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February 10, 2010

Ga. legislators pursue uncollected sales tax

ATLANTA — Could hundreds of millions of dollars in Georgia sales taxes be going uncollected every year?

Maybe, say some Georgia lawmakers. And with the state fighting its way out of a huge budget hole, they're pushing proposals aimed at catching sales tax cheats.

Competing plans being pushed by Republicans and Democrats at the state Capitol would require sales tax license lists to be crosschecked with sales tax receipts to make sure companies are paying their share.

The GOP proposal would place that responsibility with the state Department of Revenue. Democrats say their plan is a "two-way street" in which the state and local governments would share the information.

The state's system of sales tax collection came up last year but the topic has gained fresh urgency this legislative session as the state's economy has continued to sputter.

House Ways and Means Chairman Larry O'Neal said a pilot program showed there is a problem, although it's unclear how big it is.

"There is a lot of fraud and abuse in the system," the Bonaire Republican said.

The issue has become a hot topic in the race for governor.

In a series of gubernatorial debates, House Minority Leader DuBose Porter has said an estimated $1 billion in sales tax receipts is going uncollected. Scooping up that money could help solve multiple budget woes, Porter has argued.

"Those cuts to education would not be so bad," the Dublin Democrat, a candidate for governor, said.

But Revenue Commissioner Bart Graham called Porter's $1 billion figure "a made up number" that would require some 32,000 businesses be collecting $500,000 in revenue the state doesn't know about.

Graham also argued that the Democrats' plan would violate state taxpayer confidentiality laws.

"All their alleged two-way street would do is harass every legitimate business owner in the state," Graham said Tuesday.

The revenue department has also noted that Porter's idea of collecting sales tax locally is already in place in Alabama, where it has spawned a class action lawsuit against the largest private sale tax collection agent in the state.

Sales taxes make up a significant portion of the state treasury. In the last fiscal year, sales taxes accounted for about $3.3 billion of the roughly $10 billion in state tax collections.

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