Copart, a Texas-based aution firm, recently settled a long-running tax dispute with the state that began following the company’s purchase of a salvage yard that was co-owned by Gov. Nathan Deal. (ALYSSA POINTER/ALYSSA.POINTER@AJC.COM)
Photo: Alyssa Pointer
Photo: Alyssa Pointer

Georgia settles tax dispute with firm with ties to Deal

A long dispute over millions of dollars in back taxes between the state of Georgia and a Texas-based auction firm that bought a salvage yard once co-owned by Gov. Nathan Deal was recently settled after years of legal wrangling.

The firm, Copart, said through a spokeswoman Tuesday that the company is “pleased that the matter has been settled and the case has been voluntarily dismissed” but didn’t comment further. State revenue officials declined to comment, and it’s not immediately clear how much the settlement is worth.

The company in November said in regulatory filings that a judge could soon hash out a fight over $2.6 million in taxes that state regulators said was owed. In that document, Copart said it had “strong defenses” to against the state’s case but warned investors it could still lose in court.

As the fight dragged on in tax court, the sum was whittled down over the years from the $100 million the state initially assessed Copart in the dispute. The argument centered on whether the sales of parts to international resellers are subject to Georgia sales tax.

The rift became public in 2013 shortly after Deal’s attorney announced the sale of the salvage yard, a lucrative side business for the Republican that was a source of criticism during his two gubernatorial campaigns.

The Atlanta Journal-Constitution reported in 2009 that Deal and his business partner, Ken Cronan, once held a no-bid agreement with the state to provide space for state employees to inspect rebuilt salvaged cars.

The newspaper also reported that Deal, then a congressman, intervened with state officials who sought more competition. That story led to an ethics complaint and a congressional investigation. Deal resigned from Congress before the probe could move forward and put the business in a blind trust after his 2010 victory.

Deal and his partner sold the salvage yard to Copart in 2013, netting about $3.2 million each. Soon after, Copart began ramping up its lobbying and legal forces, and it complained about “ambiguous” state tax regulations involving the disputed debts.

In the November filing, Copart said it has “adequately provided” payments to the state and that it will contest the issue in court. But it told investors, as it has in previous filings, that the defense could be “expensive and time-consuming.”

“There can be no assurance that this matter will be resolved in the company’s favor,” Copart wrote in the filing, “or that the company will not ultimately be required to make a substantial payment” to the state tax office.

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