Outdated U.S. Postal Service (USPS) software may be costing city residents higher sales taxes for online purchases, and causing the city to miss out on millions in tax revenue. Sandy Springs Mayor Rusty Paul is looking to Congress for help.
“I’m almost certain that Atlanta is collecting our sales taxes. I have no definite proof about that, but logic dictates it,” Paul said during a recent City Council meeting.
The problem stems from the name of the city that appears in U.S. Postal information. In 2005, Sandy Springs incorporated and became an independent city, however its zip codes still show as Atlanta.
That means a city street address entered online, for say, driving directions or online shopping, reflects Atlanta as the city where the address is located, instead of Sandy Springs.
If online shoppers making purchases do not change the address in the city information box to Sandy Springs, they pay the 8.9% sales tax rate for Atlanta, instead of Sandy Springs’ rate of 7.75%.
Packages are delivered correctly whether Atlanta or Sandy Springs is indicated in the address information.
“It costs the individual additional dollars,” said Sharon Kraun, Sandy Springs director of Communications.”If you’re buying something fairly expensive online like jewelry or a car, and unless you change the city name, you are going to be paying taxes based on Atlanta’s tax rate.”
Paul reasons that many residents don’t know that correcting the city name could save them money and send the tax revenue from the sale to Sandy Springs, rather than Atlanta.
General sales tax revenue for Georgia cities - found through the Carl Vinson Institute of Government at the University of Georgia - show the city of Atlanta received $167.85 million in 2018. Sandy Spring’s general sales tax revenue was $43.73 million.
A look at Roswell which is a lower population size reveals $40.37 million was received in 2018, according to the institute. Those tax revenue numbers include all retail sales and not just those made online.
In U.S. Census reports, Roswell’s population in 2018 was 94,650 compared to Sandy Springs, 108,787. The city of Atlanta’s population was 498,044.
Estimating the cost to Sandy Springs in lost sales tax revenue is difficult, the mayor said. “It’s more like hundreds of thousands of dollars a year. We don’t know. We think it’s significant.”
Paul said he has turned to Democratic U.S. Rep. Lucy McBath to help fix the problem. She represents Georgia’s 6th Congressional District, which covers North Fulton, East Cobb and North DeKalb.
“She committed,” Paul recently told City Council members. “I was glad to hear about that.”
Repeated calls and emails to McBath’s offices in Washington D.C. and Sandy Springs were not returned.
According the Georgia Department of Revenue (DOR) , sales of an online company are reviewed the same as a traditional brick and mortar business.
A statement on the issue to The Atlanta Journal-Constitution said, “Sales tax is collected by the business and then reported and remitted to the DOR, the DOR then distributes sales tax to local jurisdictions based on what has been reported and remitted.”
The correct locale of the purchaser is not necessarily tracked by the DOR.
“The DOR depends on both businesses and local jurisdictions to provide accurate information to the DOR in order to assist with accurate sales tax distribution,” the statemement continued.
In 2011, Sandy Springs worked to resolve the issue directly with USPS to correct the city name in its software. The postal service mailed a letter and survey to residents and business owners asking them to vote on whether they preferred Atlanta or Sandy Springs to show as their address with USPS. Kraun said the postmaster general for the area required a simple majority of 51% from residents and 80% from business owners who wanted the software to be fixed and indicate Sandy Springs.
Residents were in favor of fixing the issue, but 81% of business owners wanted Atlanta to continue appear as the city name, said Kraun. “We wanted civic pride,” she said. “We wanted the sales tax to be clearly differentiated from Atlanta for residents.”
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