1. A person shall be considered a false nominee of a taxpayer if such person is used for the purpose of evading measures to secure payment of anticipated or existing tax liabilities.
2. Recognition of a person as a false nominee of a taxpayer is carried out on the basis of a court decision.
3. The tax authority's motion for recognition of a person as a false nominee of a taxpayer shall be considered by the court in accordance with the procedure established by the Administrative Procedure Code of Georgia.
4. The tax authority is entitled, together with submitting a motion to the court for recognition of a person as a false nominee of a taxpayer, to impose a tax lien/mortgage on the property of such person within the scope of the taxpayer's tax liability. If the court does not grant the tax authority's motion for recognition of a person as a false nominee of a taxpayer, the tax lien/mortgage shall be cancelled.
5. The tax authority is entitled, for the purpose of enforcing the recognized tax liability of the taxpayer, to apply the measures provided for in this chapter to secure payment of the tax liability against the false nominee of the taxpayer.
The use of a person for the purpose of evading measures to secure payment of tax liability shall mean the fictitious transfer of the object of such measures to that person. In this case, the false nominee holds and disposes of the object outwardly as their own, although in substance, the real person (the taxpayer) exercises possession and disposal of the object. The essence of false nominee arrangements lies, on the one hand, in the fictitious transfer of the object to the false nominee by a sham transaction, and on the other hand, in the fictitious holding and disposal of the transferred object. False nominee arrangements are manifested in the conclusion of sham transactions, fictitious ownership of the taxpayer's property, disposal of the taxpayer's property as if it were one's own, and the conduct of the taxpayer's business as if it were one's own (sham entrepreneurship).
To ensure that recognition of a person as a false nominee does not result in unjustified and unlawful interference with their property rights by the tax authority, judicial control is established over the recognition of a person as a false nominee. In particular, recognition of a person as a false nominee of a taxpayer is carried out only on the basis of a court order, and, except as otherwise provided by the Tax Code of Georgia, the sale or transfer to state ownership of a person's seized property is also carried out on the basis of a court order.
If the court does not grant the tax authority's motion for recognition of a person as a false nominee of a taxpayer, the tax lien/mortgage shall be cancelled. The tax authority is authorized, together with submitting a motion to the court for recognition of a person as a false nominee of a taxpayer, to apply a tax lien/mortgage on the property of such person within the scope of the taxpayer's tax liability.
