Is additional Georgia IRT due when a recorded instrument adds collateral for an existing note but the lender advances no new debt?

Plain-English summary

The Georgia Department of Revenue granted an intangible recording tax refund because the recorded instrument added collateral but did not secure any newly advanced debt. The original security instrument had already borne IRT.

The Department relied on O.C.G.A. § 48-6-65(a)(1) and Ga. Comp. R. & Regs. r. 560-11-8-.04. As described in the letter, IRT is not required on an instrument that supplies additional security for an existing note without an additional advance when the record affirmatively shows that tax was paid on the original security instrument.

Here, the face of the security deed noted an attached affidavit. The affidavit said the instrument memorialized the lender's final advance on the original indebtedness, pledged additional property as collateral, confirmed that the lender extended no additional credit in exchange for that collateral, and identified the IRT paid and recording information for the original security deed. Based on those recorded documents, the Department granted the redacted refund amount and sent its determination to the county clerk to facilitate payment.

What this means for you

Borrowers and property owners

Adding property as collateral does not necessarily create more IRT when the secured debt does not increase. The decisive facts here were no additional credit and proof that tax had already been paid on the original instrument.

Lenders and closing professionals

Put the exemption facts into the recorded document package. The deed itself noted the affidavit, and the affidavit traced the original recording and prior IRT payment while stating that no new credit was extended.

Tax professionals

Distinguish an additional-security transaction from an additional advance. Section 48-6-65(a)(1) produced opposite outcomes in the Department's March and April 2022 documents depending on whether the underlying indebtedness actually increased.

Common questions

Q: Is added collateral automatically subject to more Georgia IRT? A: No. This document says no additional IRT was due because the collateral secured existing debt, no new credit was advanced, and tax had been paid on the original instrument.

Q: What documentation supported the refund?
A: An affidavit noted on the face of the deed explained the no-new-credit facts and identified the prior tax payment and original recording.

Q: Was the refund amount public?
A: No. The official PDF redacts the amount, so this page does not supply a number.

Q: Why do other pages share this ruling ID?
A: Georgia's archive uses IRT 2022-03-22-01 for several different PDFs. This is the Additional Advance source; distinguish it by topic and URL.

Citations and references

• O.C.G.A. § 48-6-65(a)(1) (additional security without an additional advance after tax on the original instrument)
• Ga. Comp. R. & Regs. r. 560-11-8-.04 (additional-security rule cited by the Department)

Source

• IRT/RETT search page: https://dor.georgia.gov/search-irt-rett-letter-rulings
• Topic page: https://dor.georgia.gov/additional-advance
• Original PDF: https://dor.georgia.gov/document/document/georgia-letter-ruling-no-irt-2022-03-22-01-additional-advancepdf/download

Original ruling text

Frank M. O’Connell

Deputy State Revenue Commissioner

Robyn A. Crittenden
State Revenue Commissioner

Georgia Department of Revenue

Office of the General Counsel
1800 Century Boulevard, N.E., Suite 15107, Atlanta, Georgia 30345

March 22, 2022

VIA: First Class Mail

RE: Intangible Recording Tax Protest and Claim for Refund for Security Deed, dated a

The Department of Revenue has carefully considered your intangible recording tax (““IRT”) Protest and Claim for Refund related to the above-mentioned recording. Under Georgia law, IRT is not required to be paid on any instrument that gives additional security for an existing note without the additional advance of indebtedness when “{i]t affirmatively appears that the [IRT] has been paid on the original security instrument recorded .. .” O.C.G.A. § 48-6-65(a)(1); see also Ga. Comp. R. & Regs. R. 560-11-8-.04.

The above-referenced instrument was recorded with an affidavit the inclusion of which was

noted on the face of the security deed. See NN ~The affidavit explained that the

instrument memorialized the Lender’s final advance on Borrower’s original indebtedness secured by the Borrower’s pledge of additional property as collateral. Sec iE The affidavit further explained Lender had not extended any additional credit in exchange for the additional collateral. See id. Finally, the affidavit noted that S{J in IRT was paid when the original security deed was recorded on , and concluded no additional tax was due. See The original instrument can be found at [i

Based on our review of the documents on record, your Claim for Refund in the amount of
$MM is hereby granted. A copy of this determination is being provided to the (J County

Re: Intangible Recording Tax Protest and Claim for Refund for Security Deed, dated [I March 22, 2022 Page 2

Clerk of Superior Court to facilitate refund of the payment collected.

Sincerely,

Domini¢k Capotosto

Deputy General Counsel
Georgia Department of Revenue

cc: A Clerk of Superior Court