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New Cingular Wireless PCS, LLC v. Georgia Department of Revenue

Supreme Court of Georgia

April 16, 2018

NEW CINGULAR WIRELESS PCS, LLC et al.
v.
GEORGIA DEPARTMENT OF REVENUE et al.

          MELTON, Presiding Justice.

         This case revolves around a decision by the Georgia Department of Revenue to deny a request for a tax refund[1] filed by New Cingular Wireless PCS, LLC; Chattanooga MSA LP; Georgia RSA No. 3, LP; and Northeastern Georgia RSA Limited Partnership (collectively "AT&T").[2] In New Cingular Wireless PCS, LLC v. Georgia Dept. of Revenue, 340 Ga.App. 316 (797 S.E.2d 190) (2017), the Court of Appeals affirmed the trial court's dismissal of a suit brought by AT&T to challenge the Department of Revenue's denial of the refund request. Thereafter, we granted certiorari and posed the following question: Whether the Ga. Comp. R. & Regs. R. 560-12-1-.25 (2) properly requires that a dealer seeking a sales tax refund must reimburse its customer before applying for a refund from the Department of Revenue? For the reasons set forth below, we find that the answer to this question is "no, " and we find that the Court of Appeals opinion must be vacated in part and reversed in part, and that the case must be remanded with direction.

         As set forth in the Court of Appeals opinion, the facts of this case are as follows:

New Cingular Wireless PCS, LLC; Chattanooga MSA LP; Georgia RSA No. 3, LP; and Northeastern Georgia RSA Limited Partnership ("appellants") filed suit against the Georgia Department of Revenue and Lynnette T. Riley in her official capacity as commissioner (the "Department") following the Department's refusal to issue a refund of what the appellants contend were erroneously paid taxes [under OCGA § 48-8-2 (39) (F)]. The Department moved to dismiss the appellants' action, and [the trial court granted] that motion. . . .
The appellants allege that from [November 1, ] 2005 until [September 7, ] 2010, they sold wireless Internet access services to Georgia customers, which were exempt from state sales tax under OCGA § 48-8-2. In November 2010, the appellants filed refund claims with the Department for sales tax that they claimed was, until September 2010, erroneously charged to Georgia customers on the purchase of wireless Internet access service. The Department officially refused to pay the requested refund claims on March 19, 2015. Accordingly, on April 17, 2015, the appellants filed their complaint to challenge this denial.
The Department answered and moved to dismiss for a lack of subject-matter jurisdiction and the failure to state a claim upon which relief could be granted. Thereafter, the Department amended its answer and attached as an exhibit a copy of a global settlement agreement entered into between the appellants and their customers. The Department argued that the complaint should be dismissed because (1) the appellants did not reimburse the alleged illegally collected sales tax to customers before seeking a refund from the Department, in violation of Department Regulation 560-12-1-.25; (2) the appellants lacked standing to file sales-tax-refund claims on behalf of customers for periods prior to May 5, 2009; and (3) the action was barred by Georgia class-action law. Following a hearing on the motion to dismiss, the trial court granted it on all three grounds. [The Court of Appeals] then granted the appellants' application to file a discretionary appeal.

(Footnote omitted.) New Cingular Wireless PCS, supra, 340 Ga.App. at 316.

In its ensuing decision, the Court of Appeals held:
The trial court's order contemplates the question of dismissal under both sovereign immunity/subject-matter jurisdiction and the failure to state a claim upon which relief can be granted, but it appears to ultimately conclude that dismissal is proper on the grounds of sovereign immunity. Nevertheless, we may affirm the grant of a motion to dismiss if it is right for any reason. And setting aside the question of whether appellants' action is also barred on the grounds of sovereign immunity, it is undoubtedly barred by a failure to state a claim upon which relief can be granted because (1) "the allegations of the complaint disclose with certainty that the [appellants] would not be entitled to relief under any state of provable facts asserted in support thereof" and (2) the Department has established that the appellants "could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought."

(Footnotes omitted.) Id. at 317 (1). We now review the reasoning of this opinion.

         1. As an initial matter, the Court of Appeals erred by failing to consider the issue of standing. The Department contended below that AT&T lacked standing to seek a refund on behalf of its customers prior to May 5, 2009, when an amendment to OCGA § 48-2-35.1 expressly allowing dealers to do so became effective. This should have been addressed by the Court of Appeals prior to considering the merits, as the question of standing is a jurisdictional issue. See Parker v. Leeuwenburg, 300 Ga. 789 (797 S.E.2d 908) (2017). For this reason, we must vacate that portion of the Court of Appeals opinion as it relates to the period from November 1, 2005 until May 5, 2009, and remand the case to the Court of Appeals for consideration of this threshold issue.[3]

         2. We next consider the period of time beginning by May 5, 2009 and ending on September 7, 2010. By that point in time, OCGA § 48-2-35 mandated that taxpayers be refunded taxes or fees that were erroneously or illegally collected, and OCGA § 48-2-35.1 (d) explicitly allowed dealers[4] like AT&T to seek such a refund on behalf of its customers. In this case, it is undisputed that AT&T qualifies as such a dealer. The main disagreement revolves around the timing of a dealer's payment of improperly collected tax to its customers in relation to the procedure for seeking a refund from the Department.

         We must begin our analysis with the wording of the statute and regulation at issue in this case. First, OCGA § 48-2-35 (a) generally provides that a "taxpayer shall be refunded any and all taxes or fees which are determined to have been erroneously or illegally assessed and collected from such taxpayer under the laws of this state, whether paid voluntarily or involuntarily . . . and shall be refunded interest . . . from the date of the payment of the tax." OCGA § 48-2-35.1 (d) allows dealers like AT&T to seek this refund on behalf of its customers. With regard to dealer requested refunds, Ga. Comp. R. & Regs. R. 560-12-1-.25 (2)[5] further provides:

In the case of taxes illegally or erroneously collected, the dealer may secure a refund as provided in OCGA Section 48-2-35, provided, however, the dealer must affirmatively show that the tax so illegally or erroneously collected was paid by him and not paid by the consumer, or that such tax was ...

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