Failure to Pay Intangible Recording Tax Bars Action on Indebtedness; Removal of Bar; Penalty; Conditions Under Which Penalty Waived; Acquisition of Instrument by Holder Exempt From Tax

  1. Law
  2. Georgia Code
  3. Revenue and Taxation
  4. Taxation of Intangibles
  5. Intangible Recording Tax
  6. Failure to Pay Intangible Recording Tax Bars Action on Indebtedness; Removal of Bar; Penalty; Conditions Under Which Penalty Waived; Acquisition of Instrument by Holder Exempt From Tax

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  1. Failure to pay the tax levied by this article shall constitute a bar to the collection by any action, foreclosure, the exercise of any power of sale, or otherwise of the indebtedness secured by any instrument required by this article to be recorded, whether the instrument is held by an original party to the instrument or by a transferee. However, failure to pay the tax levied by this article shall not affect or discharge the indebtedness and other obligations secured by such instrument or the debtor's liability on account thereof and, subject to the bar, such instrument shall continue to secure the indebtedness and other obligations secured thereby and shall continue to encumber the collateral described therein. The bar may be removed by the payment of the required tax, plus interest at the rate specified in Code Section 48-2-40 from the time the tax was due, plus a penalty of 50 percent of the amount of the tax, after which the process to collect the indebtedness, including foreclosure, may proceed as if no bar ever existed. However, if an instrument required to be recorded fails to reflect on its face that the tax levied by this article is due and after a foreclosure has taken place it is discovered that the instrument securing the indebtedness is in fact subject to the tax, any deed given pursuant to the foreclosure or in lieu of foreclosure shall be imperfected but may be perfected by the payment of the required tax, plus interest at the rate specified in Code Section 48-2-40 from the time the tax was due plus a penalty of 50 percent of the amount of the tax. Once the tax, interest, and penalty as required in this subsection have been paid, the perfection of the deed will revert back to the date of the deed, and the deed shall retain its priority over any and all intervening liens or conveyances except those conveyances and liens made or created by the grantee, its successors, and assigns named in the foreclosure deed or deed in lieu of foreclosure. These provisions shall have no effect on any instrument subject to the tax on which the statute of limitations has expired.
  2. The failure to pay the tax shall not constitute a bar to the collection of the indebtedness as provided in subsection (a) of this Code section when the commissioner has determined that the tax is not payable.
  3. The commissioner may waive the penalty provided for in subsection (a) of this Code section if he determines that the failure to pay the tax was through ignorance of the law or inadvertence and that the failure did not occur out of bad faith.
  4. This Code section shall not apply to instruments acquired at a time when the holder of the instrument was otherwise exempt from the payment of the tax imposed by this article.

(Ga. L. 1953, Nov.-Dec. Sess., p. 379, § 11; Ga. L. 1973, p. 271, § 2; Ga. L. 1977, p. 635, § 3; Code 1933, § 91A-3209, enacted by Ga. L. 1978, p. 309, § 2; Ga. L. 1979, p. 5, § 59; Ga. L. 1980, p. 10, § 16; Ga. L. 1990, p. 1843, § 4; Ga. L. 1997, p. 547, § 1.)

OPINIONS OF THE ATTORNEY GENERAL

Intangible property tax on long-term notes secured by real estate is not unconstitutional. 1970 Op. Att'y Gen. No. 70-56.

Transfer does not relieve original holder of obligation.

- Transfer by assignment or otherwise of long-term notes secured by real estate to the national bank does not relieve the original holder of the holder's tax obligation, and does not change the tax status of the instrument. 1963-65 Op. Att'y Gen. p. 511.

Waiver of penalty in absence of bad faith.

- When the holders of the instrument mailed a check for the intangibles taxes shortly after acquiring the property but the tax commissioner, being unfamiliar with the commissioner's duties, held the check several months without presenting the check to the bank for payment, the state revenue commissioner is authorized to waive such penalty if the commissioner determines that the failure to pay the tax was through ignorance of the law or inadvertence, and not in bad faith. 1963-65 Op. Att'y Gen. p. 46.

RESEARCH REFERENCES

C.J.S.

- 85 C.J.S., Taxation, § 1820.

ARTICLE 4 TAXATION OF FINANCIAL INSTITUTIONS

Editor's notes.

- Ga. L. 1983, p. 1350, § 15, effective January 1, 1984, not codified by the General Assembly, provides that should subsection (e) of Code Section 48-6-93 or paragraph (11) of subsection (b) of Code Section 48-7-21 be declared invalid or unconstitutional, it is the intent of the General Assembly that the entire Act be held invalid and the method of taxation affected by the Act revert to the method in effect prior to January 1, 1984.

RESEARCH REFERENCES

ALR.

- Discrimination in state taxation of national banks or national bank shares, 87 A.L.R. 846.

Tax on bank stock as payable out of assets of insolvent bank or trust company, 87 A.L.R. 1018.

"Business situs" for purposes of property taxation of intangibles in state other than domicile of owner, 143 A.L.R. 361.


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