Phone calls have been rolling in from anti-tax enthusiasts, pointing to a bill that had suddenly ballooned from a single page to dozens, then raced through the House on Friday.
H.B. 1221 was chockfull of new definitions that would apply to sales tax collection. There was great wondering over whether this might be a stealthy effort to impose a sales tax on items purchased through the Internet.
On Saturday, my AJC colleague Aaron Gould Sheinin tracked down state Rep. Larry O’Neal, chairman of the House Ways and Means Committee.
The Bonaire lawmaker swears the bill contains no tax increase – but concedes that the massive tax reform package is “real easy to misunderstand.”
“There’s not a single new tax in it at all. There is no tax establishment of any kind. It is a result of about a nine-year, sort of national collaboration of states that have been trying to conform all of their sales tax codes together — and it has to do with a very technical aspect of the tax law,” O’Neal said.
What HB 1221 is, O’Neal said, is an ahead-of-the-curve effort to protect retailers – in case the Fair Tax or some other universal consumption tax becomes the law of the land.
The process is known as “nexus,” which is a term of art dealing with the question of whether an out-of-state retailer has a physical presence in another state. Before the Internet, it was easy to determine if a business, say Sears, had a physical location in the state.
But when it comes to Internet sales, if a person in Alpharetta buys something from a specialty dealer in Alaska over the Internet – does that give the business a physical presence in Georgia?
O’Neal’s bill is aimed at answering that question, by providing the Alaskan retailer “nexus” in Georgia.
“Long story short, if nexus is established against a retail seller, then there can be a huge tax assessment against anybody,” O’Neal said Saturday. “So, businesses have become very concerned over the last five years even though they have this [prohibition] against Internet taxes.”
Here’s an explanation of the same from Travis Fain of the Macon Telegraph:
[The bill represents] a new program that allows catalog and Internet sales companies to voluntarily start paying sales taxes on purchases shipped into Georgia. This program, included in House Bill 1221, could raise somewhere in the neighborhood of $30 million a year, House Ways and Means Chairman Larry O’Neal said Tuesday. Many of these businesses enjoy a moratorium on sales taxes for Internet purchases, but there are some concerns in the industry over just how far that moratorium extends, and whether they could eventually face prosecution over unpaid sales taxes, O’Neal said.
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