Thursday, March 18, 2010

House bill could affect tax revenues

House Bill 1093 passed the Georgia House of Representatives yesterday. The bill would allow cities and counties to provide the state Department of Revenue with information about its licensed businesses. DOR would use this information to uncover businesses that are not complying with sales tax laws. From the Rome News-Tribune:

Legislation passed by the House on Wednesday would let the Georgia Department of Revenue compare local business license lists against its list of companies sending in sales tax collections.

A pilot program in four counties and their cities last year turned up hundreds of businesses that were either operating without remitting sales tax to the DOR or paying the sales tax without being registered locally.

House Bill 1093 would let local jurisdictions opt to send their lists to the state for crosschecking.

State Rep. Katie Dempsey, R-Rome, said the principle is sound.

“If everyone pays their fair share of taxes and those taxes are remitted as they should be, it will certainly reduce the shortfall we’re experiencing in this economic crisis,” Dempsey said.

The bill now moves to the Senate for consideration...

The current language of the bill makes participation optional for cities and counties. The governing authority, in our case the Decatur City Commission, could pass a resolution enabling my office to send a business report to the state.

However, the legislation does not authorize DOR to provide local governments with any of its tax information. State Democrats have argued that if DOR provided cities and counties with sales tax data, local officials could pursue businesses that have sales tax certificates but who don’t have business licenses. Earlier versions of the bill required cities and counties to provide the data, but this appears to be strictly optional.

Lawmakers point to a pilot program in four counties that showed potential tax revenue of $100 to $300 million. However, I believe that assumption is based on 100 percent participation by local governments, and not all local governments will agree to provide this information to DOR.

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