Not all the sales tax that shoppers are paying is making it into government coffers.
As much as $1 billion a year is slipping through the cracks, according to gubernatorial candidate state Rep. DuBose Porter, D-Dublin — although Georgia Department of Revenue Commissioner Bart Graham contends that estimate is somewhat high.
Still, local legislators and elected officials say it’s time to start plugging those holes.
“Sales tax and property tax are our biggest sources of revenue,” Rome City Commissioner Evie McNiece said. “If we’re asking our citizens to pay their property taxes, if we ever have to raise the millage rate, I want to first be sure we’re already getting everything we’re supposed to be getting.”
Legislation is expected to be filed as early as next week to set up a sales tax verification Web site that lets the Department of Revenue and local governments cross-check their files.
And interest is rising in House Bill 458, which would let local governments collect their own taxes at the points of sale.
“Instead of waiting two months, we could get it in two weeks,” County Manager Kevin Poe said. “We could also get information on the (local) sectors where most of it is coming from and find out where the undistributed money belongs.”
A pilot program in several counties turned up hundreds of businesses that were either operating locally without paying sales tax to the DOR or paying the sales tax without being registered locally. The DOR collects all the tax and distributes it monthly to the county of origin.
State Sen. Preston Smith, R-Rome, said the study “opened our eyes” to the benefits of sharing information between the state and local governments.
“It showed there’s a lot of money being left on the table by people who aren’t playing by the rules,” he said. “And that increases the burden on those who are.”
The move is a start, city and county officials say, but does not address the problems of inaccurate distributions and untimely payouts.
Despite promises from the state, it is still taking about two months for the collected sales tax to make it into city, county and school bank accounts. That affects both cash flow and interest earned, County Finance Director Gary Burkhalter said.
The state also accumulates “unidentified taxes” it cannot target to specific counties. Its solution is to make pro-rated payouts twice a year, although that was temporarily halted by the Georgia General Assembly in 2008 when money got tight.
Legislation passed in 2009 re-authorized the payments, and a total of $24.7 million was returned to local entities statewide in December.
The amount “guesstimated” from Floyd County’s special purpose, local option sales tax alone was $86,992.94. Rome and Floyd County schools received more than $80,000 that had been held back. Local option sales tax for Rome, Cave Spring and the unincorporated area — money used to offset property taxes — totaled more than $76,000.
And the state is still sitting on unidentified taxes collected between Jan. 1, 2008, and May 4, 2009, because the re-authorization does not cover that period.
That’s why local governments are continuing to push for legislation allowing point-of-sale collections.
State Rep. Katie Dempsey, R-Rome, arranged a presentation last year by a company that does sales tax collections for Alabama governments. She said RDS Inc. has increased collections across the border, “and we are looking at every possible avenue right now to find every penny we can.”
However, major retailers with outlets in multiple counties are concerned about the potential bookkeeping nightmare. Trade groups managed to get the bill held in committee last year, but lawmakers appear to be more receptive this year.
Smith said some of the reporting burden could be eased through tweaks in the legislation, and state Rep. Barry Loudermilk, R-Cassville, said “it’s something we need to look at.”
State Rep. Barbara Massey Reece, D-Menlo, said companies crying hardship should invest in better technology because they’re already supposed to be reporting their collections by county. Reece supported similar legislation in 2009.
“This would raise revenue without an increase in taxes,” she said. “It is simply getting the taxes that have been collected to the right people.”
Rome News Tribune