Georgia Supreme Court rules Chatham County’s fire fee was an illegal tax

Property owners in unincorporated Chatham County were illegally charged for fire protection for two years, the Georgia Supreme Court ruled Wednesday, and the county must now pay back nearly $27 million.

What happened: Chatham County charged property owners in unincorporated areas a fire protection fee from July 2022 through June 2024. The fee was either a flat $100 per parcel or a charge based on the square footage of buildings. Property owners Damon and Sebrell Smith sued, arguing the charge was actually a tax in disguise.

The ruling: The court agreed unanimously. Under Georgia law, taxes on real property must be based on the property’s value. The county’s charge was based on square footage and flat rates, not value, making it illegal. The justices said it did not matter that the county called it a “fee.” What matters, the court said, is what it actually was, and what it actually was is a tax.

By the numbers: The trial court ordered Chatham County to refund $26,852,778.90 in illegally collected charges, plus $3,274,595.33 in interest. The Supreme Court upheld that order.

Why the fee failed: The court applied a four-part test to determine whether the charge was really a tax. The fire fee failed all four parts. Fire protection was available to everyone in the district regardless of whether they paid. The fee was mandatory, with penalties and collection lawsuits authorized for nonpayment. The amount charged had nothing to do with how much any property owner actually used fire services. And paying the fee gave property owners no benefit that non-payers did not also receive, since firefighters were required to respond to all calls in the area no matter what.

What’s new: Before this ruling, Chatham County had collected the fee for two fiscal years. The county has since dissolved the fee structure and folded fire protection costs into its regular property tax rate.

What this means for you: Property owners who paid the fire fee between July 2022 and June 2024 are part of a certified class action and are entitled to refunds under the court’s order.

The Big Picture: Because of this ruling, any other local government in Georgia that uses similar fees or has been considering them, would be acting outside of the law now that the decision has been handed down.