Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...
By Chris Marr
Online sales tax legislation failed to win final support in the Georgia Legislature before the 2017 session ended in the early morning hours March 31, with its fate tied to a proposed income tax cut.
The state House and Senate failed to reach agreement on H.B. 329 before adjournment. The bill originally proposed flattening and lowering the state’s top individual income tax rate to 5.4 percent from 6 percent.
After Senate revisions, it also contained a House proposal to require online and other out-of-state sellers to collect and remit sales tax to Georgia or else follow reporting and notification requirements. The proposal mirrored similar offerings in at least half of state legislatures this year, as states look for ways to capture sales tax from the growing e-commerce market and deliberately push against constitutional limitations.
“The Senate wouldn’t budge off of its budget-busting version of tax reform,” Rep. Jay Powell (R), chairman of the House Ways and Means Committee and sponsor of both tax proposals, told Bloomberg BNA. “It’s dead for this year.”
The online retailer sales tax proposal was expected to face a legal challenge, as has happened in other states including Alabama and South Dakota. The U.S. Supreme Court’s 1992 Quill Corp. v. North Dakota decision prevents states from requiring sales tax collection by companies without an in-state physical presence. States are increasingly challenging the standard in hopes of getting the Supreme Court to review and overturn it.
Georgia’s proposal—had it been allowed to take effect—would have generated an estimated $274 million in state sales taxes annually and another $205 million for cities and counties, Powell said previously.
The legislation aimed to create an economic nexus standard, requiring companies with more than $250,000 of annual sales revenue or at least 200 transactions into Georgia to comply.
Other notable bills failing to win approval included legislation to regulate and tax fantasy sports operators and ride-share companies such as Uber Technologies Inc. and Lyft Inc.
H.B. 118 would have clarified that playing fantasy sports isn’t illegal gambling in Georgia while also regulating and taxing the industry, which is largely dominated by DraftKings and FanDuel. The version that passed the House would have imposed a 6 percent tax on fantasy sports operators. Nevertheless, industry leaders had publicly supported the bill.
H.B. 225, on the other hand, drew opposition from leaders in the ride-share industry, Uber and Lyft. The House version of that bill would have required the ride-share network companies—not local drivers—to collect and remit sales tax on the rides they facilitate. Georgia’s state sales tax is 4 percent, but additional local taxes bring the statewide average to 7 percent, which a Lyft spokesman said could be the highest ride-share tax in the U.S.
Both bills passed the House, although H.B. 225 faced resistance there. The Senate Finance Committee made changes to both, but they never got a vote on the Senate floor.
Georgia also joined more than 20 state legislatures in considering bills to require future U.S. presidential candidates to release their federal income tax returns in order to qualify for the state’s ballot.
In Georgia’s case, though, saying the Legislature considered the proposal might be too strong.
S.B. 255 was a Democratic-sponsored bill that never made it past the committee stage in the GOP-controlled Legislature.
To contact the reporter on this story: Chris Marr in Atlanta at cMarr@bna.com
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