Bill to increase Georgia tax collections could move quickly

ATLANTA - Georgia lawmakers say they’re near a deal to tighten tax collections on some online sales.

The state House of Representatives sent House Bill 276 to a conference committee with senators on Tuesday to work out differences left over from the 2019 session.

The measure aims to ensure that companies providing online marketplaces to third-party sellers collect taxes on sales to Georgia residents. EBay and Etsy are among the marketplaces targeted by the bill, but it remains to be seen what other companies could be affected.

“I think the House and the Senate are pretty much in alignment” House Ways and Means Committee Chairman Brett Harrell, a Snellville Republican, told The Associated Press on Tuesday. “I think that’s also true of the administration.”

Senate Finance Committee Chairman Chuck Hufstetler, a Rome Republican, said Monday that he hopes the measure could take effect as early as April 1, which could boost tax collections for the state’s current budget year. Harrell said he wants to ensure that the Georgia Department of Revenue and smaller retailers could accommodate a start before the July 1 beginning of the next budget year.

State officials estimate that tightening marketplace rules could bring in $78 million for the state and $65 million for local governments in the first year. Other estimates have suggested much greater revenue gains.

So far, 38 states and the District of Columbia require online platforms to collect taxes for third-party sellers, according to the National Conference of State Legislatures. Owners of brick-and-mortar stores strongly support it.

“We think this is a great way to bring parity for retailers in the state of Georgia as the business of retailing and customer behavior evolves,” said Thomas Buesse, executive director of the Georgia Retail Association.

Although tax collections picked up in December, they’re still about level with last year’s pace, and growth has lagged badly since lawmakers cut Georgia’s top income tax rate in 2019. Lawmakers had projected another $800 million more in revenue for this year’s spending plan.

Gov. Brian Kemp has ordered midyear budget cuts of 4%, with a plan to deepen cuts by another 2% in the next budget year. Weak revenue means lawmakers might not be able to afford a further planned tax cut or be able to fulfill Kemp’s pledge to boost every teacher’s pay by another $2,000 a year.

Tightening collections would allow the General Assembly’s majority Republicans to increase revenue without raising taxes.

“We have got to bring in the revenue that’s owed to Georgia to take care of the needs we have in this state,” Hufstetler said.

Lawmakers say they hope the state Department of Revenue will hire a company to root out in-state sellers underpaying current sales taxes. Lawmakers passed a bill in 2018 allowing such a contract.

“Clearly we believe there’s a large amount of under-reporting or even fraud in the sales tax collection,” Harrell said. Hufstetler said officials hoped such an analysis could increase sales tax collections by $400 million in the first year and by $900 million in later years.

The bill got bogged down last year as lawmakers debated whether to collect taxes on Uber and Lyft. Harrell said he didn’t expect these ride-hailing services to be part of this year’s efforts. Senate Majority Whip Steve Gooch, a Dahlonega Republican, said lawmakers were exploring a flat charge on rides instead of assessing a 7% tax.