Sales/Use/Indirect:
Georgia Appellate Court Remands Telecom’s High-Tech Exemption Case Back to Trial Court

Case No. A22A0095, Ga. Ct. App. (6/28/22). After the Fulton County, Georgia Superior Court (trial court) reversed a Georgia Tax Tribunal (Tribunal) decision from 2020 [see Docket Nos. 1732418 and 1800700, Ga. Tax Trib. (8/6/20) for more details on the Tribunal’s 2020 ruling], which originally held in favor of a telecommunications company that certain purchased equipment was eligible for state sales and use tax exemption under O.C.G.A. section 48-8-3(68) (i.e., Georgia’s “high-tech exemption”), the Georgia Court of Appeals (Court) now has vacated the trial court’s ruling and remanded the case back to the trial court “for its consideration under the proper standard of review.” In doing so, the Court explained that the trial court is prohibited from undertaking a de novo determination of evidentiary questions, and it instead should determine whether the facts found by the Tribunal are supported by any evidence. The Court also noted that nothing in its opinion “is intended to indicate how the trial court should rule in this matter after the application of the proper standard of review.”

In 2020, the Tribunal held that the telecom successfully showed that the equipment at issue adequately qualified as “computer equipment,” exceeded the required $15 million annual purchase threshold, and was not otherwise excepted from the exemption as non-qualifying “telephone central office equipment or other voice data transport technology.” Among its arguments to the contrary, the Georgia Department of Revenue (Department) claimed the equipment at issue constituted non-qualifying telephone central office equipment or other voice data transport technology. The Tribunal rejected the Department’s broader interpretation of non-qualifying equipment/technology from the statutory exemption, reasoning that the state legislature only intended to except certain narrowly defined equipment/technology rather than technology (in this case, “4G technology”) that could not have been contemplated at the time of enactment. Please contact us with any questions.