Georgia Court of Appeals Reports
GWINNETT CTY. BD. OF TAX ASS. v. STANDARD DIST., 263 Ga.
App. 128 (2003) 587 S.E.2d 262 GWINNETT COUNTY BOARD OF
TAX ASSESSORS v. STANDARD DISTRIBUTING & SUPPLY OF
GEORGIA. A03A1440. Court of Appeals of Georgia. DECIDED:
SEPTEMBER 10, 2003
MILLER, Judge.
The Gwinnett County Board of Tax Assessors (the Board)
appeals from the trial court’s grant of summary judgment to
Standard Distributing & Supply of Georgia, Inc. (Standard)
on the issue of whether the Gwinnett County Board of
Equalization properly granted Standard a freeport
exemption[fn1] for the fair market value of its inventory.
Since the evidence fails to create a genuine issue of
material fact and Standard was entitled to judgment as a
matter of law, we affirm.
On appeal, we review the trial court’s grant of summary
judgment de novo to determine whether the evidence
demonstrates any genuine issue as to a material fact.
Blakey v. Victory Equip. Sales, 259 Ga. App. 34, 35(2) (576
S.E.2d 288) (2002). To prevail, the moving party must
demonstrate that there are no genuine issues of any material
fact and that the undisputed facts, viewed in the light
most favorable to the nonmoving party, support judgment as
a matter of law. Id.
In tax year 2001, Standard filed an application for a
freeport exemption (see generally OCGA § 48-5-48.1),
and reported an inventory value of $2,361,774. The Board
conducted an audit, discovered that Standard had “under
reported” its inventory by $710,532, and informed Standard
that “the inventory value above the application does not
receive the exemption.” Standard appealed to the Gwinnett
County Board of Equalization, which allowed Standard an
exemption on the full re-assessed value of its inventory.
The Board appealed this ruling to the Gwinnett County
Superior Court.
The parties stipulated that the true fair market value of
the Page 129 inventory was $3,072,306, and that the Board
advised Standard that it refused to allow the exemption due
to the fact that Standard “undervalued” its inventory. Both
the Board and Standard moved for summary judgment. The
Board moved for summary judgment on the ground that
Standard failed to report inventory and that therefore under
OCGA § 48-5-48.1(c), Standard was only entitled to a
freeport exemption for that portion of the inventory
reported. The trial court granted Standard’s motion and
denied the Board’s motion on the ground that there was no
evidence that Standard failed to report inventory, and that
as Standard only undervalued its inventory, it was entitled
to a freeport exemption on the adjusted fair market value
of the inventory.
1. The Board argues that the court erred in relying on
Georgian Art Lighting Designs, Inc. v. Gwinnett County Bd.
of Tax Assessors, 211 Ga. App. 510 (439 S.E.2d 687) (1993),
for the proposition that the statutory waiver of the
freeport exemption applies only to unreported inventory and
not to undervalued inventory. The Board contends that the
subsequent amendment to OCGA § 48-5-48.1 shows that
the legislature intended to change the law to provide for a
partial waiver of the freeport exemption as measured by the
amount of inventory that was undervalued. The Board focuses
on the language of OCGA § 48-5-48.1(c)(2)(A), which
provides that “[t]he failure to report any inventory for
which such exemption is sought . . . shall constitute a
waiver of the exemption . . . in an amount equal to the
difference between fair market value of the inventory as
reported and the fair market value finally determined to be
applicable to the inventory for which the exemption is
sought. . . .”
In Georgian, supra, 211 Ga. App. at 510, an audit of the
taxpayer’s records revealed a discrepancy between the cost
of inventory listed on the application for exemption and
the cost listed on the taxpayer’s financial statements. In
that case, this Court rejected the argument that an
application is not filed properly if it does not “accurately
and without error reflect the value of property for which
the exemption is sought,” and “decline[d] to place [such] a
construction on the statute when there is an existing
statute which exacts a penalty on a taxpayer who fails to
report the full value of personal property. See OCGA
§ 48-5-299.” Id. at 511-512.
The Board is correct that OCGA § 48-5-48.1 was
amended in 1997 after Georgian was decided. However, the
amendment added that “[t]he failure to report any
inventory,” not an undervaluing of inventory, results in a
waiver of the exemption. See OCGA §
48-5-48.1(c)(2)(A). Moreover, this Court reaffirmed the
holding in Georgian in a case decided subsequent to the
amendment. See William L. Bonnell Co. v . Coweta County Bd.
of Tax Assessors, 252 Ga. App. 151, 156-157(2) (556 S.E.2d
159) (2001) (taxpayer did not fail to report Page 130
inventory, but undervalued inventory, and therefore did not
waive the exemption). “The applicable rule of statutory
construction is that forfeitures and penalties are not
favored and statutes relating to them must be strictly
construed, and in a manner as favorable to the person
against whom the forfeiture or penalty would be exacted as
is consistent with fair principles of interpretation.”
(Citation and punctuation omitted.) Georgian, supra, 211
Ga. App. at 511. Thus, the court did not err in relying on
Georgian and in granting Standard’s motion for summary
judgment as Standard was entitled to an exemption on the
full re-assessed value of its inventory.
The Board further argues that Standard did not properly
file the application for exemption. OCGA §
48-5-48.1(c)(2) effectuates a waiver if the taxpayer fails
to “file properly,” which is defined as timely filing the
application with a “complete schedule of the inventory”
(see OCGA § 48-5-48.1(c)(1)). The Board contends
that since the type and amount of each item of inventory
are not required to be listed on the application, the
legislature must have intended “complete schedule” to mean
the total inventory value. Thus, the Board concludes that
since Standard did not report the correct value, it did not
properly file the application and therefore waived a
portion of its exemption. However, we see no authority for
such a construction of the term “complete schedule.” The
schedule would not be incomplete simply because the listed
value was inaccurate.
2. The Board contends that the trial court erred in finding
that there was no evidence that Standard failed to report
inventory. The Board argues that because Standard reported
a greater inventory value on its 2002 federal tax return
than on its application for freeport exemption, and used
the same inventory valuation method for both, it is
apparent that Standard failed to report some inventory.
However, the parties stipulated that the Board advised
Standard that it refused to allow the exemption due to the
fact that Standard undervalued its inventory, not because
Standard failed to report some of its inventory.
The court did not err in granting Standard’s motion for
summary judgment.
Judgment affirmed. Smith, C.J., and Ruffin, P.J., concur.
[fn1] Under OCGA § 48-5-48.1, a taxpayer may obtain
an exemption from ad valorem taxation of certain tangible
personal property inventory (commonly referred to as the
“freeport exemption”) by filing a written application and
schedule of property with the county board of tax
assessors.
DECIDED SEPTEMBER 10, 2003 — CERT. APPLIED FOR.
Taxation. Gwinnett Superior Court. Before Judge Jaclson.
Karen G. Thomas, Michael P. Ludwiczak, for appellant.
Andersen, Tate, Mahaffey, & McGarity, James C. Joedecke,
Jr., Jeffrey B. Hicks, for appellee. Page 131