State tax news roundup
By Kay Bell • Bankrate.com®

In recent state tax moves, Georgians are awarded a tax break to help them pay for their children's college costs. In neighboring Florida, a businessman is accused of stealing state sales tax money. And, rounding out the latest southeastern U.S. tax activity, Louisiana's special legislative session ends successfully for teachers, who should see new gambling tax measures translate into pay raises.

Georgians get tax break to save for kid's college costs
ATLANTA -- Georgia has joined the ranks of states offering tax breaks to residents saving for their children's college educations.

The Higher Education Savings Plan, signed into law on March 23, will allow contributions of up to $8,000 per year to a state-administered fund. For parents with children already at least 10 years old, a catch-up provision allows contributions of up to $16,000 per child each year for the first three years of the savings plan. Earnings in the accounts will be free of state taxes and taxes are deferred at the federal level. Each child's account can grow to a lifetime maximum of $120,000.

When the money is taken out, it will be exempt from Georgia income tax if it is used for qualified educational expenses. Approved withdrawals will pay for tuition, fees, books, supplies and equipment. Federal taxes will be collected when the money is used, but at the usually lower tax rate of the student for whom the account was established. Money that is taken out and used for non-qualified expenses would be subject to Georgia income tax, plus a 10 percent penalty.

Taxpayers who contribute to a new Georgia higher education account will be allowed to deduct up to $2,000 from their state income taxes. Taxpayers will get the full deduction as long as their adjusted gross income is less than $50,000 for single filers, double that for joint filers. The deduction is phased out for higher-wage earners.

Contributions to the savings plan, state officials note, will be invested in professionally managed investment accounts. The investment process will be governed by a board of directors, chaired by the governor. Other members are the chancellor of the Board of Regents of the University System of Georgia, the commissioner of Technical and Adult Education, the executive director of the Georgia Student Finance Commission, the state auditor, the director of the Governor's Office of Planning and Budget, the state revenue commissioner, three directors appointed by the governor, and the director of the Office of Treasury and Fiscal Services.

Florida businessman charged with sales tax theft
TALLAHASSEE -- The Florida Department of Revenue, working with the state's prosecutor, has charged the owner of a chain of transmission-repair shops with stealing more than $113,000 in sales taxes that he allegedly collected from customers but never sent in to the state.

If convicted, Terry L. Comly could get up to 30 years in prison and fines of up to $10,000 on each felony theft charge. The Tampa man also could be required to pay back taxes, penalties, interest and investigation costs.

Comly's company, Transpecialists Inc., operated auto transmission repair businesses across central Florida. State officials say two shops in Tampa and one each in Clearwater, Lakeland and Port Richey collected sales tax on all transactions with customers. But investigators say when they compared the businesses sales records and sales tax returns, they found fewer reported taxable sales than occurred and less sales tax money sent to the state than was collected.

"Tax thieves steal from the public in several ways," says Jim Zingale, executive director of the Revenue Department. "First, they steal money that the public pays to support vital services, such as law enforcement and education. Second, they steal an unearned, undeserved, competitive advantage over honest businesspeople who pay their taxes."

Florida tax officials encourage individuals who suspect tax theft or fraud to call the state's investigations office in Tampa at 813-744-6506.

Louisiana's gambling on new taxes could pay off for teachers
BATON ROUGE -- Louisiana teachers are on target to get pay raises, thanks to a special legislative session that changed tax laws affecting gambling in the Pelican State.

Two separate gambling tax bills tied to teacher salaries passed a just-ended special legislative session. One offers a tax break to Harrah's casino in New Orleans to keep the hotel in business. A reallocation of taxes the hotel will pay on its continued operation over the next four years is expected to bring in $230 million, with much of that helping to pay for teacher salaries. The second law would allow riverboat casinos to dock, netting them more patrons. For the privilege, the floating casinos will pay higher taxes, an increase from 18.5 to 21.5 percent. This money, too, is earmarked for education programs.

The Louisiana legislature met in special session to consider the gambling tax bills and adjourned after passing the bills on March 22. The governor has signed the Harrah's tax-law change and is expected to sign the riverboat casino measure shortly.

-- Posted: March 29, 2001