On March 22, 2021, the Georgia House of Representatives passed SB 185, which now heads to the Governor’s desk. The measure, which was previously unanimously passed by the state Senate, seeks to level the playing field in state tax litigation matters by reducing the level of deference accorded to the Department of Revenue’s interpretations of ambiguous laws. Specifically, SB 185 provides that “all questions of law decided by a court or the Georgia Tax Tribunal, including interpretations of constitutional, statutory, and regulatory provisions shall be made without any deference to any determination or interpretation, whether written or unwritten, that may have been made on the matter by the department, except such requirement shall have no effect on the judicial standard of deference accorded to rules promulgated pursuant to Chapter 13 of Title 50, the ‘Georgia Administrative Procedure Act.’” Accordingly, the legislation eliminates all subregulatory deference but makes no change to the current level of deference accorded (by judicial doctrine) to interpretations of the Department of Revenue within regulations that have been formally promulgated pursuant to the Georgia Administrative Procedure Act. The legislation would apply to tax cases commenced at the Georgia Tax Tribunal or a state Superior Court after the Governor’s approval or upon the bill’s becoming law without such approval if no action is taken by the Governor within 40 days after the end of the legislative session (Sine Die scheduled for March 31, 2021).

The reduction in administrative deference in SB 185 is similar to measures taken in recent years in Arizona, Arkansas, Florida, Mississippi and Wisconsin by legislation, ballot initiative, or judicial ruling. Furthermore, it aligns Georgia with the treatment of subregulatory deference at the federal level where the United States Treasury and the Internal Revenue Service stated in a 2019 Policy Statement that they will no longer argue for Auer or Chevron deference for any administrative guidance other than IRS regulations that are subject to public notice and comment and other statutory rulemaking procedures contained in the federal Administrative Procedures Act.

This legislation is primarily sponsored by state Senator Bo Hatchett and is the culmination of several years of efforts by the Metro Atlanta Chamber and state Representative Todd Jones and supported by the Coalition to Reform Administrative Deference. It further advances the goal of the Georgia Tax Tribunal, which was created by the state legislature in 2012, to establish an independent forum to settle disputes between a taxpayer and the Department of Revenue.