State Tax Tribunal
The Georgia Chamber of Commerce supports creation of an independent tax tribunal for disposition of state tax disputes. Similar entities at the state and federal level have resulted in a more streamlined disposition of tax disputes as well as more transparency and predictability.
Shortfalls of Current State Tax Appeal System in Georgia
- Currently in Georgia, when a taxpayer contests a decision by the state Department of Revenue, thatinitial appeal is reviewed and decided by the department.
- Any further appeal of that decision is either handled administratively by the Office of State Administrative Hearings (OSAH) – whose decisions can be overruled by the revenue commissioner – or in state-level superior courts whose judges handle cases dealing with a wide range of legal issues.
- Before these appeals are considered, the taxpayer must generally first file a bond or pay the full amount of the disputed tax.
This system poses three specific challenges:
- There is an inherent conflict-of-interest when the staff (or the commissioner) who assessed the original tax provides the final decision on the legitimacy of that tax;
- Superior court judges reviewing the appeals are not necessarily experienced in handling complicated, specialized tax cases to be able to provide consistent rulings; and
- Requiring taxpayers to initially pay a bond or the full amount of the disputed tax can be a financial barrier to getting appropriate consideration and resolution of their case.
Importance of an Independent Arbiter of State Tax Disputes
- A state’s ability to recognize the potential for error or bias in its tax department determinations and to provide taxpayers access to an independent tax appeals process is considered by businesses to be the most important indicator of the state’s treatment of its taxpayers.
- States with fair and efficient tax appeal systems provide for an independent tax authority to resolve disputes, staff that authority with a judge who has specific experience in tax law and do not require prepayment of the disputed tax.
- More than half of the states across the country provide an independent appeals process including many of the states in the Southeast.
Benefits of HB 100
- HB 100 would establish an independent tax tribunal within OSAH with jurisdiction to hear protests of taxes currently administered by the Georgia Department of Revenue and whose decisions cannot be overruled by the commissioner.
- This tax tribunal would provide more consistency and transparency in tax decisions along with more guidance and predictability since these decisions would be handled by a judge experienced in tax issues and because the decisions of the tribunal would be publicly published.
- The tax tribunal would not have authority to declare statutes unconstitutional and would not replace existing procedures for administratively resolving disputes prior to the issuance of a final assessment.
- All of these would improve access to an impartial tax decision-making process and increase public confidence in the tax system making Georgia more competitive with other states.
- Over the past five years, it has been estimated approximately 260 tax disputes could have been resolved by a state tax tribunal, demonstrating a real need for this legislation.
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