Editor, I want to offer a clarification to a statement made by Len Calderone in his column in Wednesday’s Coastal Courier on changing the tax code. He favors wiping out the entire income tax code and replacing it with a “consumption tax” or sales tax. He mistakenly states halfway through his commentary that, “Others believe that business owners could make personal purchases and avoid the tax because businesses would be exempt. Businesses are exempt from state sales taxes even now, but they have to prove that what is purchased is for company-only use.”
The Georgia sales and use tax is called that because businesses that purchase taxable goods are responsible for state sales taxes both on items they sell at retail and on items purchased for use within the business operations. Other than specific exemptions written into the state tax code on certain items (Bibles or airplane parts, for example), the monthly report that registered businesses have to send to the state must account for both items sold and used, and taxes must be paid accordingly.
I have been responsible for reporting and paying sales taxes for two multi-million dollar businesses during my career. Both were audited by the Georgia Department of Revenue on this very issue. When auditors found items consumed by the businesses instead of being sold at retail, we had to provide a copy of the invoice from the original supplier, showing we were charged sales tax at the time the items originally were purchased, or we had to show we recorded those items on the monthly report as “used during the course of business.” We also had to show that we paid the taxes due at the end of that month. Otherwise, we would have been assessed for the sales tax due and we’d have had to pay penalties for late payment.
Thank you for the opportunity to correct the record on this issue.
— Rafe Semmes