The state of Georgia says Uber is not paying sales tax as required by state law and is seeking millions from the ride-sharing company.
Uber says it believes it has abided by Georgia law and says the state is misinterpreting the law governing sales tax. The dispute is likely to end up in court with a lot riding on the outcome.
The Georgia Department of Revenue has sent Uber a bill for back taxes totaling $22.1 million dollars. It maintains that Uber should have been collecting sales tax and other fees for rides it billed within the state.
The question is whether a ride is a service that qualifies for the state sales tax. Published reports say the company does not collect sales tax while the state insists that it should.
The state bases its argument on the fact that taxi services collect and pay sales tax. The state of Georgia says ride-sharing services like Uber and Lyft are essentially taxi services and should abide by the same rules.
For now, Uber has appealed the Department of Revenue’s claim to the state tax tribunal, which is designated under Georgia Law to settle these kinds of disputes.
Should Uber ultimately lose the case, not only will it have to pay Georgia the back taxes it will undoubtedly increase fares in the state of Georgia.
One group cheering on the state of Georgia is the taxicab industry, which does pay sales tax. John Boit, a spokesman for the Taxicab, Limousine & Paratransit Association told the Atlanta Journal and Constitution that making exceptions to the sales tax rule creates an unfair business advantage.