HB 90 - Income tax; Federal Retiree Refund Act; enact
Georgia House of Representatives - 1995/1996 Sessions
HB 90 - Income tax; Federal Retiree Refund Act; enact
Page Numbers - 1/ 2/ 3/ 4/ 5/ 6/ 7
1. Buck 135th 2. Baker 70th 3. Birdsong 123rd
4. Orrock 56th 5. Bordeaux 151st 6. Walker 141st
House Comm: W&M / Senate Comm: F&PU /
House Vote: Yeas 168 Nays 0 Senate Vote: Yeas 56 Nays 0
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House Action Senate
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1/9/95 Read 1st Time 1/13/95
1/10/95 Read 2nd Time 1/26/95
1/11/95 Favorably Reported 1/25/95
Sub Committee Amend/Sub
1/12/95 Read 3rd Time 1/27/95
1/12/95 Passed/Adopted 1/27/95
CS Comm/Floor Amend/Sub
1/31/95 Sent to Governor
2/1/95 Signed by Governor
1 Act/Veto Number
2/1/95 Effective Date
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Rules Suspended to Introduce
Code Sections amended: 48-2-100, 48-2-101, 48-2-102, 48-2-103, 48-2-104,
48-2-105, 48-2-106, 48-2-107
HB 90 LC 18 6534-ECS
A BILL TO BE ENTITLED
AN ACT
1- 1 To amend Chapter 2 of Title 48 of the Official Code of
1- 2 Georgia Annotated, relating to state administrative
1- 3 organization, administration, and enforcement, so as to
1- 4 provide for the refund of certain income taxes to certain
1- 5 retired federal employees; to provide for a short title; to
1- 6 provide for legislative findings; to provide for
1- 7 definitions; to provide for refund claims and procedures; to
1- 8 provide for rights and duties of claimants; to provide for
1- 9 powers, duties, and authority of the state revenue
1-10 commissioner, the Department of Revenue, and the Office of
1-11 State Administrative Hearings; to provide for automatic
1-12 repeal of the foregoing provisions; to provide an effective
1-13 date; to provide implementation of this Act only upon
1-14 dismissal of litigation; to repeal conflicting laws; and for
1-15 other purposes.
1-16 BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION 1.
1-17 Chapter 2 of Title 48 of the Official Code of Georgia
1-18 Annotated, relating to state administrative organization,
1-19 administration, and enforcement, is amended by adding a new
1-20 article at the end thereof, to be designated Article 4, to
1-21 read as follows:
"ARTICLE 4
1-22 48-2-100. (Index)
1-23 This article shall be known and may be cited as 'The
1-24 Federal Retiree Refund Act of 1995.'
1-25 48-2-101. (Index)
1-26 It is found and determined by the General Assembly of
1-27 Georgia:
1-28 (1) That under the United States Supreme Court decision
1-29 of Davis v. Michigan Dep't of Treasury, 489 U.S. 803
1-30 (1989), the state collected taxes from retired federal
-1- (Index)
LC 18 6534-ECS
2- 1 employees pursuant to a Georgia statute which was
2- 2 subsequently found unconstitutional; and
2- 3 (2) That although the Georgia Supreme Court found the
2- 4 Georgia statute unconstitutional under the Davis
2- 5 analysis, it found that the Georgia refund statute found
2- 6 at Code Section 48-2-35 did not apply; and
2- 7 (3) Charles J. Reich, Petitioner, appealed the decision
2- 8 of the Georgia Supreme Court to the United States
2- 9 Supreme Court in the matter of Charles J. Reich v.
2-10 Marcus E. Collins and The Georgia Department of Revenue,
2-11 United States Supreme Court, Case Number 93-908 and that
2-12 case was decided unanimously in favor of the petitioner
2-13 on December 6, 1994, by the United States Supreme Court
2-14 and was remanded to the Georgia courts for relief
2-15 consistent with due process; and that this decision
2-16 mandates meaningful relief which requires the
2-17 establishment of a common fund for Georgia federal
2-18 retirees; and
2-19 (4) That it is in the state's best interest to end such
2-20 litigation through a dismissal with prejudice of the
2-21 Reich case and by providing for a refund procedure and
2-22 for refunds specific to retired federal employees who
2-23 meet the requirements of this article.
2-24 48-2-102. (Index)
2-25 As used in this article, the term:
2-26 (1) 'Attorneys' fees' means the percentage amount
2-27 specified by this article to be paid from the common
2-28 fund to counsel of record for the petitioner in the
2-29 United States Supreme Court case of Reich v. Collins for
2-30 payment of attorneys' fees and all expenses of
2-31 litigation.
2-32 (2) 'Common fund' means the total dollar amount of
2-33 principal to be refunded with simple interest calculated
2-34 pursuant to this article to eligible recipients.
2-35 (3) 'Eligible recipient' means a retired federal
2-36 employee whose retirement income was taxed by the State
2-37 of Georgia for the year 1985, 1986, 1987, or 1988 and
2-38 who timely filed a refund claim for that tax year.
2-39 (4) 'Installment payments' means those payments of
2-40 principal and interest thereon to eligible recipients
-2- (Index)
LC 18 6534-ECS
3- 1 which are to be made according to the schedule provided
3- 2 for by this article.
3- 3 (5) 'Principal' means the taxes collected in tax years
3- 4 1985, 1986, 1987, and 1988 by the state from retired
3- 5 federal employees which taxes were unconstitutional
3- 6 under the principles set forth in Davis v. Michigan, 489
3- 7 U.S. 803 (1989).
3- 8 (6) 'Refund claim' means a written notice, whether on a
3- 9 Form 500 X or other appropriate written notice, which
3-10 was filed by the taxpayer with the department for one or
3-11 more of the tax years 1985, 1986, 1987, and 1988 within
3-12 the time and in the manner specified by Code Section
3-13 48-2-35.
3-14 (7) 'Retired federal employees' means federal civil
3-15 service employees and United States military personnel
3-16 or their heirs or their estate or legal representative.
3-17 (8) 'Retirement income' means income which under the
3-18 principles set forth in Davis v. Michigan, 489 U.S. 803
3-19 (1989), was taxed unconstitutionally by the State of
3-20 Georgia for tax years prior to 1989.
3-21 48-2-103. (Index)
3-22 (a) The state shall pay refund claims to eligible
3-23 recipients in the total amount of the principal paid by
3-24 the eligible recipient for each year that the eligible
3-25 recipient filed a refund claim. Refunds shall be paid in
3-26 four approximately equal installment payments on or before
3-27 the fifteenth day of October 1995, 1996, 1997, and 1998
3-28 until the principal and interest thereon have been paid in
3-29 full. The state shall pay eligible recipients simple
3-30 interest calculated at 7 percent from the time the income
3-31 tax payment was due and paid by the eligible recipient
3-32 until payment of the first installment payment due October
3-33 15, 1995. The state shall further pay to an eligible
3-34 recipient interest calculated at 7 percent simple interest
3-35 on the unpaid balance of the principal due that eligible
3-36 recipient, plus accrued interest, until paid in full.
3-37 (b) The total amount of the principal and interest due the
3-38 eligible recipients shall constitute a common fund. The
3-39 state may pay refunds prior to the scheduled installment
3-40 date and no prepayment penalty shall be assessed. The
3-41 common fund exists only as an accounting device for
3-42 purposes of calculation of the amount of the principal and
-3- (Index)
LC 18 6534-ECS
4- 1 interest thereon due eligible recipients and attorneys'
4- 2 fees due. No appropriations are required to fund the
4- 3 common fund. The common fund is not a separate fund for
4- 4 purposes of any appropriations Act.
4- 5 48-2-104. (Index)
4- 6 (a) On the fifteenth day of October in the years 1995,
4- 7 1996, 1997, and 1998, the state shall deduct 15 percent of
4- 8 the installment payment due to eligible recipients for
4- 9 that year for payment of attorneys' fees. The remainder
4-10 shall be disbursed to eligible recipients on a pro rata
4-11 basis so that each eligible recipient receives
4-12 approximately one-fourth of the total amount calculated to
4-13 be due that particular eligible recipient according to the
4-14 installment payment schedule.
4-15 (b)(1) Attorneys' fees are in consideration of services
4-16 for the creation of the common fund and are being paid
4-17 from the common fund created by this article and not by
4-18 the state and do not represent extra compensation.
4-19 (2) The department shall disburse attorneys' fees on a
4-20 monthly basis from all checks negotiated by eligible
4-21 recipients and from all checks for which no objection
4-22 was filed pursuant to subsection (c) of Code Section
4-23 48-2-105.
4-24 48-2-105. (Index)
4-25 (a) The department shall calculate the amount of each
4-26 eligible recipient's refund and at the time of the first
4-27 disbursement shall provide each eligible recipient with
4-28 written notice mailed to the last known address of each
4-29 eligible recipient. The written notice shall detail the
4-30 estimated total amount of the common fund, the installment
4-31 payment schedule, the estimated amount which will be
4-32 disbursed for attorneys' fees on a yearly basis, and the
4-33 pro rata share annually estimated to be due the particular
4-34 taxpayer who is an eligible recipient. The amount shown
4-35 as the pro rata share for each eligible recipient shall
4-36 separately disclose the amount of principal and interest
4-37 thereon and any setoffs for other unpaid taxes due by the
4-38 taxpayer at the time of the written notice.
4-39 (b) The written notice shall advise eligible recipients
4-40 that negotiation of the first disbursement shall
4-41 constitute a release and full accord and satisfaction for
4-42 any and all claims for tax years 1985, 1986, 1987, and
-4- (Index)
LC 18 6534-ECS
5- 1 1988 which the eligible recipient has or may have for
5- 2 recovery of taxes alleged to be illegal based on 4 U.S.C.
5- 3 Section 111, the doctrine of intergovernmental immunity,
5- 4 or the decision of the United States Supreme Court in
5- 5 Davis v. Michigan Dep't of Treasury, 489 U.S. 803 (1989).
5- 6 Negotiation of the first disbursement shall also
5- 7 constitute full and complete acceptance of all the terms
5- 8 and conditions set forth in this article and shall bar any
5- 9 challenges to this article.
5-10 (c) An eligible recipient may decline to participate in
5-11 this settlement by providing written objection of same to
5-12 the commissioner on or before 90 days from actual receipt
5-13 of the notice. Notice shall be presumed to have been
5-14 received three days from the date of mailing by the
5-15 commissioner. Failure to send timely written objection
5-16 shall forever bar any claim the eligible recipient may
5-17 have for recovery of taxes for tax years 1985, 1986, 1987,
5-18 and 1988 alleged to be illegal based on 4 U.S.C. Section
5-19 111, the doctrine of intergovernmental immunity, or the
5-20 decision of the United States Supreme Court in Davis v.
5-21 Michigan, except as otherwise provided for in this
5-22 article.
5-23 (d) The written notice shall also advise each eligible
5-24 recipient that such recipient may request a conference
5-25 within 30 days of receipt of the written notice and first
5-26 disbursement provided for in subsection (b) of this Code
5-27 section before the commissioner or the commissioner's
5-28 designee in connection with any dispute involving the
5-29 amount calculated as the refund due, taking into account
5-30 any setoffs applied. To exercise this right, the eligible
5-31 recipient shall specify such desire in writing directed to
5-32 the commissioner, and the commissioner or the
5-33 commissioner's designee shall grant a conference at a time
5-34 he or she shall reasonably specify, which in any event,
5-35 shall be no more than 30 days from the date of such
5-36 request. Negotiation of the first disbursement by the
5-37 eligible recipient shall forever bar any right to dispute
5-38 the amount calculated as the refund due as shown in the
5-39 written notice.
5-40 (e) The commissioner or the commissioner's designee must
5-41 make a determination of the amount due the eligible
5-42 recipient within 60 days of the conference. Notice of the
5-43 determination must be in writing and must be mailed to the
5-44 last known address of the eligible recipient. Appeals of
-5- (Index)
LC 18 6534-ECS
6- 1 the determination of the commissioner shall be made within
6- 2 60 days to the Office of State Administrative Hearings.
6- 3 (f) All other disputes pursuant to this article not
6- 4 involving questions regarding the specific refund due the
6- 5 eligible recipient shall be referred to the Office of
6- 6 State Administrative Hearings. Any disputes brought
6- 7 before the Office of State Administrative Hearings shall
6- 8 be heard and decided pursuant to the procedures specified
6- 9 in Chapter 13 of Title 50, the 'Georgia Administrative
6-10 Procedures Act,' unless specifically provided otherwise in
6-11 this article. The Office of State Administrative Hearings
6-12 shall enter such orders and make such findings as
6-13 necessary to implement this article and to effectuate the
6-14 full, prompt, and final disposition of the claims of
6-15 eligible recipients under this article. Without
6-16 limitation, the Office of State Administrative Hearings
6-17 shall determine the validity and timeliness of individual
6-18 refund claims. The Office of State Administrative
6-19 Hearings shall also review the determination of the
6-20 commissioner or the commissioner's designee as to the
6-21 amounts due eligible recipients.
6-22 (g) Eligible recipients may appeal any decision of the
6-23 Office of State Administrative Hearings to the superior
6-24 court of the county of the residence of the taxpayer,
6-25 except that if the taxpayer is a nonresident individual,
6-26 any appeal shall be made to the Superior Court of Fulton
6-27 County. All appeals from the Office of State
6-28 Administrative Hearings shall be governed by Chapter 13 of
6-29 Title 50, the 'Georgia Administrative Procedures Act.'
6-30 48-2-106. (Index)
6-31 (a) In the event of a refund to an eligible recipient, the
6-32 commissioner may set off other state taxes which have
6-33 become due, whether at the time of initial calculation or
6-34 thereafter.
6-35 (b) The department may not exercise the right to set off
6-36 other state taxes which have become due unless and until
6-37 it provides written notice to the eligible recipient. The
6-38 eligible recipient may contest the setoff according to
6-39 laws, policies, and procedures of the department.
6-40 (c) When the setoff authorized by this Code section is
6-41 exercised, the refund shall be deemed granted and the
6-42 amount of the setoff shall be considered for all purposes
6-43 as a payment toward the particular tax debt which is being
-6- (Index)
LC 18 6534-ECS
7- 1 set off. Any excess refund amount remaining after the
7- 2 setoff has been applied shall be refunded to the taxpayer
7- 3 as otherwise provided in this Code section.
7- 4 48-2-107. (Index)
7- 5 Notwithstanding any provision of law to the contrary,
7- 6 interest paid to eligible recipients pursuant to this
7- 7 article shall not constitute income for the purposes of
7- 8 Chapter 7 of this title.
7- 9 48-2-108. (Index)
7-10 This article shall stand repealed and shall be null and
7-11 void and of no effect with no further legislative action
7-12 required on December 31, 1999."
SECTION 2.
7-13 This Act shall become effective upon its approval by the
7-14 Governor or upon its becoming law without such approval;
7-15 provided, however, that the state revenue commissioner shall
7-16 not implement the provisions of this Act unless and until
7-17 the counsel of record for the petitioner in the matter of
7-18 Charles J. Reich v. Marcus E. Collins and The Georgia
7-19 Department of Revenue, United States Supreme Court, Case
7-20 Number 93-908, has dismissed Charles J. Reich v. Marcus E.
7-21 Collins and The Georgia Department of Revenue with
7-22 prejudice.
SECTION 3.
7-23 All laws and parts of laws in conflict with this Act are
7-24 repealed.
-7- (Index)
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Robert E. Rivers, Jr., Clerk of the House
Last Updated on 01/02/97