Georgia DOR Income Tax Audit Protest

The situation

Robert, 49, is a managing partner at Southeast Strategy Group, LLC, an Atlanta-based management consulting firm structured as an S-corp. The firm provides strategy consulting to clients across the Southeast (Georgia, Florida, Tennessee, Texas).

In late 2025, GA DOR audited the firm's 2023 S-corp return and issued a Notice of Proposed Assessment for the firm's 2023 Georgia income tax: $52,800 in additional GA income tax (including penalty and interest: $67,100 total). GA DOR's position: the firm's consulting revenue sourced as "Georgia income" should include 100% of revenue from projects where the firm's partners performed administrative coordination, project management, and quality review from their Atlanta offices, even for client engagements physically based in Texas and Florida.

Robert's defense: Under O.C.G.A. § 48-7-27.1 and Georgia's income sourcing rules, service income is sourced to where the services are PERFORMED. For the out-of-state client engagements, Southeast Strategy Group's consultants traveled to client sites in Austin, TX and Miami, FL, the core delivery work was performed physically at those locations. The Atlanta-based administrative coordination does not transform Texas/Florida services into Georgia-source income.

Robert has 45 days from the NPA to file a protest (via the Georgia Tax Center portal).

What Robert needs to understand: (a) Georgia's service income sourcing rule: "where the services are performed" (not where the client is or where the firm's office is). The dispute is factual: how many days did Robert's consultants spend physically in GA vs. physically in TX/FL on each project? Robert needs a project-by-project workday allocation log for 2023, showing where each billed day was performed. (b) The Georgia Tax Center protest filing is a blank form. GTC accepts his Form TSD-1 submission but does not guide him on what to write in the "statement of reasons" field. The statement should: (i) cite the relevant O.C.G.A. sourcing statute; (ii) provide the project-by-project allocation; (iii) attach supporting evidence (consultant travel records, client-site meeting calendars, hotel receipts). (c) After DOR denies the protest, the Georgia Tax Court (launched July 1, 2026) provides independent review. The new court is brand-new, there's no established Georgia Tax Court precedent yet. (d) Wiggam Law quoted Robert $11,000-$16,000 for DOR protest and Tax Court representation. The service income sourcing analysis, project-by-project workday log, and protest statement are structured analytical steps Robert can substantially complete himself.

Second portrait: Linda, 62, retired from Delta Air Lines in January 2023 as a director. She receives a Delta corporate pension of $78,000/year, IRA distributions of $68,000/year, and Social Security income of $31,000/year. Total 2023 income: $177,000. She lives in Roswell, GA.

GA DOR issued an NPA for $7,300 in additional Georgia income tax: the auditor's position is that Linda's retirement income exclusion under O.C.G.A. § 48-7-27(a)(5) is limited to the first $65,000 of qualifying retirement income, and the auditor applied the exclusion only to her Delta pension (stopping at $65,000), excluding her IRA distributions from the exclusion calculation entirely.

Linda's defense: The retirement income exclusion under O.C.G.A. § 48-7-27(a)(5) allows taxpayers 62 or older to exclude up to $65,000 of net income from "retirement income", which includes pension income, annuities, interest, dividends, and IRA distributions that constitute retirement income. Linda argues that her IRA distributions are retirement income and should be counted in the $65,000 exclusion, reducing her GA tax liability by approximately $3,400 (= $68,000 IRA income × [amount within exclusion] × 5.49%).

Who receives this

Georgia taxpayers who received a GA DOR Notice of Proposed Assessment from an income tax audit. Primary segments: (1) Atlanta metro businesses (S-corps, LLCs) with multi-state service income and PTE income sourcing disputes; (2) Retirees (65+) with retirement income exclusion qualification disputes; (3) Part-year residents (people moving to or from Georgia) with income allocation disputes; (4) Freelancers and self-employed workers with Schedule C deduction challenges. Special context: The Georgia Tax Court launched July 1, 2026, the first month of its operation. A self-serve guide for Georgia taxpayers appealing to this new court fills an immediate gap. Scale: Atlanta is now the 9th largest US metro area; Georgia added 850,000+ residents 2020-2024.

Why the agency will not advise you

GA DOR cannot advise taxpayers how to contest its own NPAs. Georgia Tax Court is genuinely independent (constitutional amendment-created). Georgia Tax Center portal = filing mechanism only. ezel.ai = blank template only. 45-day deadline (among the shortest of state income tax audit protests). SPECIAL TIMING: The Georgia Tax Court is brand-new (July 1, 2026), a self-serve guide for the new court fills an immediate first-mover gap.

Key facts, with sources

• The Georgia Department of Revenue administers Georgia income tax under O.C.G.A. Title 48. When an audit results in proposed additional tax, the DOR issues a Notice of Proposed Assessment (NPA). Under O.C.G.A. § 48-2-49, the taxpayer has 45 days from the NPA date to file a protest (online via the Georgia Tax Center portal or by mailing Form TSD-1). If the protest is denied, the DOR issues an Official Assessment and Demand for Payment. The taxpayer may then appeal to the Georgia Tax Court. The Georgia Tax Tribunal, previously the independent appellate body for GA tax disputes, was an independent division of the Office of State Administrative Hearings (OSAH), separate from the GA DOR. Effective July 1, 2026, following a constitutional amendment passed by Georgia voters, the Georgia Tax Tribunal was replaced by the Georgia Tax Court, a more formal state court with its own appointed judges, completely independent of the GA DOR. Georgia Tax Court decisions are appealable to the Georgia Court of Appeals. The Georgia Tax Center (GTC) portal allows taxpayers to file Form TSD-1 protests online, but the GTC is a FILING MECHANISM, not a substantive analysis tool. It accepts the taxpayer's uploaded documents and protest statement but provides no guidance on what arguments to make, what evidence to gather, or how to structure a defense against the specific audit finding. Source: What to do if you receive a Proposed Assessment — GA DOR · Georgia Tax Tribunal vs. GA Department of Revenue — Wiggam Law · Protests and Appeals — GA DOR
• The Georgia Tax Court launched July 1, 2026, following approval of a constitutional amendment by Georgia voters. The Georgia Tax Court is a formal Georgia state court (not an administrative tribunal), hearing appeals from Official Assessments issued by the GA DOR. This is the first month the Georgia Tax Court has accepted new cases, making 2026 a watershed year for GA tax controversy practice. Georgia's income tax rate is phasing down (5.49% for 2024 to 4.99% over several years under H.B. 1437, 2022). Despite the rate reduction, Atlanta's economic growth (tech, film, logistics) is generating significant new income tax audit activity. Key GA income tax audit categories: (1) Pass-through entity (PTE) income, Georgia enacted a PTE tax election (SB 56, 2022) allowing S-corps and partnerships to pay GA income tax at the entity level; first major audit cycle for 2022-2023 PTE elections is underway in 2025-2026; (2) Part-year residency, people moving TO Georgia from CA, NY, IL face both-state income allocation disputes; (3) Retirement income exclusion (O.C.G.A. § 48-7-27(a)(5)), taxpayers 65+ may exclude up to $65,000 ($130,000 MFJ) in income from retirement sources; auditors dispute which sources qualify. Professional market: Georgia tax attorneys (Wiggam Law, Freeman Mathis & Gary, Hendrick & Lewis) charge $3,000-$20,000 for GA DOR audit protest and Tax Tribunal/Court appeals. No substantive self-serve GA income tax audit protest tool was found. Source: Georgia Tax Court — Constitutional Amendment 2026 · Georgia DOR Individual Income Tax Audits · Wiggam Law — Georgia Notice of Proposed Assessment

When to bring in a professional

Self-serve responses fit routine cases: clear facts, amounts a business can absorb, and a deadline still ahead of you. Bring in a licensed professional when the amount at stake is large relative to their fee, the facts are genuinely disputed, criminal exposure is possible, or the deadline has already passed. A short paid consultation to sanity-check your plan is often worth it even when you handle the filing yourself.

All sources for this guide

1. What to do if you receive a Proposed Assessment — GA DOR
2. Georgia Tax Tribunal vs. GA Department of Revenue — Wiggam Law
3. Protests and Appeals — GA DOR
4. Georgia Tax Court — Constitutional Amendment 2026
5. Georgia DOR Individual Income Tax Audits
6. Wiggam Law — Georgia Notice of Proposed Assessment