Collecting elusive sales tax
Published 2:50 pm Friday, February 27, 2009
Ever wonder why some Internet sales companies charge you sales tax and others do not?
As one who owns a business, and one who buys from suppliers using the Internet for inventory orders, I have noticed that some companies ask for my sales tax resale number, so they don’t have to add sales tax to resale items, and some companies never ask.
I have often thought that a lot of sales tax revenue was being lost when we purchase products from the Internet without having to pay Georgia sales tax. Without that additional revenue, 3 cents out of every 7 cents on the dollar goes uncollected and not returned to Decatur County.
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I called the Georgia Department of Revenue and asked why.
It has to do with physical presence.
If the company you are dealing with has a retail outlet in the state of Georgia, sales taxes must be collected.
If the company only exists as an on-line business, otherwise known as a “remote seller,” without a retail outlet in the state, the law says they can wave the sales tax, not having to collect it, and not having to pay it.
Since Internet sales are in the billions of dollars, and growing rapidly every day, it’s a huge revenue loss for any state with sales tax collection laws. And remember, out of the 7 cents we send into the state each month, 3 cents is returned here.
It may be one of the reasons many think you can buy almost anything cheaper on the Internet because for one thing, you can avoid the sales tax.
The Florida Legislature right now is considering revenue producing laws that would tax every sale on the Internet when the product is delivered to a state address. It is estimated in Florida alone, it’s worth an extra $2 billion.
I asked Charles Willey of the Georgia Department of Revenue, Sales Tax division, if there were any similar moves within the current Georgia legislature. He said there were none.
I also sent an e-mail to our local lawmakers, Gene Maddox and John Bulloch, and have not received a reply.
Willey said it has to do with the federal commerce laws, which interprets which companies must collect and which need not. It would have to be an act of Congress or a Supreme Court interpretation to get it changed.
If Florida goes ahead and challenges the commerce laws and wins, it could apply to all states collecting sales taxes.
Willey had no idea and did not know if anyone in Georgia had prepared figures of estimated lost revenue from non-taxable retail sales from the Internet.
If Florida estimates the loss at $2 billion, even if we said the Georgia loss might be half that amount, it’s a monumental figure in potential new revenue.
In the meantime, if you want to help Bainbridge and Decatur County governments recoup some of the budget losses that everyone is currently experiencing, stay off the Internet. Shop locally as much as possible, and shop local merchants who can give you expert time and attention to your needs and wants.