End may be near for tax-free online shopping in Georgia

Online shoppers could soon start paying sales taxes for the first time on many purchases, delivering hundreds of millions of dollars to Georgia’s state coffers, under a bill that easily passed the U.S. Senate on Monday.

The bill’s chances remain unclear in the Republican-run House, as some influential conservative groups such as the Heritage Foundation think tank and Grover Norquist’s Americans for Tax Reform have labeled it a tax increase.

The 69-27 tally for the Marketplace Fairness Act included yes votes from both Georgia Republican U.S. Sens. Saxby Chambliss and Johnny Isakson. Gov. Nathan Deal is firmly on board, but many of his former House Republican colleagues from Georgia are noncommittal.

The bill would empower states and localities to collect sales taxes from Internet retailers that do not have a physical presence in their tax jurisdiction. Currently, people who buy untaxed goods from Amazon.com and other such retailers are supposed to report the purchases on their state tax returns and pay up, but few do.

Proponents of the bill argue it helps brick-and-mortar stores compete more evenly against online competition. Foes say it amounts to a tax increase on consumers and burdens small online retailers with paperwork for thousands of tax jurisdictions across the country.

Deal signed similar state-based legislation last year, but with the federal issue in limbo, Georgia has yet to see a dime.

“I am very encouraged that Washington is moving on that issue,” Deal told reporters Monday. “I hope the House will follow suit. I’ve made our congressional delegation aware and reminded them we’ve already taken action toward collecting that tax.”

U.S. Reps. Tom Price of Roswell, Phil Gingrey of Marietta and Paul Broun of Athens are unsure about the bill. Rep. Tom Graves of Ranger said he’s against it because it “would throw a classic Washington wet blanket on the brightest frontier of our economy, the Internet.”

On the other side, Rep. Austin Scott, a Tifton Republican, has signed on as a House co-sponsor of the bill, and Rep. Hank Johnson, a DeKalb County Democrat, said Monday he will vote for it.

There are no firm plans for a House vote, and the bill has yet to move in committee.

A 2009 University of Tennessee study estimated that on the high end, Georgia would lose $455.5 million in uncollected Internet sales tax in 2012. Since that study was completed, online sales have grown at a faster pace than even his optimistic estimates predicted, said Bill Fox, director of the Center for Business and Economic Research at the school.

Fox said he expects the losses will have increased since that study. But the Marketplace Fairness Act, if passed, will not collect all the unpaid taxes.

The federal law has an exception for online sellers that make $1 million or less a year, and Fox said those retailers make up a large percentage of the lost funds. He also expects some retailers will continue not to comply with the law.

“A noticeable share won’t be collected,” he said.

In Georgia, Amazon shoppers were expected to start paying sales tax on their orders at the beginning of the year. But five months after the state law went into effect, Georgia still isn’t collecting money from the retailer.

Tax collection from online shoppers was expected to add $16 million to the state’s coffers in 2013, but a spokesman for the state Department of Revenue said he wasn’t sure if any new online-only retailers had begun to collect sales tax in the state. Amazon is not collecting the tax, and spokesman Ty Rogers declined to comment on any plans to do so.

Amazon is expected to begin charging sales tax to Georgia shoppers this fall. But it is not clear if the company will build job-creating warehouses or distribution centers in Georgia, as it has in other states, in exchange for the months-long delay in tax collection. Elsewhere, states have made announcements after reaching a deal with the retailer; in Georgia, both the state and Amazon are mum.

Georgia has taken steps to enforce its sales tax policies, said Deal spokesman Brian Robinson. But he would not speak to Amazon.

“We’re not sitting and waiting on the federal law, though that would solve everything,” he said.

Rick McAllister, president of the Georgia Retail Association, said a congressional solution would be the most sweeping, and would guarantee all online retailers would collect the tax.

In the meantime, he and others are keeping their sights on Amazon, and hoping the company voluntarily complies with the law.