ATLANTA – The Georgia Department of Revenue has lost a legal bid to tax the revenue generated from the leasing of coin-operated amusement machines (COAMs).
The state Supreme Court Tuesday unanimously upheld a lower-court ruling that declared gross revenue from COAMs is exempt from taxation in a case brought by Funvestment Group, which operates an arcade in Gwinnett County.
Funvestment sued the revenue department after the agency attempted to collect taxes on income from the company’s lease of COAM machines from Tiny Towne, a children’s amusement center in Norcross. The revenue department argued the state law exempting COAMs from taxes only applies to income generated from the customers who play the games.
Both the Fulton County Superior Court and, subsequently, the Georgia Court of Appeals, ruled against the state, declaring lease income from COAMs also is tax-exempt. On Tuesday, the Georgia Supreme Court agreed.
Justice Shawn Ellen LaGrua, writing for the court, wrote that the state law in question does not define what the terms “revenue” or “gross revenue” mean or what it means to “generate” gross revenue.
“[The law] does not indicate that the gross revenues can only be generated by playing the COAMs,” LaGrua wrote. “[It] is unambiguous and applies to any revenue 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.”
The COAM industry is a topic the General Assembly has taken up almost every year.
The state House and Senate passed different versions of legislation this year to reform an industry that has been plagued by illegal cash payouts to winners. But the bill died when the two legislative chambers couldn’t reach agreement on a final version of the measure.
This story available through a news partnership with Capitol Beat News Service, an initiative of the Georgia Press Educational Foundation.