Georgia Court Rules in Favor of Taxpayer’s Allocation Method for Atlanta Business Tax

By: Jess Johannesen, SALT Director

The Georgia Court of Appeals issued a decision concluding that the City of Atlanta (“City”) did not properly calculate the business occupation taxes for Block, Inc. (“Block”), the owner of the payment systems Square and CashApp.[1] 

The City audited Block’s Atlanta business occupation taxes for the tax years 2016 – 2018, during which Block generated more than $235 million in gross receipts from Georgia customers.  Block had

 multiple offices during the years under audit, ranging from 15 to 28 offices in the U.S. depending on the year, including a single Georgia office throughout the relevant periods.  In addition, the parties agreed that all of Block’s U.S. offices contributed to generating the Georgia gross receipts.

Georgia statutes authorize municipalities to assess and collect occupation taxes, like the Atlanta business occupation tax at issue,[2] and the state statutes provide that the starting point for assessing occupational taxes is the gross receipts of the business for the taxable period generated from sales to customers within Georgia.  Specifically, the definition of gross receipts excludes proceeds from sales of goods or services delivered to or received by customers who are outside of Georgia at the time of delivery or receipt.[3]

When a business has “a location or office situated in more than one jurisdiction, including businesses .  . .  with one or more locations or offices in Georgia and one or more locations outside the state,” the rules provide two methods for allocating gross receipts subject to tax.[4]  The first method applies when gross receipts can be reasonably allocation, which the parties agreed is not possible in this case.  Therefore, the parties agreed that the second method was applicable, and it provides that:

Where the business . . . cannot reasonably allocate the dollar amount of gross receipts among multiple locations or offices, the business . . . shall divide the gross receipts reported to all local governments in this state by the number of locations or offices of the business . . . which contributed to the gross receipts reported to any local government in this state, and shall allocate an equal percentage of such gross receipts of the business or practitioner to each location or office.[5]

Under this rule, the gross receipts are divided by the number of locations that contributed to the generation of those receipts.  The disagreement between the parties centers around the “number of locations . . . which contributed to the gross receipts.”  In the City’s view, since the gross receipts starting point, by law, must exclude sales to customers who are outside of Georgia, then the gross receipts reported to any local government in Georgia means that only Block’s Georgia office can be deemed to have contributed to its reported Georgia gross receipts.  Thus, the City’s position is that the denominator to allocate Block’s Georgia gross receipts was the sole Georgia office.

The Court of Appeals disagreed and concluded that the plain reading of Georgia’s statutes does not limit the denominator based on whether the locations or offices are in Georgia.  Specifically, the introductory language in the state statute specifically contemplates the division of Georgia gross receipts among contributing out-of-state offices.  As such, the Court of Appeals ruled that for purposes of computing the City’s tax, Block’s Georgia gross receipts should be divided by the number of its offices, including out-of-state offices, contributing to those Georgia gross receipts.

This ruling may present a refund opportunity for taxpayers who may have paid Atlanta business tax based on applying the allocation method among Georgia locations only.  Aprio’s SALT team has experience working with our clients to analyze these types of local taxes and we can assist your business to determine if it is paying the correct amount of tax, and we can pursue refund claims on your behalf if warranted.  We constantly monitor these and other important state tax topics, and we will include any significant developments in future issues of the Aprio SALT Newsletter.

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[1] City of Atlanta et al. v. Block, Inc. of Delaware, Ga. Ct. App., No. A25A0120, June 17, 2025.

[2] Local municipal codes essentially mimic the authorizing state statutes.

[3] OCGA §48-13-5(2) and Atlanta Code §30-51

[4] OCGA §48-13-14 and Atlanta Code §30-80

[5] OCGA §48-13-14(a)(2) and Atlanta Code §30-80