In a recent decision by the Court of Appeals of Georgia, the Court held that it had jurisdiction over a taxpayer’s lawsuit filed against the City of Atlanta, its mayor, its chief financial officer, and the Atlanta City Council, and that the taxpayer was entitled to a refund of business and occupation taxes it previously paid to the City. City of Atlanta et al. v. Block, Inc. of Delaware, No. A25A0120 (Ga. Ct. App. June 17, 2025). Taxpayers should take heart that even when a state or local taxing authority tries to put up both procedural and substantive barriers for taxpayers claiming refunds to which they believe they are entitled, principled taxpayers who fight the good fight can still prevail in the courts.

The taxpayer, Block, Inc. of Delaware (“Block”), a company whose businesses include the payment systems Square and CashApp, generated more than $235 million in gross receipts from Georgia customers during the tax years at issue. Following an audit, the City of Atlanta assessed additional business and occupation taxes, plus interest and penalties, which Block paid under protest. Block then filed the lawsuit at issue here, claiming a refund of amounts paid under protest and asserting that under the applicable state law and local ordinance, Block should have been permitted to allocate its gross receipts because it operated multiple out-of-state offices that contributed to its gross receipts in Georgia.

The City of Atlanta first argued that the Court did not have jurisdiction to decide the case, claiming that it had sovereign immunity. Under the Georgia Constitution, sovereign immunity is waived for declaratory relief actions brought against a municipality; however, the waiver applies only to actions brought exclusively against the municipality, and, if any defendants other than a municipality are named in the action, then the matter must be dismissed. The City of Atlanta claimed that by also naming the mayor, chief financial officer, and city council as defendants, Block’s lawsuit was required to be dismissed on sovereign immunity grounds. However, the Court disagreed, finding that Block’s lawsuit was a refund claim action rather than an action for a declaratory judgment and that Georgia’s statutory authorization to bring tax refund claims against localities was an express waiver of sovereign immunity.

Next, the City of Atlanta argued that because Block’s taxable gross receipts consisted only of gross receipts from Georgia customers, only Block’s lone Georgia office, and not its multiple out-of-state offices, should be considered when allocating the gross receipts. Again, the Court disagreed, finding that “[t]he statute’s plain language in no way limits the number of offices contributing to Georgia gross revenue to offices located within the State of Georgia . . . [w]e must presume that the General Assembly ‘meant what it said and said what it meant.’”

The City of Atlanta’s final argument was that summary judgment should not be granted to Block because issues of material fact existed as to Block’s business structure and as to whether its out-of-state offices contributed to its gross receipts from Georgia customers. The City of Atlanta contended that factual issues remained because the only factual evidence in the record was an affidavit of Block’s director of income tax compliance. For a third time, the Court disagreed, explaining that the City of Atlanta “fails to present any argument about why [the affiant’s] credibility may be at issue.” Moreover, the Court found that the City of Atlanta had conceded in its response to Block’s statement of material facts that Block had many offices in the United States and “[e]ach of these offices contributed to Block’s business and its generation of revenue.” 

On July 1, 2025, the City of Atlanta was granted an extension of time to file a petition for writ of certiorari with the Georgia Supreme Court. Stay tuned for further developments.