Georgia is losing out on considerable revenue generated by online sales taxes, a newly formed activist group says.
The totals of dollars not collected equal hundreds of millions of dollars, according to the Faith, Justice and Truth Project, who said big retailers are not fully collecting and remitting sales taxes – to the tune of $750 million.
The FJTP is a newly formed institute focused on promoting economic justice and popular education among Georgia’s communities and people of faith.
The report, titled “Georgia Sales Tax Erosion: Big Retailers Are Not Paying Their Fair Share” and released Tuesday, says that e-commerce retailers are to blame, despite Georgia’s enactment of additional legislation in 2018. According to the FJTP, protections for small businesses are being used by large retailers. The press release sent by the group mentioned Etsy and Walmart.com, both of which are classified as “marketplace facilitators,” who are reportedly dodging the tax.
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The report says Walmart.com is “heavily engaged in e-commerce” but is “not paying their fair share because many of the products are sold and shipped by third parties. The report estimates that as much as 90% of the items for sale on Walmart.com are sold by these third parties and Walmart.com is not collecting and remitting the sales taxes on those sales.
The press release mentioned a number of findings from the report:
- Georgia’s sales tax revenue has declined since 2013 relative to personal income and GNP growth.
- One possible reason for the reduction in remote seller sales tax is that Georgia fails to capture taxes from third parties who sell items in online marketplaces like Walmart.com.
- Big retailers are exploiting small business protection in Georgia’s internet sales tax to keep from having to remit sales taxes on items sold on their sites.
- Based on reasonable growth of reported e-commerce sales, Walmart could see e-commerce sales exceeding $30 billion in 2019. Georgia’s percentage of the total sales is estimated to be 4.25% or $1.275 billion.
- However, since approximately 90% of the items sold on Walmart.com are sold by third parties, it is estimated that Walmart will remit less than $10 million in sales tax on approximately $1.2 billion in online sales in Georgia
- Overall estimated revenue loss from all “marketplace facilitators” sales tax is estimated at nearly $750 million, which could easily account for the loss of Georgia’s overall sales tax revenue.
“This tax loophole is disproportionately punitive to minorities because of the digital divide,” Rev. Billy Honor, Executive Director of The Faith, Justice and Truth Project, said in the news release. “Capturing this lost revenue is a moral issue, because it makes the business playing field much fairer for all Georgia citizens and does the right thing by putting these lost funds from retailers like Walmart.com to work for our communities.”
In 2018, the U.S Supreme Court ruled in South Dakota v. Wayfair that states have authority to mandate that out-of-state sellers collect and remit sales tax on product purchases. Among states with a sales tax, all but three nationally have already taken action to ensure tax equity between in-state and remote sellers. Georgia’s legislation to close loopholes in 2019 failed to pass out of both chambers of the legislature.
The full report is available online at www.FaithTruthJustice.org
Full report in PDF form is below, but may take a few moments to load due to file size.
FJTP Sales Tax Study FINAL
