Revenue commissioner says local sales tax collection is a Pandora’s box of trouble

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.

For instant updates, follow me on Twitter.

25 comments Add your comment

DuBose Porter is an idiot

September 24th, 2009
10:49 am

hahahahaha! DuBose is a fool

GatorBait

September 24th, 2009
10:52 am

I wouldn’t say he is an idiot, but it makes you wonder if he sat down and actually discussed the practicality of his proposal. Like most politicians, especially those in Georgia, I bet he didn’t.

All of the options are pretty bad though, so Dubose may still have a chance

FredVaHighlands

September 24th, 2009
10:56 am

This has Mary written all over this. Are you aligning yourself with a Republican administration that has us 2 billion dollars in the hole? When we spoke in Virginia Highlands I was more than confident that you were a strong Dem. Mary, what are you a Dem or a Republican, your vote depends on it. The beguiled Fred.

Rochelle Covington

September 24th, 2009
10:57 am

Once again, Lisa Borders is proven to be an idiot with no substance. I hope November 3rd is the last we hear of her. Surely, there’s a cushy private sector job with Lisa’s name on it.

DuBose Porter is an idiot

September 24th, 2009
10:58 am

A chance? If Porter gets elected, that will be the greatest thing to ever happen to the states of Tennessee, North Carolina, Alabama, Florida and Texas. Maybe he has a chance if those states start contributing to his campaign.

Jasher

September 24th, 2009
11:00 am

Of course an official with a Republican government thinks a Democratic candidate’s idea for raising money is bunk. I swear, you could set your watch to this kinda stuff.

HotLanta

September 24th, 2009
11:00 am

Rochelle Covington, a cushy private sector job? you mean where they actually do their work efficiently and without forcing people to pay for it? I am pretty sure the “cushy” jobs are in the government bureaucracy.

Jasher

September 24th, 2009
11:01 am

Rochelle, cut it out with the classless, baseless comments. It only makes you look a Monday morning quarterback shouting obscenities from the cheap seats.

HotLanta

September 24th, 2009
11:02 am

OK, so Jasher, what about the fact that NO state of significant size and population uses that tax strategy? How is that for proof the idea is “bunk.” If it was so great, why isn’t California using it? They are Democrats

Jasher

September 24th, 2009
11:04 am

HotLanta (seriously, pick a less lame handle), California is HARDLY a model of government to compare to Georgia. Try again.

HotLanta

September 24th, 2009
11:05 am

I used them because they are in a horrible budget crisis and if this method really does produce Billions out of thin air, why on EARTH would they not use it?

And my name is just fine, thank you

Jasher

September 24th, 2009
11:07 am

HotLanta: California is not Georgia. Try again.

Claire

September 24th, 2009
11:07 am

Isn’t Bart Graham a leading figure in the administration that drove the State $2 million in the red?

Claire

September 24th, 2009
11:11 am

My mistake. That’s $2 BILLION in the red. Billion with a B.

Jasher Junk

September 24th, 2009
11:15 am

Jasher, you said the only reason Repubs are dismissing it is because its a democrat proposing it. I think that makes it a fair question to ask why, if that is true, this proposal isn’t used in democrat states, especially the ones in horrible budget crises because they have the MOST to gain.

If it is so great, how come no state of any importance uses it

Jasher

September 24th, 2009
11:22 am

Stop using my name, hack. And stop talking in circular logic — that may fool the laypeople, but I see through it. Georgia state government thinks it’s a bad idea because they won’t get the money they usually collect from these transactions, which I’m sure goes to lovely little projects like slop for Sonny’s pig farm. Talk in facts, not fallacies.

Jasher likes boys

September 24th, 2009
11:24 am

Where the heck is my circular logic, jerk? Just because you cant refute it doesn’t mean its circular or wrong, it means maybe YOU are wrong.

They are talking about getting more money for the government anyway, jackarse.

JASHER

September 24th, 2009
11:52 am

Great question, Jasher. Why aren’t any states with any kind of economy using local tax collection methods? Because it costs a ton of money for a city of any size to do it, and Atlanta ain’t got no money, just like most cities. It only works if you are a city the size of say, Dublin, where DuBose is from, which has about 50,000 residents.

HB

September 24th, 2009
3:13 pm

“If it was so great, why isn’t California using it?”

Hahahahahahaha! Isn’t California nearly bankrupt?! Clearly, whatever they’re doing isn’t so great…

Chris Mathews is covered in his own leg tingleing spittle

September 25th, 2009
2:00 am

OFF TOPIC. Has anyone seen the footage of the violent protesters at the G20? Those right wingers are as violent as ever….wait….this just in…. strike that… those are leftist protesters rioting and raising all holy hel!. At least they aren’t making fun of, or protesting Obama. Otherwise we may be forced to call him racist.

[...] Graham has taken exception to Porter’s call for local control of sales tax collection, saying it would lead to an avalanche of audits and paperwork for businesses. He made his points in a few paragraphs we posted on Thursday. [...]

Wow, Dubose Really is an Idiot

September 25th, 2009
12:42 pm

Just read Porter’s response. He must have middle schoolers writing his responses for him because it contained few facts, no in depth analysis, a bunch of logical fallacies, points that don’t make sense, the same sentences scattered throughout, etc. Well, I HOPE they are middle schoolers because if he wrote that, I feel sorry for the man.

Confused

September 25th, 2009
12:49 pm

I am really really confused right now. Porter, a democrat, thinks taxes should be collected at the local level and kept there without the state meddling. Democrats, however, believe that state taxes should be collected and sent to the federal government and then redistributed how they think it should be redistributed among the states.

Which model does he really support because they seem to completely contrast each other?

[...] issue, in fact, prompted this response in September from state Revenue Commissioner Bart Graham. He conceded that more auditors will always result in more tax collections, but said dreams of large sums are just [...]

[...] even got into some public back-and-forth with state Revenue Commissioner Bart Graham on the [...]