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Georgia Senators raise questions about e-retailer tax bill

Legislation to force more e-retailers to collect taxes on what they sell is getting a close look in the Georgia Senate after zipping through the state House.

The Georgia House in February overwhelmingly approved 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 who spend at least $500 on their site.

Copies of the notices would go to the state Department of Revenue so it would know who owes at least some of the taxes.

House Ways & Means Chairman Jay Powell, R-Camilla, the bill’s sponsor, said Georgians who buy products online are already supposed to be paying the taxes.

The General Assembly passed a bill in 2012 aimed at getting to start collecting sales taxes, and in 2013 the company agreed to do so. But many other e-retailers still don’t collect or remit the taxes to the state.

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.

Powell’s bill got an initial hearing in a Senate tax subcommittee Wednesday and he faced questions about how it would work, and why the state should raise extra revenue without a corresponding cut in other taxes.

Powell expects e-retailers who are currently not collecting the taxes to sue the state if lawmakers pass his bill. So it could be several years before the state actually collects any money from it.

“The sooner we do this, the sooner we will have an opportunity to collect the taxes,” he said.

Still, Senate Finance Vice Chairman Hunter Hill, R-Atlanta, said the bill has problems.

“I would have preferred it to be part of a larger package with lowering taxes in other areas to accommodate that we are expanding taxes on some of these businesses,” Hill said. “I would have liked to have seen it as part of a more comprehensive tax reform.”

Powell has another bill, House Bill 329, which also has already passed the House, that cuts the maximum income tax rate in Georgia from 6 percent to 5.4 percent. Such a cut has long been a major goal of Senate Republicans like Hill.

Lawmakers tend to combine several tax bills into one or two big bills at the end of each session, so the e-retailer and income tax measures could still wind up in the same legislation.

Such bills are called “Christmas trees” because House and Senate leaders attach several bills onto one, like ornaments on a tree, to force colleagues to vote on a large package instead of individual proposals. It’s one of the ways lawmakers sneak in last-minute tax breaks that might not be approved on their own.

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