The Georgia House passed two bills targeting internet-based businesses this week that would mean big money for the state, and they could bump up the tab for Georgians who use ride-share and short-term housing rental services.
The sponsor of both bills, House Ways and Means Chairman Brett Harrell, R-Snellville, said the legislation, in both cases, aims to force online businesses to collect sales taxes that lawmakers say are already owed. The bills are a reaction to a U.S. Supreme Court decision last year that reversed a decades-old ruling and backed internet sales taxes.
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.
Under the law, the state and local governments were expected to collect an extra $500 million to $600 million a year in sales taxes.
The law was written before states received the high court’s approval.
House Bill 182, which the House passed Monday, 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 would 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.
State estimates say 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.
The House also passed House Bill 276, which state estimates say could bring in much more: up to $157 million a year in state and local sales taxes by fiscal 2024.
The bill would do much the same thing as House Bill 182, only for businesses that “facilitate” or “broker” sales, such as ride-sharing networks like Uber and Lyft, short-term housing rental sites like Airbnb and auction sites like eBay. Those companies would, by law, have to collect sales taxes on their services.
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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