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Checking it twice: Recouping sales taxes by sharing business license information

Businesses may want to double check that they’re paying their sales taxes accurately as Rockdale County is looking to partner with the state to detect businesses that slip through the cracks in the system.

The Georgia Department of Revenue recently launched a program called the Business Occupational Tax Submittal System where counties and municipalities submit information from local business licenses, such as business name, address, phone number, type of business.

The state then checks to see if they are properly receiving sales taxes from those businesses or if the business may be paying their sales taxes but operating without a license from their local county/municipality.

On the local level, county code inspectors can help the short-staffed DOR as they do their routine rounds, said Commissioner JaNice Van Ness, who has been leading the initiative in the county to sign up with the program.

“When they go in to look for business license, they could also look for compliance with the Department of Revenue,” said Van Ness. “So the counties could make sure they’re getting accurate reflections,” of the sales tax.

Tax Commissioner Dan Ray said accurate business registry also somewhat affects property taxes, since business also have inventory and other property that can be taxed even if they rent their facility.

“Most of our tax system is based on volunteer compliance. Ninety-nine percent of the people comply because they want to be good citizens. You still have to have to have an enforcement arm,” said Ray.

Although it may seem like pennies, the sales taxes fund a wide variety of important projects in the county and city.

In Rockdale, the sales tax is 7 percent or 7 pennies on the dollar. Four of those pennies go back to the state, one penny to the voter approved Special Purpose Local Option Sales Tax – which fund specified capital projects, the Education Local Option Sales Tax – which funds specified capital projects, and the Homestead Option Sales Tax – which helps fund discounts in homeowner property taxes.

The program, which was first piloted in 2010 with Hall County, has now spread to counties and municipalities in 49 Georgia counties.

The voluntary program began because “it was said there were businesses that were not paying their sales tax,” said Tim Mitchell, Manager of the Office of Tax Policy for the Ga. DOR.

“This came out of an effort with Hall County. Part of it was to see if that was the case,” said Mitchell.

So far, the total collections from the program, including the pilot year, has been roughly $545,000. About $233,000 has been distributed back to the local participants.

According to Mitchell, 334 businesses were found that previously not locally registered. The program became available state-wide Jan 1, 2011.

During the 2010 Hall County pilot program, 241 new business registrations or sales taxes payers were established and about $300,500 collected.

Hall County submitted about 1,356 business license records and the state contacted about 957 businesses during the pilot program period.

Hall County currently has about 3500 active business licenses and about 100 alcohol licenses, according to Hall County Business License Director Susan Rector.

Rockdale County had 3,234 business licenses in 2011 and 2,372 in 2010. The city of Conyers currently averages about 1,800 business licenses. The cost of registering a business varies with factors such as the size of the business.

The county also recently put in place requirements for non-profits to register at a $10 charge and currently has 119 on the registry list. The city of Conyers waives the registry fee for non-profits.

Rockdale recently put signing up with the program as one of their legislative priorities this year.