Effective April 29, 2021, Georgia courts and the Georgia Tax Tribunal are prohibited from granting any deference to the Georgia Department of Revenue’s interpretation of the tax law, unless that interpretation has been formally adopted as a rule under the Georgia Administrative Procedure Act (“APA”). S.B. 185, 2021 Leg., Reg. Sess. (Ga. 2021).

Taxpayers in Georgia (and in other states with similar practices) should be aware that they are now on equal footing with the taxing authority, and that the taxpayer’s interpretation of an ambiguous statute will be accorded the same weight as the taxing authority’s interpretation. Administrative agencies will have to promulgate formal rules in Georgia to be granted any judicial deference and will otherwise be held to the same standard to which taxpayers have always been held in advancing their construction of the tax law. Taxpayers, on the other hand, may find more success in advancing alternative interpretations of the tax law before the courts.

Administrative deference at the state level is often modeled after principles from federal case law, pursuant to which courts will, under certain circumstances, defer to an agency’s interpretation of an ambiguous statute or regulation.[1] One justification for this practice is that agencies often have technical expertise in highly specialized areas and are therefore better suited than courts of general jurisdiction to interpret ambiguous statutes that the agencies administer. In state tax proceedings, judicial deference to taxing authorities can make it difficult for taxpayers to successfully combat an agency’s interpretation of the tax law in litigation.

The new Georgia law solves this problem for taxpayers and expressly prohibits courts from granting deference to administrative interpretations. Under the new law,

[a]ll questions of law decided by a court or the Georgia Tax Tribunal pursuant to this subsection, 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 [Georgia Department of Revenue]

S.B. 185, 2021 Leg., Reg. Sess. at ln. 41-45 (Ga. 2021). The new law does not apply, however, to “the judicial standard of deference accorded to rules promulgated pursuant to [the Georgia APA].” Id. at ln. 68-70. Thus, while regulations that have been formally adopted under the APA will still be afforded some judicial deference in Georgia courts, all other administrative interpretations—even if they are longstanding—will no longer be entitled to the judicial deference they were previously granted.

Georgia joins several other states that have in recent years abandoned the deference that courts typically afford to administrative agencies. Arizona, Mississippi, and Wisconsin, for example, have all abandoned judicial deference to administrative agencies either by statute or case law. Florida’s prohibition against administrative deference was approved by voters and is written directly into the Florida constitution. Fla. Const. Art. V, § 21.