New Cingular Wireless Pcs, LLC v. Georgia Department of Revenue
340 Ga. App. 316
| Ga. Ct. App. | 2017Background
- Appellants (New Cingular and related entities) sold Internet access services in Georgia and filed refund claims in Nov. 2010 for sales taxes they contend were erroneously collected before Sept. 2010; the Department denied the claims in Mar. 2015 and appellants sued in Apr. 2015.
- The Department moved to dismiss on sovereign-immunity/subject-matter-jurisdiction and failure-to-state-a-claim grounds, and attached the parties’ global settlement agreement as an exhibit.
- Department regulation Ga. Comp. R. & Regs. 560-12-1-.25(2) requires a dealer seeking refunds on behalf of consumers to affirmatively show the tax was paid by the dealer and not the consumer, or that the tax was collected from the consumer and has since been refunded to the consumer.
- Appellants admitted they had not refunded the allegedly erroneously collected tax to consumers before seeking relief from the Department, though their settlement agreement included provisions for a Pre-Refund Escrow Fund that contemplates prepayment to satisfy taxing-jurisdiction requirements.
- The trial court dismissed the complaint on three grounds (failure to refund consumers per regulation, lack of standing for pre-2009 periods, and that the claim was a barred class action); the Court of Appeals affirmed on the primary ground that appellants failed to state a claim because they did not comply with the refund-regulation prepayment requirement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a dealer must repay consumers before seeking a refund from the State under OCGA § 48-2-35 and applicable Dept. regulation | Appellants: § 48-2-35 allows dealers to seek refunds without advancing funds to customers first | Dept.: Regulation requires dealers to show tax was refunded to consumers (or paid by dealer) before seeking State refund; sovereign-immunity waiver must be strictly followed | Held: Dept. regulation is entitled to deference; because appellants admitted no repayment, they failed to state a claim and dismissal was proper |
| Whether the Department’s interpretation of its regulation is unreasonable or contrary to statute | Appellants: Dept. interpretation is inconsistent with regulation’s plain language and § 48-2-35 | Dept.: Regulation was validly promulgated under statutory authority and its interpretation is reasonable and entitled to deference | Held: Court deferred to agency interpretation as reasonable and not plainly erroneous; dictionary support for "secure" and settlement terms reinforced reasonableness |
| Whether the court needed to resolve standing and class-action bars after dismissal for regulatory noncompliance | Appellants: Trial court erred in concluding they lacked standing for pre-2009 taxes and that claim was a barred class action | Dept.: Additional grounds supported dismissal | Held: Court did not reach merits of standing and class-action holdings because dismissal on failure-to-state-a-claim (no repayment) was dispositive |
Key Cases Cited
- Sawnee Elec. Membership Corp. v. Ga. Dep’t of Rev., 279 Ga. 22 (Ga. 2005) (statutory tax-refund suits constitute an express waiver of sovereign immunity to be strictly construed)
- Pruitt Corp. v. Ga. Dep’t of Comm. Health, 284 Ga. 158 (Ga. 2008) (courts defer to agency interpretations of statutes and rules the agency administers)
- Ga. Dep’t of Rev. v. Owens Corning, 283 Ga. 489 (Ga. 2008) (administrative interpretation of statutes enforced by the agency is entitled to great weight)
- Austin v. Clark, 294 Ga. 773 (Ga. 2014) (standard for dismissal for failure to state a claim requires complaint show claimant could not possibly be entitled to relief)
- Webb v. Bank of Am., N.A., 328 Ga. App. 62 (Ga. Ct. App. 2014) (same dismissal standard applied)