Georgia bill aims to boost tax collections on online purchases


Top lawmakers are making another run at forcing online retailers to begin collecting taxes on what they sell in what they say is a bid to level the economic playing field with Georgia stores.

House Ways and Means Chairman Jay Powell, R-Camilla, filed House Bill 61, which would force online retailers with at least $250,000 or 200 sales a year in Georgia to either collect and remit to the state sales taxes on purchases or send “tax due” notices each year to customers. Copies of the notices would go to the state Department of Revenue so it would know who owes the money.

Powell’s committee decides whether tax legislation moves in the House, and his co-signers on the bill guarantee it will get attention at the Capitol: House Appropriations Chairman Terry England, R-Auburn; House Rules Chairman John Meadows, R-Calhoun; House Minority Leader Stacey Abrams, D-Atlanta; and House Ways and Means Vice Chairman Trey Kelley, R-Cedartown.


Powell’s measure is the latest shot fired in a years-long battle to get online retailers to collect sales taxes on purchases. The owners of retail stores — who have a lot of political clout at the Capitol — have long said they are handicapped by the fact that they have to charge state and local sales taxes on what their customers buy, while many online customers don’t. That means products can cost less when bought online.

The U.S. Supreme Court in 1992 essentially said sales taxes should only be collected when a seller has a physical presence in the state in which the sale occurs, such as a store or a warehouse.

Congress has been reluctant to pass e-tax legislation, and while several states have approved or debated such bills, they invite a court fight and a hard-press lobbying effort by big online retailers.

The General Assembly passed a bill in 2012 aimed at getting Amazon.com to start collecting sales taxes, and in 2013 the company agreed to do so. Three years later it announced plans for a distribution center in Jackson County, which means it might have fallen under the Supreme Court ruling anyway.

But many other e-retailers still don’t collect or remit the taxes to the state.

“Part of what we are trying to do is collect the sales and use taxes (state and local governments) are entitled to but find hard to collect,” Powell told his committee this week. “Part of this is a fairness issue.”

He added that state sales tax collections have been relatively flat since the end of the Great Recession, in part because online, tax-free sales have continued to increase.

A state fiscal analysis suggests collecting those taxes could mean an extra $274 million in revenue for the state and $200 million for local governments. The combined figure could hit $621 million by 2022. Not surprisingly, a lobbyist for Georgia’s cities told the committee his organization supported Powell’s efforts.

The Georgia Retail Association, which represents stores, has also long supported e-tax legislation.

“This would help create a neutral playing field among all retailers, and create fair competition, which ultimately, is what each business owner wants,” said James Miller of the association.

The state report estimates about $5.1 billion worth of e-commerce and mail-order purchases by Georgians from companies without state stores went untaxed in 2006, more than half of all such sales.

When Colorado passed a similar law, companies said they wouldn’t be coerced into collecting sales taxes, calling it unconstitutional.

The U.S. Supreme Court in December declined a chance to revisit the Colorado law, and internet commerce advocates said it would entice states to pass laws that would lead them to gather sales information on customers.

Steve DelBianco, the executive director of NetChoice, a trade group that represents Overstock.com, eBay and PayPal among others, said the Georgia proposal raises privacy concerns.

“Georgia residents are in for a rude privacy shock if the state mandates ‘tattletale reporting’ on citizen purchases from out-of-state retailers,” DelBianco said. “In many cases, the link between a particular retailer and a specific customer would inform the state government about that individual’s health concerns, political leanings, sexual orientation, personal tastes and financial status, among other things.

“The state government would know when a Georgia citizen has his gift purchases delivered to a different address, potentially revealing personal and very private relationships.”

Powell acknowledges that the issue will wind up in court if HB 61 passes. But his committee sounded ready to get that legal debate started.

“We’re not here to give one business an advantage over another,” said state Rep. David Knight, R-Griffin. “The government shouldn’t say one business should be paying taxes and one shouldn’t.”



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