NOTICE: This opinion is subject to modification resulting from motions for reconsideration under Supreme Court Rule 27, the Court’s reconsideration, and editorial revisions by the Reporter of Decisions. The version of the opinion published in the Advance Sheets for the Georgia Reports, designated as the “Final Copy,” will replace any prior version on the Court’s website and docket. A bound volume of the Georgia Reports will contain the final and official text of the opinion.
In the Supreme Court of Georgia
Decided: September 19, 2023
S22G1247. FUNVESTMENT GROUP, LLC v. ROBYN A.
CRITTENDEN, IN HER OFFICIAL CAPACITY AS
COMMISSIONER OF THE GEORGIA DEPARTMENT OF
REVENUE.
LAGRUA, Justice.
We granted certiorari in this case to decide whether revenue
generated from the lease of a bona fide coin operated amusement
machine (“COAM”) qualifies as “gross revenues” exempt from
taxation under OCGA § 48-8-3 (43). 1 Funvestment Group, LLC
(“Funvestment”), the lessee of the COAMs at issue and the owner of
the location where the COAMs are available for play, argues that
1 OCGA § 48-8-3 (43) provides that
[t]he sales and use taxes levied or imposed by this article shall not
apply to: . . . [g]ross revenues generated from all bona fide coin
operated amusement machines which vend or dispense music or
are operated for skill, amusement, entertainment, or pleasure
which are in commercial use and are provided to the public for play
which will require a permit fee under Chapter 27 of Title 50.
1
revenues generated from the lease of COAMs are considered “gross
revenues” exempt from sales and use tax. The Court of Appeals
concluded that the subject lease revenues are not “gross revenues”
and that the exemption only applies to money inserted into COAMs
for play. See Funvestment Group, LLC v. Crittenden, 364 Ga. App.
447, 452 (1) (a) (875 SE2d 436) (2022). For the reasons that follow,
we conclude that the Court of Appeals erred in reaching this
conclusion, and we thus reverse the judgment of the Court of
Appeals.
1. Pertinent Facts and Procedural History
Funvestment owns and operates an amusement facility in
Norcross, Georgia that contains an arcade room, party rooms for
group events, a restaurant, an indoor driving track, and a computer
lab equipped with touchscreen computers and simulators on which
children can learn about driving safety. Some of the equipment used
at Funvestment’s facility, including arcade games, toy cars, and a
train, are classified as COAMs.
2
Funvestment leases the COAMs from Tiny Towne
International, Inc. (“Tiny Towne”) pursuant to a Location Rental
Agreement. In accordance with that agreement and as payment for
leasing the COAMs, Funvestment agreed to pay Tiny Towne “[ten]
percent of the total gross revenue after deductions for state master
license, state sticker fees, and refunds, and [ten] percent of the other
gross income generated by [Funvestment’s] business.” 2 As discussed
in more detail below, Funvestment’s lease payments to Tiny Towne
would ordinarily be subject to sales and use taxes under OCGA § 48-4-30 (d) (1). However, because OCGA § 48-8-3 (43) provides that
“gross revenues generated from [COAMs]” are exempt from sales
and use taxes, Funvestment and Tiny Towne contend they were not
required to pay and remit sales and use taxes on the revenues
generated by Funvestment’s lease of the COAMs to the Georgia
Department of Revenue (“DOR”). In May 2016, following a routine
2 The record reflects that all of the COAMs at Funvestment’s facility have
been registered with the Georgia Lottery Corporation and that Tiny Towne and
Funvestment have paid for and obtained the requisite licenses and permits
from the State to own and operate those machines.
3
audit, the DOR issued a proposed assessment to Funvestment to
collect the value of these unpaid taxes.
Funvestment appealed the proposed assessment to the DOR,
asserting that the revenues generated from the lease of the COAMs
were exempt from sales and use tax under OCGA § 48-8-3 (43).
Following a hearing, the DOR issued a decision concluding that the
exemption in OCGA § 48-8-3 (43) did not apply to the income
generated from Funvestment’s lease of the COAMs because the
statute contemplated only an exemption from tax on the
“participation transaction”—i.e., from the actual play of the COAM
by a person who has placed “a coin, or its equivalent” into the
machine.
Funvestment appealed to the Georgia Tax Tribunal, which
agreed with Funvestment’s interpretation of OCGA § 48-8-3 (43).
Relying on Telecom*USA, Inc. v. Collins, 260 Ga. 362 (393 SE2d 235)
(1990) and Georgia Dept. of Revenue v. Owens Corning, 283 Ga. 489
(660 SE2d 719) (2008), the Tax Tribunal concluded that OCGA § 48-4
8-3 (43) was clear, and pursuant to the clear language of that
statute, “the General Assembly unambiguously exempted all gross
revenues generated from COAMs for sales and use tax purposes,”
including revenues generated from lease payments. On this basis,
the Tax Tribunal ruled that Funvestment was not obligated to pay
sales and use tax on its lease payments to Tiny Towne as required
by the proposed assessment.
The DOR appealed to the Superior Court of Fulton County,
which reversed the Tax Tribunal, concluding that revenues
generated from the lease of COAMs are not included in the
exemption provided by OCGA § 48-8-3 (43). After granting
Funvestment’s discretionary application, the Court of Appeals
affirmed the superior court, concluding that (1) the statute required
that “the contemplated gross revenues” be “generated from” the
playing of the actual COAMs, and (2) Funvestment’s position failed
to accord with “well-settled standards for reviewing taxation
statutes”—namely, the standard found in Owens Corning, providing
5
that “[t]axation is the rule, and exemption from taxation is the
exception.” Funvestment, 364 Ga. App. at 451 (1) (a) (citing Owens
Corning, 283 Ga. at 489). After determining that the “words of the
statutory provision are plain,” id. at 454 (1) (b) (ii), the Court of
Appeals held that
the plain language of the exemption [in OCGA § 48-8-3
(43)] means that the COAM itself must generate the
revenue by vending or dispensing music or public play by
inserting money. Because the leases do not constitute
remuneration for vending or dispensing music or public
play, the exemption clearly applies only to the money
inserted into the COAMs for play, not leases of the
COAMs themselves.
Id. at 449 (punctuation omitted; emphasis in original).
We granted certiorari to address the following questions: (1)
whether the Court of Appeals was correct to hold that the sales tax
exemption under OCGA § 48-8-3 (43) does not apply to
Funvestment’s lease payments to Tiny Towne because such
payments are not “[g]ross revenues generated from” COAMs; (2)
whether, under OCGA § 48-8-3 (43), revenues must be generated by
participation-plays of the machines to be exempted; (3) whether the
6
funds must be the “revenue” of the taxpayer in order to qualify for
the exemption under OCGA § 48-8-3 (43), whether the subject lease
payments in this case are “revenue” belonging to Funvestment, as
opposed to an expense, and whether that makes any difference in
the analysis; and (4) how apparently competing interpretive
presumptions regarding tax statutes might bear on the meaning of
statutory provisions at issue in this case—compare, e.g., Georgia
Dept. of Revenue v. Owens Corning, 283 Ga. 489, 489 (660 SE2d 719)
(2008) with Telecom*USA, Inc. v. Collins, 260 Ga. 362, 363 (1) (393
SE2d 235) (1990).
2. Legal Backdrop
(a) COAMs
COAMs are defined by statute as
every machine of any kind or character used by the public
to provide amusement or entertainment whose operation
requires the payment of or the insertion of a coin, bill,
other money, token, ticket, card, or similar object and the
result of whose operation depends in whole or in part
upon the skill of the player, whether or not it affords an
award to a successful player[.]
7
OCGA § 50-27-70 (b) (2) (A). “The term also means a machine of any
kind or character used by the public to provide music whose
operation requires the payment of or the insertion of a coin, bill,
other money, token, ticket, card, or similar object such as jukeboxes
or other similar types of music machines.” Id. There are two classes
of COAMs—Class A machines and Class B machines. See OCGA §
50-27-70 (b) (3) and (4). The COAMs at issue in this appeal are Class
A machines. 3
Our General Assembly has enacted legislation extensively
regulating the COAM industry in this State. See OCGA § 50-27-70
et seq. See also Gebrekidan v. City of Clarkston, 298 Ga. 651, 656-57 (3) (a) (784 SE2d 373) (2016) (“[T]he statutory scheme [regulating
COAMs], which is now administered by the Georgia Lottery
3 A Class A machine is defined as “a bona fide coin operated amusement
machine” which “does not allow a successful player to carry over points won on
one play to a subsequent play or plays” and “[p]rovides no award to a successful
player”—instead rewarding a successful player only with “free replays or
additional time to play,” “noncash merchandise,” “points, tokens, tickets, or
other evidence of winnings” that may be exchanged for noncash merchandise,
or “any combination” thereof. OCGA § 50-27-70 (b) (3) (A)-(E).
8
Corporation [], is extensive.”). In accordance with those regulations
and as a condition of operation, all COAMs, COAM owners, location
owners, and locations where COAMs are available for play must be
licensed by the Georgia Lottery Commission (“GLC”). See OCGA §
50-27-70 (a). More specifically, all location owners, like
Funvestment, and COAM owners, like Tiny Towne, are required to
pay an annual license fee to the GLC to obtain a location license and
a master license, respectively. See OCGA §§ 50-27-70 (b) (6) and (7)
and 50-27-71 (a.1) (requiring location license fees for location
owners, who are defined as “the owner or operator of a business
where one or more [COAMs] are available for commercial use and
play by the public”); OCGA §§ 50-27-20 (b) (10) and (13) and 50-27-71 (a) (requiring master license fees for COAM owners, who are
defined as “any person, individual, firm, company, association,
corporation, or other business entity owning a [COAM] in this
state”). Additionally, master license holders—i.e., COAM owners—
must pay a permit fee, see OCGA §§ 50-27-70 (b) (14), and receive a
9
“sticker” or “decal” for each COAM, showing “proof of payment of the
permit fee.” OCGA § 50-27-78. On appeal, Funvestment asserts
that this COAM-licensing fee structure was established by the
General Assembly to replace the system of collecting revenue by
levying sales and use taxes on COAM-generated revenues. See
OCGA § 50-27-70 (a). 4
(b) Sales and use tax
In 1951, the General Assembly enacted the “Retailers’ and
Consumers’ Sales and Use Tax Act,” see Ga. L. 1951, p. 136, which
authorized the levy and collection of a general sales and use tax, now
codified at OCGA § 48-8-1 et seq.
It is the intention of the General Assembly in enacting
this article to exercise its full and complete power to tax
the retail purchase, retail sale, rental, storage, use, and
consumption of tangible personal property and the
services described in this article except to the extent
prohibited by the Constitutions of the United States and
of this state and except to the extent of specific
exemptions provided in this article.
4 Amici Curiae Georgia Amusement & Music Operators Association and
Georgia Oilmen’s Association submitted helpful briefing in support of
Funvestment’s contentions on appeal.
10
OCGA § 48-8-1. In furtherance thereof, “[t]here is levied and
imposed a tax on the retail purchase, retail sale, rental, storage, use,
or consumption of tangible personal property and on the services
described in this article.” OCGA § 48-8-30 (a) (1). “Tangible
personal property” is defined as, “personal property that can be seen,
weighed, measured, felt, or touched or that is in any other manner
perceptible to the senses.” OCGA § 48-8-2 (37).
According to these provisions, “[e]very purchaser of tangible
personal property at retail in this state shall be liable for a tax on
the purchase,” which “shall be paid by the purchaser to the retailer[5]
making the sale.” OCGA § 48-4-30 (b) (1). The retailer is then
obligated to “remit the tax” to the Georgia Department of Revenue
(“DOR”), and when the tax is received by the DOR, it “shall be a
credit against the tax imposed on the retailer.” Id.
5 The “retailer” is defined as “[e]very person making a sale or sales of
tangible personal property at retail.” OCGA § 48-8-30 (b) (1).
11
Similarly, under OCGA § 48-8-30 (d) (1), “[e]very person to
whom tangible personal property in the state is leased or rented
shall be liable for a tax on the lease or rental.” “The tax shall be paid
to the person who leases or rents the property by the person to whom
the property is leased or rented.” Id. “A person who leases or rents
property to others” is a “dealer,” and the dealer is required to collect
the sales and use tax from the person to whom the property has been
leased or rented and “remit the tax” to the DOR. Id. Pursuant to
these provisions, leases of COAMs—including Funvestment’s lease
of the COAMs at issue here—would ordinarily be subject to sales
and use tax unless an exemption or exception applies.
3. Analysis
In OCGA § 48-8-3, the General Assembly has exempted certain
sales and transactions involving tangible personal property from the
imposition of sales and use taxes, to include the sales tax exemption
at issue in this case relating to COAMs, which was enacted in 1992.
See OCGA § 48-8-3 (43) (“The sales and use taxes levied or imposed
12
by this article shall not apply to: . . . [g]ross revenues generated from
all bona fide coin operated amusement machines[.]”). On appeal,
Funvestment contends that the exemption in OCGA § 48-8-3 (43)
clearly applies to leases of COAMs; that the term “gross revenues”
includes the “leased income” a dealer or COAM owner receives from
a person to whom a COAM has been leased; and that, since the
enactment of this exemption in 1992, the General Assembly has
consistently maintained and applied it to revenues generated from
both the participation plays and leases of COAMs.
(a) Statutory construction
To determine whether the sales tax exemption under OCGA §
48-8-3 (43) applies to revenues generated from the lease of COAMs,
we must begin our analysis with the wording of the statute itself. As
noted above, OCGA § 48-8-3 (43) provides that:
[t]he sales and use taxes levied or imposed by this article
shall not apply to: . . . [g]ross revenues generated from all
bona fide coin operated amusement machines which vend
or dispense music or are operated for skill, amusement,
entertainment, or pleasure which are in commercial use
and are provided to the public for play which will require
13
a permit fee under Chapter 27 of Title 50.
“When construing a statute, we must presume that the General
Assembly meant what it said and said what it meant.” Bell v.
Hargrove, 313 Ga. 30, 32 (2) (867 SE2d 101) (2021) (citations and
punctuation omitted). “Accordingly, we afford the statutory text its
plain and ordinary meaning, viewing the statutory text in the
context in which it appears, and reading the statutory text in its
most natural and reasonable way, as an ordinary speaker of the
English language would.” Id.
Throughout this litigation, Funvestment has maintained the
position that the plain language of OCGA § 48-8-3 (43) does not limit
the exemption to revenue generated by playing COAMs, and “[t]he
only natural reading of the exemption includes leased income in the
gross revenues.” (Punctuation omitted). The Court of Appeals
determined that Funvestment’s position lacked merit because it
“disregard[ed] the express language requiring that the
contemplated ‘gross revenues’ were ‘generated from all bona fide
14
coin operated amusement machines which vend or dispense music
or are operated for skill, amusement, entertainment, or pleasure
which are in commercial use and are provided for public play.’”
Funvestment, 364 Ga. App. at 450-451 (1) (a). Noting that
“[t]axation is the rule, and exemption from taxation is the
exception,” the Court of Appeals held that “[t]he statutory provision
at issue here, OCGA § 48-8-3 (43), contains no clear and
unambiguous expression of an exemption applicable to
[Funvestment’s] lease payments to Tiny Towne.” Id. at 452 (citing
Owens Corning, 283 Ga. at 489). On this basis, the Court of Appeals
affirmed the superior court, noting that “the plain language of the
exemption means that the COAM itself must generate the revenue
by vending or dispensing music or public play by inserting money,”
so the exemption “clearly applies only to the money inserted into the
COAMs for play, not leases of the COAMs themselves.” Id. at 449.
We disagree and conclude that, by its plain terms, OCGA § 48-8-3
(43) covers revenues generated from the lease of COAMs, as well.
15
“When, as here, statutory text is clear and unambiguous, our
interpretive task begins and ends with the text itself.” Bell, 313 Ga.
at 32 (2). Our analysis largely turns on the meaning of the phrase,
“[g]ross revenues generated from all [COAMs].” Neither the Georgia
Public Revenue Code, OCGA § 48-1-1, et seq., nor the statutes
regulating COAMs, see OCGA § 50-27-70 et seq., define “revenue,”
“gross revenue,” or what it means to “generate” gross revenue.
However, when the exemption in OCGA § 48-8-3 (43) was enacted
in 1992, the term “revenue” was commonly defined as “the total
income produced by a given source.” Revenue, NEW WEBSTER’S
DICTIONARY (1992). “Gross,” as in “gross income,” was commonly
defined as “consisting of an overall total exclusive of deductions.”
Gross, NEW WEBSTER’S DICTIONARY (1992). And “generate” meant
“to bring into existence” or “to be the cause of.” Generate, NEW
WEBSTER’S DICTIONARY (1992). Additionally, Black’s Law
Dictionary then defined the term “revenue” as “[g]ross income or
receipts” and, in turn, defined “gross income” as the “[t]otal income
16
from all sources before deductions, exemptions, or other tax
reductions.” Revenue and Gross Income, BLACK’S LAW DICTIONARY
(6th ed. 1991). Thus, by common usage and legal definition , the
term “gross revenues” includes the “overall total” income from “a
given source” or “all sources.” Revenue and Gross, NEW WEBSTER’S
DICTIONARY (1992); Gross Income, BLACK’S LAW DICTIONARY (6th ed.
1991).
The phrase, “[g]ross revenues generated from all [COAMs],”
OCGA § 48-8-3 (43), contains no words of limitation restricting the
manner in which COAMs generate these revenues, and there are no
contextual limitations provided elsewhere in OCGA § 48-8-3, the
rest of the Georgia Public Revenue Code, OCGA § 48-1-1, et seq., or
the statutes regulating COAMs, see OCGA § 50-27-70 et seq.
Moreover, the phrase, “which vend or dispense music or are operated
for skill, amusement, entertainment, or pleasure which are in
commercial use and are provided to the public for play,” simply
describes the type of machines from which these revenues are
17
generated—i.e., COAMs—it does not indicate that the gross
revenues can only be generated by playing the COAMs. Id.
Certainly, when a customer inserts money into a COAM for play, it
generates revenue for the location owner. See OCGA § 50-27-70 (b)
(8). However, when a person to whom a COAM has been leased
makes a lease payment on the subject COAM, it also generates
revenue for the person leasing the COAM (i.e. the dealer or COAM
owner). See OCGA § 50-27-70 (b) (13).
In this case, Tiny Towne leases the subject COAMs to
Funvestment, and in this context, the COAMs generate income (or
revenue) for Tiny Towne when Funvestment makes the
corresponding lease payments. And, as noted above, in accordance
with OCGA § 48-8-30 (d) (1), Funvestment would typically be
required to pay sales and use taxes to Tiny Towne for its lease of
these COAMs, and Tiny Towne would then be required to remit
those taxes to the DOR, unless the exemption at issue—or some
other exemption—applied.
18
Given the common and legal meanings of “revenue” and “gross
revenue” delineated above, we conclude that the plain language of
the phrase, “[g]ross revenues generated from all [COAMs]” set forth
OCGA § 48-8-3 (43), is unambiguous and applies to any revenues a
COAM generates or brings into existence, which, in this case, are
revenues generated by the lease of the COAMs and revenues
generated by the playing of the COAMs. This is the most “natural
and reasonable way” to read this statute. Bell, 313 Ga. at 32 (2).
Thus, the lease payments Funvestment makes to Tiny Towne for its
lease of the COAMs—which also constitute income to Tiny Towne—
are exempt from sales and use taxes under OCGA § 48-8-3 (43), and
Funvestment is not obligated to pay nor is Tiny Towne obligated to
remit any sales and use taxes to the DOR on these lease revenues.
(b) The standard to be applied in analyzing tax statutes
We also asked the parties to address on certiorari how the
“interpretive presumption” regarding tax statutes delineated in
Owens Corning, 283 Ga. at 489, and the “apparently competing
19
interpretive presumption” of tax statutes outlined in Telecom*USA,
Inc., 260 Ga. at 363 (1), might bear on the meaning of OCGA § 48-4-3 (43) and any other statutes at issue in this case. We ultimately
conclude that Owens Corning and Telecom*USA, Inc. are not
incompatible as far as the standard to be applied in analyzing tax
statutes in general—these cases merely distinguish between the
standards to be applied when there is ambiguity in either a tax
statute imposing a tax or a tax statute creating an exemption to a
tax—and we need not apply either of these standards here because
we have concluded that OCGA § 48-8-3 (43) is not ambiguous.
In Owens Corning, 283 Ga. at 489, this Court announced the
“well-settled” standard for analyzing tax statutes.
Taxation is the rule, and exemption from taxation is the
exception. And exemptions are made, not to favor the
individual owners of property, but in the advancement of
the interests of the whole people. Exemption, being the
exception to the general rule, is not favored; but every
exemption, to be valid, must be expressed in clear and
unambiguous terms, and, when found to exist, the
enactment by which it is given will not be enlarged by
construction, but, on the contrary, will be strictly
construed.
20
Id. (citation and punctuation omitted). When a statute creating a
tax exemption is ambiguous, “the statute must be interpreted in
favor of the tax, not the exemption.” Id. at 490. See also Amoena
Corp. v. Strickland, 248 Ga. 496, 499 (3) (283 SE2d 894) (1981)
(holding that “tax exemptions are to be strictly construed against
the taxpayer and doubts resolved in favor of taxability”). On the
other hand, “when a taxing statute [imposing a tax] has doubtful
meaning, it must be construed liberally in favor of the taxpayer and
against the State.” Telecom* USA, 260 Ga. at 364. See also
Cherokee Brick & Tile Co. v. Redwine, 209 Ga. 691, 693 (1) (75 SE2d
550) (1953) (explaining that, when a tax statute imposing a tax “is
of doubtful meaning, it must be construed liberally in favor of a
taxpayer and against the taxing authority;” whereas, “any
ambiguity in an alleged exemption from taxation must be construed
favorably to the State and against the taxpayer”).
Because the statute at issue in this case—OCGA § 48-8-3
(43)—creates an “exemption from taxation,” if there was any
21
ambiguity in the statute, we would resolve it in favor of the State—
i.e., in favor of taxability. Cherokee Brick & Tile Co., 209 Ga. at 693
(1). See also Owens Corning, 283 Ga. at 490. However, as we
concluded above, the plain language of OCGA § 48-8-6 (43) is “clear
and unambiguous,” and thus, we need not construe it in favor of the
State but in accordance with its explicit terms. Owens Corning, 283
Ga. at 489.
4. Conclusion
Accordingly, because the plain language of OCGA § 48-8-3 (43)
applies to revenues generated by COAMs, which includes revenues
generated from the lease of COAMs and revenues generated from
the participation plays of COAMs, we conclude that the Court of
Appeals erred in concluding that the exemption did not apply to the
lease revenues generated in this case, and we reverse the judgment
of the Court of Appeals.
Judgment reversed. All the Justices concur, except Colvin and
Pinson, JJ., disqualified.
22