Guest Column
By Wendell Willard
Sandy Springs City Attorney

Sandy Springs is proud to be the chosen location of so many local, state, national and international businesses and takes seriously any attempts to disparage and falsely portray its policies and administration. Such an attempt was made in an article by Eric Tresh, attorney, in the Guest Column of the Aug. 27-Sept. 9 edition of the Sandy Springs Reporter. Mr. Tresh’s article dealt with the Sandy Springs’ Business and Occupation Tax and presented a misleading and inaccurate depiction of the application and enforcement of this tax by Sandy Springs. As City Attorney for Sandy Springs, I feel obligated to respond to his disingenuous comments.

It appears that Mr. Tresh is not interested in the fact that Sandy Springs is following the law and seeking to apply it uniformly to all. Rather, he attempts to instill a groundless sense of fear and outrage on the part of businesses in his effort to pressure the acceptance of his position, which is contrary to applicable law and judicial decisions. Sandy Springs has examined the business occupation tax ordinances of its surrounding cities and counties to be sure it is in line with these jurisdictions, and it is.

Georgia authorizes tax

Georgia law authorizes municipalities to impose a business and occupation tax on gross receipts of businesses which operate and have a location within the city limits. Most municipalities do so.

Georgia law also directs the deduction or exclusion from the total annual gross receipts, which are used to calculate the occupational tax, those proceeds from the sale of goods and services that are delivered to or received by customers who are outside the state at the time of delivery or receipt. The Sandy Springs ordinance complies completely with state law.

On Sept. 1, 2009, an order was entered by a Fulton County Superior Court judge in the case of Mirant Corporation, et al. v. City of Sandy Springs, Georgia, et al., Fulton County Superior Court, Civil Action File No. 2008 CV 161115, which interpreted the exclusion provision just as Sandy Springs has applied it. This order states “the delivery of tangible property under this statute would follow a destination theory for applying the exclusion.” Thus, proceeds from the sale of tangible goods that are delivered to or received by customers who are outside the state at the time of delivery or receipt are not to be included in the gross receipts figure used to calculate occupational taxes.

On the other hand, the judge held: “Services are delivered where the employee exerts substantial efforts for the purpose of serving customers. Therefore, the exclusion only applies to proceeds from the sale of services where the business exerted substantial efforts outside the state of Georgia. The exclusion does not apply to proceeds from the sale of services where the business exerted substantial efforts in the state of Georgia (i.e., city of Sandy Springs) whether in person, through telephone or via Internet, even if the customer resides outside the State of Georgia.”

Occupational taxes have been imposed by Sandy Springs pursuant to this Superior Court order, which is the only judicial decision of any kind to date on the application of this particular exclusion provision.

No risk of multiple taxes

Further, contrary to Mr. Tresh’s characterization, there is no risk that a business will be subject to multiple taxation on the same gross receipts, and I challenge him to bring any true example to our attention. The Sandy Springs ordinance and state law provide for an allocation process if more than one location of a business is involved in generating the same gross receipts and for the exclusion of gross receipts required to be reported to any other local government. Therefore, the sum of gross receipts of a business taxed by all local governments will never exceed 100 percent of the total gross receipts of the business.

In the past, many cities and counties in Georgia have not actively enforced the business and occupation tax laws, which require businesses to register on an annual basis, pay an occupational tax and receive an occupation tax certificate (often referred to as a business license). This was the case when Sandy Springs was incorporated. It seems Fulton County had accepted without question what each business chose to report and pay, resulting in the occupational tax law not being applied equally to all businesses. In addition, many businesses were operating that had never registered and obtained the required annual business occupation tax certificate. While the “market sourcing theory” referenced by Mr. Tresh in his column may be the basis for some other state taxes, Georgia law does not apply this policy to the imposition of business occupation tax in this state.

The author of the article, an attorney, is currently representing two businesses in Sandy Springs that are involved in the review procedure Sandy Springs has established to allow for further inquiry into any disagreement regarding the application or amount of an occupational tax. If, after pursuing an initial informal conference and review process, a business is still dissatisfied with the city’s decision, the business may pursue a formal appeal before the city council. If dissatisfied with the city council’s decision, the business may then file a petition with the Superior Court of Fulton County. These procedures exist to ensure that the law is correctly and fairly applied.

Want taxes to be fair

No one enjoys paying taxes, but when we are required to pay, we want the tax to be fairly and equally assessed to all who have the same obligation. It is a priority for Sandy Springs’ council that adequate policies and procedures are in place so that all businesses operating within the city limits of Sandy Springs are fairly treated and properly registered, and pay their appropriate amount of tax.

The mayor, council and management of Sandy Springs strongly support the business community and recognize the many important contributions our businesses have made and continue to make to the city. A demonstration of this commitment is the fact that the city has joined with our Chamber of Commerce to perform a full review of all local taxes paid by our businesses, including business occupation taxes, property taxes and franchise fees.

Wendell is the City Attorney for Sandy Springs and also serves in the Georgia General Assembly in the House of Representatives for District 49.