Monday’s column focused on the contention by House Democratic Leader DuBose Porter and Atlanta mayoral candidate Lisa Borders that the state was leaving sales tax money on the table – at the expense of counties, cities and school boards.
State Revenue Commissioner Bart Graham has taken issue with the amount – $1.6 billion annually – cited by one Georgia Municipal Association official, and with the wisdom of the concept of letting cities and counties collect their own taxes.
Read his entire letter here. But this is the gist:
We previously provided the $1.6 billion figure in the Joint House and Senate Appropriations Budget Briefing on January 21, 2009. It is actually the total amount of all delinquent tax accounts of all tax types dating back to 1988. Senator Chip Rogers (R) is correct that “there is no way” there is $1.0 billion of sales tax annually which goes uncollected.
We will always agree that more collectors will always collect more money. If the solution was as simple as hiring private companies to collect taxes, many states and the IRS would have been privatizing tax collections for decades. Alabama, which authorized local collection in 1947, is joined by only Louisiana, Colorado, and Arizona out of the 36 states which have local sales taxes.
In general, states across the country have decided that it doesn’t make sense to require businesses to file a separate return for each county (up to 159 in Georgia each month) in which they do business, each with the authority to perform its own tax audits, make its own legal interpretations, and entrusting confidential information to private collectors and numerous local government officials who would not otherwise have a tax compliance reason to know.
Moreover, other legal complications would abound with ignored legal precedent and conflicting legal interpretation. The result of which would be more tax litigation in the State’s court system.
We know how the Georgia-based furniture company with seven stores in Georgia would feel about filing seven different county sales tax returns and a state sales tax return monthly rather than a single state and local return because we have asked them. We also know how they would feel about being subject to seven new audit jurisdictions. Conversely, we know how many of Georgia’s 159 counties would get an audit appointment with an out-of-state Fortune 100 retailer operating in Georgia that already deals with 50 states and the IRS.
While it does make sense to outsource some activities, this Department of Revenue would not outsource in areas where taxpayer rights are paramount. If you pay a contractor based on how much they collect, then of course the contractor will have every incentive to be overly aggressive, and you would probably never see another penalty waiver granted when circumstances warrant it.
The Department certainly gets asked enough times every year to waive penalties and interest on past due taxes not only by taxpayers but by their advocates. When the law and circumstances warrant such, the Department is pleased to oblige. In this proposal, advocates would be appealing to private companies or the local jurisdictions increasing the risk of politicizing revenue collection.
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