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Survey of Railroad and Utility Taxation Practices Among the States: 2005 Update

STATE OF GEORGIA

1. Basis for taxation: 

Ad valorem property tax. The following public utilities are subject to the tax: railroads, express companies, car companies, telephone or telegraph companies, electric companies, gas companies, water companies, steam power companies, refrigerated air companies, dockage or cranage companies, canal companies, toll road or toll bridge companies, and navigation companies.

2. Property subject to taxation:

Taxable: Tangible property and special franchises. "Special franchise" is defined as:

a.     The right and privilege within the state and granted to any person by the state, any county, or any municipality for the (1) exercise of the power of eminent domain, (2) use of any public highway or street, or (3) use of land above or below any highway or street.

b.     The special right exercised within the state and granted by charter, resolution, statute, or otherwise, whether pursuant to the laws of Georgia or any other state, for the exercise of any public service including, but not limited to, (1) construction and operation of railroads, (2) common carriage of passengers or freight, (3) construction and operation of any plant for the distribution and sale of gas, water, electric light, electric power, steam heat, refrigerated air, or other substances by means of wires, pipes, or conduits laid under or above any street, alley, or highway, and (4) construction and operation of any telephone or telegraph plant.

c.     The right to conduct wharfage, dockage, or cranage business.

d.     The right to conduct any express business or the operation of sleeping, palace, dining, or chair cars.

e.     The right and privilege to construct, maintain, or operate canals, toll roads, or toll bridges.

f.     The right to carry on the business of maintaining equipment companies, navigation companies, freight depots, passenger depots, and every other like special function.

Exempt: Pollution control property.

3. Classification (if applicable):

No.

4. Level of government which determines basis for tax liability - ad valorem property tax:

Staff of the State Revenue Commissioner determines proposed assessments of operating railroad and utility property. However, county assessing units determine final assessed values.

5. Report filing and valuation method(s) required by statute for ad valorem taxation:

Reporting Requirements 

Railroad equipment companies -- Any person owning, leasing, furnishing, or operating any kind of railroad cars on any railroad in the state must file an annual return showing (a) total number and value of all cars of the company, (b) total car-wheel mileage made by the cars in the U.S., and (c) total car-wheel mileage in Georgia.

A railroad company operating a railroad is not considered to be a railroad equipment company.

Other utilities

Special franchises -- Each person holding, or owning, and exercising any special franchise must file an annual return stating the value of the franchise as exercised within the state. In the case of any special franchise exercised beyond the limits of one county, municipality, or school district, the return must show, as in the case of telegraph lines, telephone lines, railroads, or steam boats, the number of miles over which the railroad, telegraph, telephone, or other franchise is exercised in each county, municipality, and school district.

Tangible property -- Each public utility must file an annual return showing the fair market value of all of its property in the state, without any deduction for indebtedness. Each class or species of property must be separately named and valued as far as practicable. The return must also show the capital stock, net annual profits, gross receipts, business, or income (gross, annual, net, or any other kind) for which the public utility is subject to taxation by state law.

If the utility fails to file a return of tangible property, a penalty is assessed in the amount of 10% of the taxes for which it may be liable by reason of the return.

Valuation Factors

Railroad equipment companies -- Cars are to be taxed on their value as stated in the company's annual return, in proportion to the car-wheel mileage in the state.

Other utilities

Special franchises -- Property is to be taxed on its value as stated in the company's annual return. If the Revenue Commissioner refuses to accept the value stated in the return, he must arrive at a valuation on the basis of information available.

Tangible property -- Railroad rolling stock and appurtenant personal property -- Property is to be taxed on its value as stated in the company's annual return, in proportion to the railroad's track mileage in the state.

Other property -- Property is to be taxed on its value in the state as stated in the company's annual return.

If the Revenue Commissioner refuses to accept the value stated in the return, he must arrive at a valuation on the basis of information available.

6. Practical application of valuation method(s):

lf acceptable to the Revenue Commissioner, the value of the property is taken as stated in the company's annual return. lf not acceptable, the Revenue Commissioner does his own valuation using the unit value method. In applying this method, the income and market approaches to value are used, with greatest weight given to the market approach.

7. Valuation treatment of large facilities such as power plants, dams, or rail yards:

There is no separate valuation treatment of these facilities when they are part of operating systems.

8. Apportionment method(s) required by statute:

Railroads -- Road miles.
Railroad equipment companies -- Car-wheel mileage.

Other utilities 
Special franchises -- Not applicable.

Tangible Property

Railroad rolling stock and appurtenant personal property -- Road mileage.

Other property -- Same as for apportionment within local tax district (see below)

Among local units 

Railroads -- Tract mileage.

Railroad equipment companies -- Track mileage.

Other utilities

Special franchises -- Same as for tangible property - other (see below).

Tangible property

Railroad rolling stock and appurtenant personal property -- Road mileage.

Other property -- apportioned by the company in its annual return. Such apportionment must be carried out according to the method specified in regulations by the state Revenue Commissioner. In promulgating such regulations, the commissioner must consider: (a) the location of the various classes of property, (b) the gross or net investment in the property, (c) any other factor reflecting the public utility's investment in property, (d) pertinent business factors* reflecting the utility of the property, (e) pertinent mileage factors, and (f) any other factors which in the commissioner's judgment are reasonably calculated to apportion fairly and equitably the property between the various tax jurisdictions.

*Pertinent business factors" are defined as data that reflect the use of the public utility's property, including, but not limited to, data relating to gross revenue, net income, tons of freight carried, revenue ton miles, passenger miles, car miles, and comparable data.

9. Practical application or apportionment requirements:

To the state 

Railroads -- Tract mileage.

Railroad equipment companies -- Track mileage.

Other utilities --

Special franchises -- Same as for tangible property -- other (see below).

Tangible property --

Railroad rolling stock and appurtenant personal property -- Track mileage.

Other property -- The Revenue Commissioner provides each utility company with specific rules for apportioning value among tax districts. For most types of companies, the factor used is gross investment in property (as measured by original cost).

Among local units

Railroads -- all operating property is allocated according to tract miles, with weighting form main line tract.

All other -- operating property is allocated according to gross investment (original cost).

10.  Apportionment treatment of large facilities such as power plants, dams, or rail yards:

Facilities are apportioned to local units according to proportion of value in respective systems. Rail yards are treated as side tracks.

11. Description of assessment appeals system:

There is no administrative appeal of state-set assessments; owners must sue in Fulton County district court for redress. Owners may appeal county-set assessments; first through local boards of assessment review, next through board of equalization. Further appeal can be made in district court.

12. Status of deregulation/restructuring of electric generating and impact on valuation and apportionment methods used:

There have been little deregulation/restructuring of this industry in Georgia to date. Valuation and apportionment methods have not yet been so affected. (Plants owned by independent power producers are locally assessed.)

13. State Government Staffing:

Staff consists of five employees (full-time equivalent basis).

Law Source(s):     Official Code of Georgia Annotated as cited in Macmillan's State and Local Taxes

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