Sales Tax

I finally broke down and joined the social media network twitter.  You can follow me on twitter at @salestaxpro.  I was really surprised how easy it is to set up a twitter account. It’s hard to do a lot of content in only 140 characters, but I’ll give it a try.   Here is what I will be doing on Twitter:

1. Posting updates to my blog

2. Announcing technical updates to my document library and other resources

3. Alerting you to new issues that may be of interest.

4. Once I get enough followers, I’ll be announcing special technical webinars and phone calls for only twitter followers.

If you are already a twitter member, I’d appreciate you re-tweeting my messages to your groups.  There are just a few sales tax folks on twitter and I seem to be the only consultant. The others are either bloggers or software companies.

Thanks for your help and support.

Ned Lenhart
Now on Twitter @salestaxpro

There is discussion within the Streamlined Sales Tax Program to develop a uniform sales tax refund period.  Some discussion is to make this a 1 year look back.  Most states allow the refund period to be the same as the assessment period which is 3 years.  The states are well within their right to limit the refund period under their soverign ammuity laws.  Technically, there is no requirement that states allow for refunds at all, however that would not set well with the public.

Limiting the look back to 1 year could have some uninteneded consquences.  First, it may flood the system with refunds-some legitimate and some not.  If you know that you only have a 1 year look back, you may only have time to throw everything into the refund claim and then sort it out later.  This could back up the system.

The other consequence would be a decline in current revenue collections if businesses adopt a very conservative approach to what is taxable and what is not.  Companies would be more aggressive at claiming exemptions or flat out not paying use tax on purchases.  If they know they can’t get a refund, why pay in the tax in the first place. 

Neither alternative is good, but I believe they could be real possibilties.

Ned Lenhart
President
Sales Tax Refunds

Georgia House Bill 1093 was signed into law recently.  This bill is in response to some legislators’ belief that tens of millions of tax dollars are going uncollected in Georgia because of unregistered state domiciled businesses.  In an effort to cooperate with the local governments, the state is now requiring that each city and county that has a local business tax ordinance to gather and submit additional information to the Georgia Department of Revenue.  The goal is to identify businesses that are registered for business tax that should also be registered for collection and remittance of sales tax.

During the hearings, someone legislators speculated that over $300 million of sales tax was going uncollected because of unregistered local businesses and that if the counties and cities would help identify these law breakers, there would be a windfall for them also.  If you do the math, at 7% sales tax rate that is over $4 billion in untaxed but taxable revenue.  I have serious doubts that this is a legitimate number.

The bill requires that the municipalities gather the following information from taxpayers:

1. Name and address
2. Sales tax ID if one exists and if the business is required to have an ID

The municipality then will submit this information to the Georgia DOR.  That’s it.

The bill does not require any action on the part of the DOR.  There is no call to action once the data arrives or any mention as to what follow up steps the state or the municipality will take.  There is no matching required to take place to ensure that the unregistered businesses actually register.  Nothing.

This bill also dodges the biggest problem completely.  It assumes that the business knows whether it is required to have a sales tax ID.  If the business is required to have an ID but does not know it has such a responsibilty, what good is this program?

Ned Lenhart
President of Sales Tax Advisors of Georgia
Georgia Tax Enforcement