General Motors Acceptance v. Jackson

• Decision Date: 15 November 2000
• Docket Number: No. A00A1315.,A00A1315.
• Citation: 542 S.E.2d 538,247 Ga. App. 141
• Parties: GENERAL MOTORS ACCEPTANCE CORPORATION v. JACKSON.
• Court: Georgia Court of Appeals

542 S.E.2d 538

247 Ga. App. 141

GENERAL MOTORS ACCEPTANCE CORPORATION v. JACKSON.

No. A00A1315.

Court of Appeals of Georgia.

November 15, 2000.

Reconsideration Denied December 4, 2000.

King & Spalding, Nolan C. Leake, L. Wayne Pressgrove, Jr., Felton E. Parrish, Atlanta, for appellant.

Thurbert E. Baker, Attorney General, Daniel M. Formby, Deputy Attorney General, David A. Runnion, Warren R. Calvert, Senior Assistant Attorneys General, for appellee.

Parker, Hudson, Rainer & Dobbs, William J. Holley II, Charles W. Lyons, Atlanta, amici curiae.

ANDREWS, Presiding Judge.

General Motors Acceptance Corporation (GMAC)¹ appeals from the trial court's grant of summary judgment to T. Jerry Jackson, Commissioner of the Department of Revenue, in GMAC's appeal to the superior court of the Department's denial of its claim for a refund of sales and use taxes under OCGA § 48-8-45(c).

In reviewing the Department's administrative decision, the superior court determines whether there was any evidence to support the agency's decision. Sawyer v. Reheis, 213 Ga.App. 727, 728-729(1), 445 S.E.2d 837 (1994). Upon our review of the superior court's actions, the evidence is construed in favor of the agency's decision. Ga. Power Co. v. Ga. Public Svc. Comm., 196 Ga.App. 572, 580(5), 396 S.E.2d 562 (1990). Both the superior court and this Court review conclusions of law de novo. OCGA § 50-13-19(h); Municipal Elec. Auth. &c. v. Ga. Public Svc. Comm., 241 Ga.App. 237, 239(1), 525 S.E.2d 399 (1999).

So viewed, the record shows that GMAC finances both General Motors dealers' wholesale floor plans and retail purchases by consumers of automobiles from these dealers. The dealer acquires the cars from General Motors, and GMAC finances the acquisition by the dealer. Dealers are required to make monthly payments to GMAC of interest only. At the time the car is sold to a consumer, the dealer remits to GMAC the amount of the floor plan liability for the car.

On consumer purchases, GMAC and each dealer enter into the GMAC Retail Plan, a master contract which provides that GMAC may purchase contracts from the dealer at a discount rate. If GMAC approves the consumer's credit, the dealer would sign the Installment Contract's assignment provision, without recourse, so that GMAC would have no right to recover from the dealer if the consumer defaulted. The assignment clause provides: "Seller assigns its interest in this contract to General Motors Acceptance Corporation (GMAC) under the terms of the GMAC Retail Plan agreement."

Upon GMAC's approval of the customer's credit and the resulting assignment to GMAC, the contract would be entered into GMAC's records, and payment would be made by GMAC to the dealer consisting of the "amount financed" on the contract, including sales tax, plus either a flat fee or an amount representing the difference between the interest rate the dealer charged the consumer and GMAC's "buy rate" at which the contract was purchased. The buy rate is generally lower than the rate paid by the retail customer and is where money is made on the deal. A flat fee is paid to the dealer if the rates are the same. Neither the assignment clause nor the GMAC Retail Plan makes any reference to sales taxes and their treatment after assignment.

Over years of doing business, GMAC has established a rate of default of three percent for its retail installment financing business based on contracts assigned by dealers. In order to provide for that, GMAC sets aside a certain percent of the finance charge as an anticipated loss reserve. For retail consumers with riskier credit, a larger loss reserve is set up. GMAC maintains accounts for each dealer to which the loss reserves are credited. As losses occur, they are deducted from the assigning dealer's account by GMAC.

In the event of a default by a purchaser, GMAC attempts collection efforts by negotiating and eventually by repossessing and selling the vehicle. A defaulting purchaser is charged late charges in addition to other contract amounts. Even after a delinquent account has been charged off by GMAC, it is possible that additional amounts will be received from the purchaser through these efforts.

In August 1997, GMAC, for the first time, filed a claim for refund of sales taxes with the Department of Revenue. The claim sought a refund for the period from August 1, 1994 through October 31, 1996, for bad debts. GMAC computed the amount by multiplying the amount of its "uncollectible loan accounts" by a five percent tax rate.² This claim was denied by the Department, and the superior court granted the Department summary judgment on the appeal.

1. GMAC's first enumeration is that the trial court erred in concluding that it did not qualify as "any person" under OCGA § 48-8-45(c).

That subsection provides that

[a]ny person reporting on the accrual basis of accounting shall be allowed a deduction³ for bad debts under rules and regulations of the commissioner on the same basis that bad debts are allowed as a deduction on state income tax returns. In the case of an assignee of credit card debt purchased directly from a dealer without recourse, the assignee reporting on the accrual basis of accounting or a credit card bank which extends such credit to customers under a private label credit card program shall be allowed a deduction for bad credit card debts under rules and regulations of the commissioner on the same basis that bad credit card debts are allowed as a deduction on state income tax returns.

(Emphasis supplied.)

The last sentence of this provision was added by Ga. L. 1998, p. 604, § 1.

This subsection, however, is not considered in a vacuum, but must be analyzed in the context of the entire Sales & Use Tax Act, including subsections (a) and (b) of OCGA § 48-8-45, and the Act's history, keeping in mind that courts, when interpreting statutes, look diligently for the intent of the General Assembly. OCGA § 1-3-1(a); Undercofler v. Capital Automobile Co., 111 Ga.App. 709, 716(1), 143 S.E.2d 206 (1965).

The Sales & Use Tax Act was originally enacted to levy a privilege or license tax upon every person engaged in selling tangible personal property at retail, with the tax computed on gross sales of the retailer. Hawes v. Phillips, 122 Ga.App. 714, 716-717, 178 S.E.2d 759 (1970); Williams v. Gen. Finance Corp., 98 Ga.App. 31, 34(1), 104 S.E.2d 649 (1958).

In 1960, the Act was amended to impose the tax primarily upon the purchaser. As now contained in OCGA § 48-8-30(b)(1), the amendment provided that

[e]very purchaser of tangible personal property at retail in this state shall be liable for a tax on the purchase at the rate of 4 percent of the sales price of the purchase. The tax shall be paid by the purchaser to the retailer making the sale,.... The retailer shall remit the tax to the commissioner ... [,] and, when received by the commissioner, the tax shall be a credit against the tax imposed on the retailer. Every person making a sale or sales of tangible personal property at retail in this state shall be a retailer and a dealer and shall be liable for a tax on the sale at the rate of 4 percent of the gross sale or gross sales, or the amount of taxes collected by him from his purchaser or purchasers, whichever is greater.

(Emphasis supplied.)

Thus, the tax imposed became a tax dual in nature, as both purchaser and retailer were liable for the tax and the tax was imposed upon each sale when the contract was executed. Grantham Transfer Co. v. Hawes, 225 Ga. 436, 442(3)(d), 169 S.E.2d 290 (1969); Undercofler v. Eastern Air Lines, 221 Ga. 824, 834(2), 147 S.E.2d 436 (1966); Hawes, supra, 122 Ga.App. at 717, 178 S.E.2d 759.

The retailer is required to register with the State and to report and remit the tax to the State on monthly returns. OCGA §§ 48-8-59(a)(1); 48-8-30(b)(1), (h); 48-8-32; 48-8-33; 4...