State lawmakers on Tuesday grilled Department of Revenue officials over a sales tax fiasco that has led local governments in Floyd County to see their sales tax revenue evaporate.
Members of the House Ways and Means Committee expressed incredulity as top tax officials said they could not answer many questions about the case due to state confidentiality laws.
Who made the mistake, the taxpayer or the department? How much did it cost the state? When was the mistake make and why did it take so long to correct? Who is the taxpayer and what is the name of the business? Those questions and more were met with a variation of: It’s confidential.
“This is not going well,” committee Chairman Jay Powell, R-Camilla, said after one attempt to get information.
When Rep. Trey Kelley, R-Cedartown, asked whether the company overpaid or if the state made a mistake, Revenue Commissioner Lynne Riley said that “information is not subject to disclosure at this time. We would defer that to the Attorney General’s Office to see if any of that might be a violation.”
Powell questioned how that could be.
“Are you telling me that making the statement that the taxpayer inadvertently or intentionally overpaid versus the department made a mistake and over-assessed in anyway discloses the identity of the taxpayer?” he said.
Warren Calvert, a senior assistant attorney general who works with Revenue, said there is very little legal precedent in Georgia to guide them in what is confidential and what is not. There was a U.S. Supreme Court case, he said, that makes it seem as if the state may not release that information.
“The fact that information would not tend to identify the taxpayer does not mean it’s not taxpayer information,” Calvert said.
What is clear, however, is that sometime in the last 10-15 years — the department would not say when — a business owner in Floyd County overpaid millions of dollars in sales tax to the state. In June of this year, Revenue officials completed an audit that found the taxpayer was due a $2.553 million refund, plus $1.42 million in interest (calculated at 12 percent) from local governments in Floyd County.
That $3.969 million is in addition to whatever the state had to refund the taxpayer, but Revenue officials would not say how much that was.
Consumers in Floyd County pay three pennies in sales tax in addition to the four pennies levied by the state. Businesses report sales tax collected to the state and the Department of Revenue sends the state portion to the general fund and the local portion back to the local governments.
Following the audit, the state wrote the taxpayer a check for its portion of the overpayment. The Floyd governments chose to have their repayment deducted from their monthly disbursements from the state, leading some to see their entire monthly sales tax be docked.
Floyd County Commissioner Gary Fricks said sales taxes make up about 25 percent of the county’s revenue. Losing a month’s worth or more is not easy to overcome.After Tuesday’s meeting, Fricks said he was pleased to hear lawmakers question Revenue officials.
“The most important thing is they understand our frustration,” Fricks said.
Riley said that as soon as she was told about the audit in June she quickly contacted local Floyd County officials and told them of what might be coming. She, too, expressed frustration that state law does not allow her to be more forthcoming.
“Therein lies part of the heartburn we have, seated before you today,” Riley, a former state lawmaker, said. “The rules are such as they are that make it difficult to be responsive without fear of violating that confidentiality statute.”
Perhaps it is time to change the statute, Powell said. He ordered Kelley to convene a special subcommittee to study potential changes to the confidentiality laws and how much the state can charge in interest.
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