Court Opinion

ID: 5627868
Source: CourtListenerOpinion
Date Created: 2022-01-11 04:59:37.230591+00
Date Added: 2024-06-11T08:37:28.378109
License: Public Domain

Broyles, C. J.,
dissenting. G. C. Maxwell, a resident of Richmond County, Georgia, brought an action in the superior court against T. Grady Head as State revenue commissioner, to recover an alleged overpayment of $356.70 (as income tax for the year 1935), with interest thereon at six per cent, a year from September 19, 1936. The case was tried by the judge, without the intervention of a jury, on an agreed statement of facts. A judgment was awarded Maxwell for the full amount sued for; and the defendant excepted. The agreed statement of facts shows that the amount sued for was paid by Maxwell as Georgia income tax for the year 1935, on his pro rata share of partnership income from certain partnerships in which he was a partner; that each of these partnerships was organized outside of Georgia, and each had one or more partners who was (or were) non-residents of this State; and that the entire income of each of said partnerships was derived from its business carried on outside of Georgia. The only question here presented is whether, under the above-stated facts, the Georgia income-tax law applicable to the year 1935 should be construed as taxing Maxwell on his share of such foreign partnership income earned outside of this State? The question as to the constitutional power of this State to tax said income is not here involved; and counsel for the defendant in error concede in their brief that the State has such power, but they contend that it was not exercised before January 1, 1937. The revenue commissioner argues that the Code, § 92-3101, authorizes the taxing of such income. That section is based on the act of 1931 (passed at the extraordinary session of the legislature for that year), and reads as follows: “A tax is hereby imposed upon every resident of the State, which tax shall be levied, collected, and paid annually, with respect to the entire net income of the taxpayer as hereinafter defined.” (Italics mine.) It will be observed that said act merely provides in general terms for the taxation of the entire net income, “as hereinafter defined,” of every resident of this State; and said taxation is thereinafter defined in the succeeding sections of the act, said sections being now embodied in the Code, §§ 92-3104, 92-3112, *49292-3117. Section 92-3104 provides that “individuals carrying on business in partnership shall be liable for income tax only in their individual capacity, and each partner shall include in his individual return his distributive share, whether distributed or not, of the net income of the partnership for the taxable year.” It is declared in section 92-3112 (a) that “the tax imposed by this law shall apply to the entire net income received from all property owned or from business carried on in this State by natural persons noi residents of the Stale.” (Italics mine.) Section 92-3117 provides that “foreign partnerships, that is, partnerships where one or more of the individual members are non-residents of this State, shall not be subject to tax under this law, but the individual non-resident members of such partnership shall be taxable on their share of the net profits of such partnerships from property owned or business carried on in this State. The net income [italics mine] of a foreign partnership shall be computed in the same manner and on the same basis as that of a non-resident individual.” The foregoing sections when construed together show that the taxable net income of a foreign partnership does not include income earned by it outside of this State; and since the individual members of such a partnership are taxed only on their pro rata portion of such net income, it follows that a partner living in Georgia is not taxed upon his share of the income earned by such partnership outside of this State.
However, conceding that the question is a doubtful one, it is well settled that revenue producing statutes must be construed most strongly against the taxing authority, and most strongly in favor of the taxpayer. Furthermore, it is apparent that the General Assembly of Georgia, by passing the act approved December 29, 1937 (Ga. L. Ex. Sess., 1937-1938, p. 150), recognized that the previous statutes did not tax resident members of foreign partnerships upon the partnership income earned outside of this State. That act is described in the caption as “amending section 92-3117 of said Code, so as to provide for taxation of resident members of nonresident partnerships.” And the amendment added the following subparagraph (a) to Code section 92-3117: “Effective January 1, 1937, where one or more of the individual members is a resident of Georgia but a member of a partnership doing business without the State of Georgia, such resident member or members shall in-*493elude iu his individual return his distributive share (whether distributed or not) of the net income of the partnership for the taxable year." In my opinion, the judge properly rendered judgment in favor of the plaintiff for the full amount sued for.