Lawmakers are taking aim at the revenue department

[private]The Georgia revenue department is normally a rather straightforward government agency: it collects tax revenues, forwards most of money to the state treasury, and sends local sales tax revenues back to the cities and counties where it was collected.

In 2015, however, the onetime low-profile department became ensnarled in two controversies where the agency’s leadership irritated powerful members of the General Assembly and prompted some lawmakers to go on the warpath.

As a result, the revenue department and its commissioner, Lynne Riley, could find itself squarely in the political crosshairs when the General Assembly convenes its new session in January.

As House Speaker David Ralston put it recently, “I would like to see them eliminate the need for legislative action, if they would go back and revisit that, because if they don’t, we may have to.”

Ralston was referring to one of the controversies engulfing the department, a lobbying battle between the powerful beer wholesalers and the smaller craft brewers who’ve been trying for years to get the flexibility to sell some of their product directly to consumers.

Legislation was passed and signed this year (SB 63) that allowed craft brewers to charge customers for tours of the brewing facility and give away some beer afterward, which was a backdoor way of letting them dabble in retail sales.

In writing the rules to implement SB 63, the revenue department appeared to side with the wholesalers, who opposed the bill, and released a rule that clamped down on brewers who attempted to hold these paid tours.

“It has the net effect of neutering the bill,” complained Sen. Hunter Hill (R-Atlanta), the author of SB 63.

The Atlanta Journal-Constitution reported that during the rulemaking process, revenue department officials met repeatedly with representatives of the beer and liquor wholesalers but refused to meet with the craft brewers.

“We got hosed,” said Nancy Palmer, the executive director of the Georgia Craft Brewers Guild.

Top leaders in both the House and Senate are urging the revenue department to take another look at the brewery tour rule and revise it so that it more closely aligns with the Legislature’s intent in passing SB 63.

In addition to Ralston’s suggestion that the rule be revisited, Senate President Pro Tem David Shafer sent a letter to Riley urging her to take that action.

“To the extent that the regulations you have already promulgated require clarification, I believe that it would be more appropriate for you to do so through the formal rule-making process, with public notice of any proposed new regulations and opportunity for public comment and legislative oversight,” Shafer wrote in a Dec. 23 letter. “Accordingly, I would urge you to withdraw the Bulletin.”

Riley, through a spokesman, acknowledged receiving the letter from Shafer but didn’t seem inclined to make any changes in the controversial rule.

The commissioner “is appreciative of his interest in this matter,” said public information officer William Gaston.

“The Department of Revenue adopted the brewery and distillery tour regulations in June of 2015 pursuant to state statute,” Gaston said. “When circumstances indicated the need for clarity of the regulations, Commissioner Riley initiated the development of the policy memo, which was released under her authority in September, 2015. The Department will continue to administer the regulations as they are currently in effect.”

Another issue confounding legislators is the revenue department’s refusal to release basic tax data to lawmakers.

This matter came to a head in August when Rep. Jay Powell (R-Camilla), chairman of the House Ways & Means Committee, held a hearing into a massive sales tax refund problem involving a company in northwest Georgia.

The revenue department had disclosed it would have to refund $4.5 million that a Floyd County business overpaid in sales taxes between 2005-12. The money would come out of sales tax revenues that the department would have sent to local governments in Rome and Floyd County, which was a major hit to those governments.

Powell tried to question revenue department employees about the circumstances of that overpayment incident, without asking about the identity of the company involved. Revenue employees declined to answer even the simplest questions from Powell, claiming that state law classified the data as “confidential.”

As the refusals kept mounting, Powell became visibly angered with the revenue department officials. “This is not good,” he said at one point.

Powell finally told Rep. Trey Kelley (R-Cedartown), an attorney, to head a subcommittee that would look at the revenue department’s confidentiality provisions and see if some changes might be needed. Kelley said a bill will be introduced in the upcoming session.

The bill will try to clarify the information that the revenue department must keep confidential so that more data about the sources of sales tax payments could be released to local governments, Kelley said.

“I want to protect taxpayers’ privacy, but I understand local governments’ frustrations,” Kelley said. “We need to clarify the statute so that the revenue department knows what they can talk about.”

The bill will also require the revenue department to give local governments more advance notice when a large sales tax refund to a local business is pending.

“We don’t need to let what happened in Floyd County happen again,” Kelley said.

When asked if Riley, who was a House member before Gov. Nathan Deal appointed her revenue commissioner a year ago, had any comment on Kelley’s bill, Gaston said, “the Department of Revenue does not comment on pending legislation.”

© 2015 by The Georgia Report

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Tags: administrative rules , beer wholesalers , craft brewers , David Ralston , Hunter Hill , Jay Powell , Lynne Riley , revenue department , sales tax refunds , Trey Kelley