outside his work area. The proceeds from the illegal goods help maintain the program that keeps Sid on the payroll.
Afterwards, we were back to a discussion of Legal Affairs and Tax Policy Updates ( income tax ) by John Foster, CPA Manger Income Tax GA DOR. Mr. Foster talked about the income tax credits that the film companies are able to request and said that during the beginning of 2016, every preapproved process will be available on the GTC. Mr. Foster talked about the Fire Works Excise Tax, the Transportation tax from HB 170 and the Private College Exemption from HB202 which is more of a sales tax policy but also relies on the income status of the college.
Our last speaker was Amy Oneacre. CPA, Assist Director Tax Policy, GA DOR. She discussed HB225 which addressed taxation of For Hire Transportation ( like Uber ). There would be a new licensing system that a master license may be used. There is a per fee based on the number of vehicles under the master license. Ms. Oneacre does not know what will happen to the bill as it will be effective and also repealed on July 1, 2017.
She discussed HB 277 where the definition of floor sampling was expounded; HB 426 where a certain expired exemption was put back in place for non-profit health centers and volunteer clinics; and HB 428 which refunded certain sales tax paid by zoos or aquariums.
Ms. Oneacre also discussed updates on the manufacturing machinery exemption ( 560-12-2.62 ) regarding consumable supplies. She also mentioned some reworking updates on the electricity necessary and integral to manufacturing. This is out for public comment as some energy not used by a manufacturer is taxable.
Ms. Oneacre mentioned some regulations that are still in progress to be reviewed for updates including,
- Direct Pay permits
- Withdrawals from inventory
- Consolidation of local tax regulations
- Contractor forms and procedures
Ms. Oneacre said that now all informational news is called Policy Bulletin and new letter rulings are also published on the website. Some letters will be redacted to mask the name of the petitioner.
All in all the meeting was very informative. While most of us were from GA, there were other attendees from as far away as AZ, NJ and TN.
I look forward to read the final outcome of the Inglett and Scholastic cases and the updates that will be forthcoming to the manufacturing exemption regulations.