With House Bill 334, the Georgia Department of Revenue has changed Regulation: 560-3-2-.26 “Electronic Funds Transfer, Credit Card Payments, and Electronic Filing” that will have a dramatic effect on virtually all small businesses operating in Georgia.
The new 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 2010 and 2011.“Effective for tax periods beginning on or after January 1, 2010, the threshold will decrease to $1,000. Therefore, any person or business with any single sales and use tax or withholding tax payment that is greater than $1,000 will need to both file electronically and remit their payment by EFT as well as for all future payments and filings.”
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 for Sales and Use Tax and Withholding Tax, 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, even if subsequent payments drop below the threshold.
This eliminates the notorious “float” of several weeks that it normally took the GA DOR to process checks. It eliminates 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 (my website is here), 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 44 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 unsure why Georgia is the only state with this rule in place. But that’s a different article altogether.)
So, what happens if you fail to comply? The penalty is also spelled out in the new law:“Each failure to remit payment by EFT will result in the assessment of a 10% penalty of the payment due. An additional penalty equal to the greater of $25.00 or 5% of the entire tax due (before payments and credits) will be assessed for each return not submitted electronically.”
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, to require as many taxpayers as possible to file and pay electronically.
If you’re reading this, I hope it’s because you read last night’s post about JSmith’s Nasy Email. If not, click here. We’ll wait.
One of the most important lessons I learned in my life as a “government insider” was the ability to answer correspondence of this kind of tone with patience and thoroughness. To illustrate, please see the abridged text of my response to my client’s employee’s husband (Oh, and don’t miss the constitutional history lesson!):
“Dear Mr. xxxxxx
“I have just received your email and wish to address your concerns. First, let me say how sorry I am that I have caused you such obvious alarm and concern. Having been in this business for some time, I perhaps take for granted that everyone understands the intricacies and peculiarities of alcohol law.
“Second, I am not an attorney, but an experienced consultant, who specializes in helping his clients navigate the processes of obtaining business and alcohol licenses in various municipal and state governments. TaxTraxx (www.taxtraxx.com), is a company I started three years ago, after serving approximately eight years in numerous capacities at the Georgia Department of Revenue. My firm facilitates projects like this for a number of business across the southeast. To date, we have an excellent record of providing services to our clients and we work with individuals of many different nationalities. We also file Sales Tax returns for our clients in 44 of the 45 states that collect Sales and Use Tax (North Dakota is the only exception). On our website, you will see some case studies of services that we have provided for our clients.
‘In this case, my firm has been engaged by xxxxxx, whom I am copying on this message. xxxxxx specializes in the sale of convenience stores and other types of businesses. xxxxxx contracted my services for the purposes of securing business licenses and alcohol licenses for several xxxxxxxx stations in metro Atlanta that are being sold to independent owners.
“The store where Mrs. xxxxxxx works, is being sold to xxxxxxx, which is 100% owned by a resident of xxxxxxx.
“Because the new owner is not a resident of Georgia, the City of xxxxxxxx requires a United States Citizen who is a current employee of the business to be listed as “Registered Agent” for the purposes of securing the new alcohol license. The main purpose for a registered agent is to have a local (within Georgia) contact for process of service, or to send mail in the event that mail might be undeliverable to the business address. The current owner, xxxxxxxxx, and the new owner asked Mrs. xxxxxx if she would be willing to serve in this capacity on behalf of the xxxxxx. From experience, I know this to be a common practice among municipal governments – over the past three years, I have worked with more than 80 different municipalities in Georgia alone. In the city of xxxxxxx, this requirement is specifically governed by Section x-xx of the City Ordinance. On the state level, this requirement is governed by O.C.G.A 3-4-23.
“To answer your specific question about why we asked Mrs. xxxxxxxx for your information, I will direct you to the Application for Sale of Distilled Spirits, Malt Beverages, and Wine . Specifically, pp. 3, 6, 9 and 10 are those that Mrs. xxxxxx filled out with me today. Page 3 is the only place on the application that asks for spouse’s information. This information is requested for one purpose only – to provide proof that neither the applicant nor the applicant’s spouse are currently engaged in any other business(es) manufacturing, distributing or serving alcohol. As far as I am aware, none of these agencies are allowed to run credit checks. They are, however, allowed to run NCIC and GCIC criminal background checks, fingerprints, and to check that all tax returns have been filed and tax obligations paid to the relevant local and state governments.
“There is a great deal of legal history related to the manufacture, distribution, and sale of alcohol in the United States. As you know, the manufacture, distribution and sale of alcohol was prohibited by the 18th Amendment to the US Constitution in 1922 and that prohibition was repealed by the 21st Amendment in 1934. At the time that prohibition was lifted, the US Government went to great lengths to create a 3-tier system for the production, distribution and sale of alcohol in this country. Because of certain federal laws, still on the books, it is illegal to be a participant in more than one tier of the three-tier system at a given time (i.e. a person who owns a distillery cannot also own a distributorship or a retail establishment. Or, a person who owns a bar may not also manufacture distilled spirits.) There have been some very limited exceptions allowed under federal law, specifically wine tastings at vineyards and brewpubs, wherein malt beverages are both manufactured and sold at retail. However, these exceptions are tightly governed by other, equally stringent laws. (As a side note, both tobacco and motor fuel have similar 3-tier systems and laws in place.)
“To your point questioning the legality of inquiring about marital status, I believe you will find that this exclusion only applies to employment-related matters. Mrs. xxxxxx was neither being interviewed for a job, nor was she told that her job would be in jeopardy if she did not provide that information. As a general rule, it is not illegal to inquire about marital status.
‘Regarding your allegation that I would use your personal information for any benefit, I assure you that the only entities having access to your or your wife’s information will be the xxxxxx County Sheriff’s Department, the City of xxxxxxx and myself. I am keenly aware that this seems like an odd practice. Frankly, I’m surprised that in three years of private consulting, yours is the first protest of this kind that I have ever received.
“At this point, I do not have any of your personal information. I have submitted Mrs. xxxxxx’s information to the xxxxxx County Sheriff’s Office. The City of xxxxxx, though, will not accept this application, because it is incomplete without your information.
“In your message, you requested contact information for xxxxx Realty, which I am providing below:
“My contact information follows in the signature.
“Mr. xxxxxx I applaud you for your concerns and for your candor. Again, I assure you that you have nothing to fear from me or from my associates regarding this application, your information or your wife’s information.
“I further hope that my response has given you a sample of the thoroughness I employ when completing a project and a feel for my experience level and discretion and that you will feel comfortable in asking any further questions you may have. The choice is yours and Mrs. xxxxxx’s, of course, whether she continues as the Registered Agent on this application. If she decides to no longer be considered, the new owner will have to find someone else to fill this role. Regardless your decision, I wish you nothing but the best. Sincerely, P. Todd Kelly”
See? I gave him enough data and background information so that he could not object to my objections. I anticipated his follow up questions and answered them in this reply, mitigating his rejoinder. (Note: I don’t talk like that in real life.)
Let me know what you think. In part 3, I’ll share his response.