Monthly Archives: July 2009

It’s That Time of Year Again – Happy (Sales Tax) Holidays!!!

Now is the time that the masses, suffering under the yoke of the various state tax systems around the country, yearning from relief from their 6, 7, or, heaven forbid, 8% burdens, go full force into the malls, free from taxation without reservation. The Georgia Department of Revenue reminds us that Georgia’s annual Sales Tax holiday starts today, July 30 and lasts all weekend, through Sunday, August 2.

It’s been a number of years that Georgia and a bunch of other states have jumped on the Sales Tax holiday bandwagon and I’ve never been a much of a fan.

Want to know why?

As a former “government insider”, I think the concept is a little bit deceptive. The ads tout big savings on items you buy during the holiday. However, if you think about it, the savings are minimal. Consider that purchasing $100 worth of exempt merchandise saves you only $7 in most of Georgia’s counties. Whoopee.

I ventured out this morning, looking for new pants, and was frustrated at the crowds and the mess. Frankly, I’d rather give the state my $7 and let them hash it out.

Don’t get me wrong, the savings on an eligible computer system (up to $1,500) would save you $105 in Sales Tax. That’s worth it. Although you could order a computer online and still qualify for the sales tax holiday without having to fight the crowds.

There are also some quirky “gotchas”. For example, according to the Dept of Revenue’s FAQ page, if you go online and buy a pair of pants that costs $95, but shipping costs an additional $10, you’d have to pay tax on $105. The pants are no longer eligible because the TOTAL of the item plus shipping exceeds the $100 threshold. On the other hand, if you drive over to the mall and purchase the pants for $95, then the pair of pants is an eligible purchase. You’d probably be using ten dollars worth of gas to get there and back, while polluting Georgia’s air. Like I said, “Quirky.”

Next, the holiday makes bookkeeping difficult for some of my clients. Most of my clients aren’t affected because they either don’t sell any eligible products, or they are not in the retail business to begin with. For those who are, tracking eligible products versus non-exempt products and trying to reprogram their point of sale system means an additional couple hours of work on their part and a couple hours of extra work on my part to get their sales tax return completed.

Finally, the impact to the state budget, while not enormous, is, at the very least, significant. It’s hard to find an exact total, and those that you can find, don’t seem to agree. But, it appears that the annual impact to state and local governments in Georgia is in a neighborhood just north of $3.5 Million. This is money that has to be replaced in some way, despite the sharp decline in state revenues and massive cuts in operations statewide.

In a future article, I’ll suggest ways to make this revenue up – not by increasing taxes elsewhere, but by eliminating some wasteful State programs. Somebody remind me to tell you about the “Umbrella Guys”. OK?

For more information on the Georgia sales tax holiday, and for lists of eligible items, click here:

Here’s a link to a table showing all the states currently offering Sales Tax Holidays: (Courtesy of Federation of Tax Administrators)


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Georgia Changing Filing Requirements on Sales and Use Tax

The Georgia Department of Revenue has proposed a change to Regulation: 560-3-2-.26 “Electronic Funds Transfer, Credit Card Payments, and Electronic Filing” that, if approved, will have a dramatic effect on virtually all small businesses operating in Georgia.

The essence of the proposed rule lowers the threshold at which businesses must submit tax payments electronically. That threshold was $10,000 for all tax payments made prior to January 1, 2007. It has been $5,000 for all tax payments made after January 1, 2007; but, it gets progressively lower over the next two calendar years.

Here’s the change. “Beginning January 1, 2010, all taxpayers owing more than $1,000 in connection with any return, report, or other document pertaining to sales tax, use tax, withholding tax, or motor fuel distributor tax . . . shall pay any such . . . tax . . . or liability and all future payments to the state by electronic funds transfer using the ACH debit or credit method even if some payments for those tax types subsequently fall below $1,000.”

Oh, and the threshold goes down to $500, beginning with payments due January 2011 or later.

What does this mean? It means that, going forward, business taxpayers will have to begin making electronic payments of all tax types, if any of their tax payments are greater than $1,000 (beginning January 2010) or $500 (beginning January 2011). And, once you cross that threshold, you have to make ALL subsequent payments electronically.

This eliminates the notorious “float” of several weeks that it normally takes the GA DOR to process checks. It removes flexibility in filing early, but sending payments later. It gives the department access to your bank account.

What should you do to protect yourself as a small business person? I would recommend that you work with a tax preparer, who can offer filing services, and who can warehouse your payment until the very last possible day to process it, in order to avoid late payment penalties and interest. Remember, that in Georgia, you have until the 20th of the month to file the previous month’s Sales and Use tax return – but only until 3 PM on the 19th of the month to pay the amount due.

I’m a sales tax guy, so I think in terms of Sales and Use tax, primarily, but the other tax types are in play as well. If the 20th falls on a weekend or holiday, you really only have until 3 PM on the Friday BEFORE the 20th to make your payment.

Most other states (and I file sales and use tax returns in 45 of them) allow the due date to slip back to the Monday or Tuesday AFTER the due date, if the due date falls on a weekend of holiday. Even those states whose due dates fall on the last day of the month allow the due date to slip to the Monday or Tuesday afterwards in this case.

I’m still unsure as to why Georgia is the only state that I am aware of with this rule in place, other than to speed up receipt of funds.

Under the current system, if you file a sales tax return in Georgia and mail it on the 20th, you can almost certainly count on two to three weeks “float” time before you check is processed. I track the checks I mail for my clients monthly, and find this to be pretty accurate. Under the new system, this all goes away.

I’ll give credit to the policy makers at the Georgia Department of Revenue, though. They have finally carried through on a pledge that the State Revenue Commissioner made when he was appointed in 2003, that being to require as many taxpayers as possible to file and pay electronically.

The comment period for this rule change is open until 10:00 AM, August 7, 2009. All comments should be directed to Commissioner Bart L. Graham, Georgia Department of Revenue, Suite 15200, 1800 Century Blvd, Atlanta, GA 30345.

Link to the entire rule change:

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