ATLANTA – A new report says Georgia is missing out on hundreds of millions of dollars in sales tax revenue because of a loophole that allows online retailers to skirt a new state law.
As of this year, online retailers are required to collect the tax in Georgia, but the report from the Faith, Justice and Truth Project found that so-called “marketplace facilitators” — or online sites that connect consumers with a seller's products and services — are hosting tax-free transactions that should be generating revenue for state and local governments.
Those untaxed products and services could be costing Georgia about $750 million a year, according to the report. A recent state analysis of a similar proposal put the figure closer to about $157 million a year.
“I don’t know of any Georgia community that would say, ‘Please, don’t give us any more resources,’” Billy Honor, who is the executive director of the newly formed Georgia-based advocacy group, said at a press conference held this week at the state Capitol. “This is a way in which we can do it and we can do it on a premise of fairness.”
As an example, Honor said someone could avoid paying $2,071 in taxes on a Rolex by buying the watch through Walmart.com instead of in person at an Atlanta jewelry store.
Honor, who is also an Atlanta pastor, said capturing these taxes owed would level the playing field among online and brick-and-mortar stores as well as among Georgians who can easily hop online to order goods and those who cannot.
State lawmakers have tried to task these marketplace facilitators, including Airbnb and ride-share companies such as Uber and Lyft, with collecting the tax. Most recently, such a measure cleared the House this year, only to stall in the Senate; it remains alive for next year.
Lawmakers did pass a measure last year that required all online retailers who make more than $250,000 or 200 sales annually to pay the tax. Starting next year, that threshold will be lowered to $100,000 to include more retailers.
Larry Ramsey with the Association County Commissioners of Georgia said tapping these marketplace facilitators — such as Walmart.com and Etsy.com — to collect the money is the most efficient way to ensure that sellers who are supposed to be charging the sales tax are actually doing so. Amazon agreed to start collecting the tax in Georgia years ago.
Sales tax dollars, Ramsey said, is the second largest source of revenue for counties.
“Every dollar of sales tax that’s not collected has to be replaced from somewhere. Generally, that’s going to be property tax,” Ramsey said, referring to the primary revenue source for counties. “The demand for county and city services is not going down. The cost for those services is not going down.
“The revenue has to come from somewhere.”
Walmart, for one, says it supports the proposal to require marketplace facilitators to collect and remit sales tax on behalf of their third-party sellers, according to a spokesperson.
“We collect and remit sales tax on behalf of our Marketplace sellers when they instruct us to do so,” said Ravi Jariwala with Walmart. “We can’t contractually collect tax on behalf of our sellers without support in the law.”
Jill Nolin covers the Georgia Statehouse for CNHI's newspapers and websites.