Gaddy v. Georgia Dept. of Revenue

Consolidated appeals arose out of a complaint filed by four Georgia taxpayers in which they challenged the constitutionality of Georgia’s Qualified Education Tax Credit, Ga. L. 2008, p. 1108, as amended (“HB 1133” or the “Bill”). HB 1133 set up a tax credit program that allows individuals and businesses to receive a Georgia income tax credit for donations made to approved not-for-profit student scholarship organizations (“SSOs”). The Bill created a new tax credit statute for that purpose. Generally speaking, the SSO is required to distribute the donated funds as scholarships or tuition grants for the benefit of students who meet certain eligibility requirements, and the parent or guardian of each recipient must endorse the award to the accredited private school of the parents’ choice for deposit into the school’s account. Plaintiffs alleged: (1) the Program was educational assistance program, and the scheme of the Program violated the Constitution; (2) the Program provided unconstitutional gratuities to students who receive scholarship funds under the Program by allowing tax revenue to be directed to private school students without recompense, and also that the tax credits authorized by HB 1133 resulted in unauthorized state expenditures for gratuities; (3) the Program took money from the state treasury in the form of dollar-for-dollar tax credits that would otherwise be paid to the State in taxes, and since a significant portion of the scholarships awarded by the SSOs goes to religious-based schools, the Program takes funds from the State treasury to aid religious schools in violation of the Establishment Clause; and (4) the Department of Revenue violated the statute that authorized tax credits for contributions to SSOs by granting tax credits to taxpayers who have designated that their contribution is to be awarded to the benefit of a particular individual, and by failing to revoke the status of SSOs that have represented to taxpayers that their contribution will fund a scholarship that may be directed to a particular individual. Plaintiffs sought mandamus relief to compel the Commissioner of Revenue to revoke the status of SSOs, and injunctive relief against the defendants to require them to comply with the constitutional provisions and statutory laws set forth in the complaint. In addition to mandamus relief and injunctive relief, plaintiffs sought a declaratory judgment that the Program was unconstitutional. The Georgia Supreme Court found no error in the trial court’s finding plaintiffs lacked standing to pursue their constitutional claims, or their prayer for declaratory relief with respect to those claims, either by virtue of their status as taxpayers or by operation of OCGA 9-6-24. Consequently plaintiffs failed to allege any clear legal right to mandamus relief. View "Gaddy v. Georgia Dept. of Revenue" on Justia Law