Whether ride-share companies such as Lyft and Uber have to begin collecting sales taxes from customers in Georgia will be decided on the final day of the 2019 session.
The Georgia House approved a bill Friday for a second time to force so-called “marketplace facilitators” of business — such as ride-share and short-term home rental companies like Airbnb — to collect sales taxes from customers. The Senate passed its own version of the bill Friday, only one that exempted taxes on rides. House and Senate leaders will now try to figure out the final details.
Friday was the 39th working day of the 40-day session.
There is talk that legislators may ultimately add a flat fee to each ride, but whatever happens — or doesn’t happen — will occur Tuesday, when lawmakers finish their work for the year.
The stakes are high for ride-share companies and their customers. The Georgia Department of Revenue has already billed Uber $22 million for taxes, penalties and interest it says the company owes from July 2012 through June 2015.
The measures passed in both chambers are largely the work of House Ways and Means Chairman Brett Harrell, R-Snellville, who said they were in reaction to the U.S. Supreme Court decision last year that reversed a decades-old ruling and backed internet sales taxes.
Harrell said the sales taxes are already owed, but they aren’t being collected. A similar case was made last year when legislators passed a bill calling for the collection of sales taxes on most internet sales.
“This doesn’t change a single tax rate, doesn’t raise a tax, lower a tax, impose a tax or repeal a tax,” Harrell told colleagues before the House vote on Senate Bill 128, which included the “facilitator” language the House had earlier approved in another bill. “It simply says those online platforms are responsible for collecting and remitting those taxes that are already due.”
The House approved the bill 94-74, but there was opposition to the ride-share provision.
State Rep. Bee Nguyen, D-Atlanta, said the tax “will hurt the most vulnerable Georgians who rely on ride shares to get to their places of employment.” In Atlanta, she said, the provision would amount to an 8.9 percent sales tax on Uber and Lyft rides.
Some of the other businesses that would be affected by the measure, such as Airbnb, have voiced support for the bill.
A state estimate said the “marketplace facilitator” measure could bring in up to $157 million a year in state and local sales taxes by fiscal 2024.
The Senate on Friday also gave final passage to another measure sponsored by Harrell to increase taxes collected in the new economy. House Bill 182 would lower the monetary amount online retailers have to sell in Georgia before they must collect taxes from customers.
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.
Some big companies, such as Amazon, had been collecting sales taxes for years, but many retailers had not.
The law was written before states received the high court’s approval.
House Bill 182 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.
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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