Georgia’s new law making more online retailers collect taxes on their sales to state residents just took effect Jan. 1, and already lawmakers are preparing to change it to add millions of dollars more to the pot of state revenue.
During the 2018 session, state lawmakers passed legislation — which went into effect this year — saying online retailers that make at least $250,000 in sales or 200 individual sales a year in Georgia must either collect and remit sales taxes on purchases or send “tax due” notices each year to customers who spend at least $500 on their sites.
Under the second option, customers would be obligated to send the taxes to the state Department of Revenue, and retailers would have to send the state copies of the notices to customers.
Some big companies, such as Amazon, had been collecting sales taxes for years, but many retailers had not.
The state got the green light on its bill in June, when the U.S. Supreme Court reversed a decades-old ruling and backed internet sales taxes.
Under the law, the state and local governments were expected to collect an extra $500 million to $600 million a year in sales taxes.
But the law was written before states had received the high court’s approval.
The new measure, House Bill 182, sponsored by House Ways and Means Chairman Brett Harrell, R-Snellville, would lower the threshold for retailers having to collect and remit the taxes from those making at least $250,000 in sales to $100,000. That means more retailers will have to collect the taxes. The bill also would remove the option that companies send tax notices to customers in lieu of collecting the taxes. Under the bill, they’d just have to collect the taxes.
HB 182 won approval from Harrell’s committee Thursday and could be on the House floor for a vote next week.
The changes would mean about $16 million in additional revenue from online retailer sales taxes for state and local governments in fiscal 2021 and $22 million by 2024.
Brick-and-mortar store owners have long said they were at a disadvantage against online retailers who could sell products without the tax. They said that allowed internet retailers to undercut them on pricing products. Critics say internet sales tax laws stifle innovation and hurt small retailers.
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