The City of Atlanta hereinafter “Atlanta” imposes an occupation tax, the coverage of which includes attorneys who maintain an office and practice law within Atlanta. In 1999, a group of such attorneys, the Barnes appellees, filed a demand for refund of the taxes they had paid for 1996, 1997, and 1998, asserting that the tax was an unconstitutional regulation of the practice of law. One year later, the refund demand not having been acted upon, they sued Atlanta, again alleging that the occupational tax was an unconstitutional precondition on the practice of law, and seeking a refund of taxes paid. The trial court certified two classes in the Barnes case: Class One consists of all attorneys who have paid the occupational tax but have not made pre-litigation claims for refunds pursuant to OCGA § 48-55-380, and was certified for the constitutional claim only; Class Two consists of all attorneys who have paid the tax and have made a claim for refund, and was certified for both the constitutional and refund claims. The trial court granted the Barnes appellees’ motion for summary judgment on the constitutional claim, ruling the tax was an unconstitutional precondition on the practice of law. In a separate action, appellee Salo filed suit against Atlanta alleging the tax was unconstitutional and asking for declaratory judgment. Salo has not paid the tax. The trial court dismissed Salo’s complaint, but later reversed itself after it granted summary judgment to the Barnes appellees. Salo was then granted the declaratory relief she sought. Atlanta appealed the rulings in both cases and the appeals have been consolidated for decision. 1. We consider first the constitutionality of Atlanta’s occupation tax ordinance. In Sexton v. City of Jonesboro , 267 Ga. 571 481 SE2d 818 1997, this Court considered an occupation tax similar to that involved in this case and held it to be an unconstitutional regulation of the practice of law, regulation of which is reserved by Georgia’s constitution to this Court. The trial court in the present case considered Atlanta’s occupation tax scheme in light of the holding in Sexton and found it unconstitutional as it applied to lawyers. Atlanta enumerates as error that finding.
This Court made clear in Sexton that municipalities may impose an occupation tax that includes lawyers within its scope so long as the tax is a revenue measure only and does not act effectively as a precondition or license for engaging in the practice of law. Id. In concluding that the Jonesboro tax ordinance did act as a precondition to practicing law, this Court enumerated a number of elements showing the true nature of the tax ordinance: registration and payment were required prior to transaction of business for that year; a certificate was required to be obtained and displayed; and non-payment of the tax could result in criminal sanctions. At the time of the decision in Sexton , the occupation tax ordinance in place in Atlanta contained those same features, but Atlanta began amending the ordinance in 1998 in an attempt to avoid the problems infecting the Jonesboro occupation tax ordinance. Nevertheless, the trial court found, the ordinance presently in place still requires payment of the tax in advance of practicing law and still creates the possibility of incarceration of lawyers who engage in the practice of law but refuse to pay the tax after being ordered by a court to do so. Based on those factors, we agree with the trial court that Atlanta’s ordinance remains indistinguishable in effect from the ordinance struck down in Sexton : payment of the tax is a precondition to the practice of law, and incarceration for practicing law without payment of the tax would impede the practice of law whether that incarceration is directly for practicing while delinquent, as was the case in Sexton , or indirectly for that conduct by means of a citation for contempt of court. The trial court’s holding that the ordinance is unconstitutional was correct.
