If you've ever bought books at Amazon.com or won a bid on eBay, beware: Chances are, you're a tax scofflaw.
Those online sellers aren’t required to collect state sales taxes. But Georgia shoppers are still required to pay it.
Most Georgians don’t know they owe the sales tax or even how to go about paying it. Georgia’s losses from unpaid taxes are conservatively estimated at $365 million this year and more than $410 million in 2012, according to a University of Tennessee study
Meanwhile, Georgia has cut education spending more than $1 billion, and local governments have continued to make cuts to jobs and services.
Georgia, though, is doing little to capture the lost money, hoping that online shoppers will volunteer to pay what they owe.
That seems unlikely.
“I’m in the business, and I didn’t even know about [the tax],” said Larry White, a Peachtree Corners resident who owns several online retail companies. “Why isn’t there an app for that?”
A half-dozen tax experts, company executives and even a state legislator who spoke to The Atlanta Journal-Constitution about this issue said they have not paid taxes for items they bought online. Only Andrea Shepard, a Georgia Department of Revenue tax policy analyst, said she has paid the tax, known as a use tax.
But it’s next to impossible, she said, to enforce collection of that money.
“Is the Department of Revenue knocking on doors? No,” she said. “Do we want them to? Probably not.”
Americans are expected to spend more than $161 billion online this year and more in the future. The Department of Revenue has no immediate plans to go after the lost income, though it has made meager efforts to make people aware of the requirement.
The department sent out a Cyber Monday press release reminding online shoppers of the tax and created a form to make it easier for individuals to pay the tax on their own.
“It shouldn’t be my responsibility,” said April Jacobs, a Dunwoody resident who enjoys shopping online. “They make it really easy not to pay that tax.”
Not all online shoppers are avoiding the payments.
Those who shop at sites such as Walmart.com or Target.com are charged taxes when they check out. But retailers that do not have a physical presence in Georgia are not required to collect the tax.
That’s the result of a 1992 Supreme Court ruling that said a physical presence — such as a store — was needed to require sales tax collections. There are three bills in Congress that would change that, but Doug Sheppard, news editor of State Tax Notes, a publication that tracks tax trends, said a dozen such bills have failed in the past decade.
“A lot of people have taken the view that they’ll believe it when they see it,” he said.
Those that are paying the tax are primarily businesses. As of Monday, Georgia had collected $437.9 million in use tax from nearly 11,000 filers, nearly all businesses.
The total use tax collections are 5 percent of the $7.9 billion Georgia collected in sales and use tax through mid-December.
Although collecting more use tax won’t fill the gaps in Georgia’s budget, it’s essential to helping local retailers compete, said Bill Fox, the director of the Center for Business and Economic Research at the University of Tennessee.
“It certainly isn’t a level playing field,” said Dennis Fink, the chief financial officer of furniture retailer Havertys.
Fewer than 10 percent of shoppers consider not paying sales tax an important consideration in making online purchases, according to a joint study by online researcher Forrester and Bizrate Insights, which rates online retailers.
Mary Moore, CEO of the Cook’s Warehouse, said she has seen that in her own business. Moore, who owns five metro Atlanta locations of the store, said she loses sales of items like a $3,000 home-brew coffee maker when shoppers realize they can save money by buying online.
White, the online retailer who did not know about the tax, said when he buys online it is largely because of the money he can save. The absence of sales tax can factor into that.
“Where is sales tax important? High-ticket items,” he said. “There, sales tax matters.”
The Georgia Retail Association plans to push a bill that would expand the definition of physical presence, and hopefully capture more of the lost revenues by forcing more online sites to collect sales tax from shoppers.
Rick McAllister, president of the association, put its chances of passage at 50/50, saying the proposal needs to gain momentum.
Rep. Wendell Willard, R-Sandy Springs and a member of the Appropriations Committee, said he was unconvinced such a measure would be legal.
Willard said he has not paid use tax on books he bought online. He predicted there might be a “small revolution” if the state decided to go after online shoppers to boost its coffers.
“There would be revenue agents following FedEx and UPS trucks,” he said. “What a maze that would cause.”
For its part, Amazon said in a statement that it would support a federal law requiring online companies to collect sales tax.
McAllister, with the Georgia Retail Association, said on-the-ground stores are getting “clobbered” because the federal government is giving online sellers like Amazon an advantage.
“Most people don’t know they aren’t paying the tax,” he said. “[Online sellers] are making a tax scofflaw out of you. That’s a shame.”
Who collects online sales taxes
Retailers who have a physical presence in Georgia must collect the tax, but those who do not aren’t required to do so.
You won't pay if you buy from: Amazon, eBay or Overstock because those retailers don't have a physical presence in the state.
You will pay sales tax if you buy from: Target.com, Walmart.com or HomeDepot.com. Those retailers have a presence in Georgia.
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