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Georgia's New Sales Tax Law Requires Registration or Reporting

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Georgia is joining the growing list of states to pass a law requiring companies to either collect sales tax from Georgia customers or report these sales to the state. This “either/or” obligation complicates the tax collection requirements of sellers while making it easier for the Georgia Department of Revenue (GDOR) to collect tax on purchases sold to Georgia businesses and residents. Out-of-state online sellers will be hit particularly hard by these new requirements.

The law (H.B. 61) impacts out-of-state sellers who during the previous or current year have total sales in Georgia of more than $250,000, or complete a minimum of 200 separate transaction in the state. The law takes effect Janyary 1, 2019.

What Are Your Options?

Small out-of-state businesses, most notably online sellers, who meet the economic qualifications, will face the biggest challenges abiding to this law. Here are the different scenarios.

a) Registration Option: The seller decides to collect sales tax from their Georgia customers and remit the tax to the state. This scenario requires the seller to register with the state, then implement a system to collect and remit sales tax. It’s an option that can quickly turn into a time consuming (and costly) obligation.

b) Reporting Option: The seller chooses to report Georgia sales to the revenue department. This option could create a PR nightmare for the seller when customers receive their sales tax “bills” from the Georgia Department of Revenue and learn that the seller turned over the details of their transactions to the state.

The Risk of Penalties:

Non-compliance penalties are stiff. If a seller fails to report sales to the state, a $5.00 penalty per non-reported transaction will be imposed. Failing to send sales tax statements to purchasers incurs a fine of $10.00 per statement.

If the state catches you not registering and not reporting, you will be liable for past due taxes, interest and penalties.

How the Supreme Court Ruling May Impact This Law:

By the end of June 2018, the Supreme Court will rule on the landmark case, South Dakota v. Wayfair. The Court’s decision will either:

  1. Rule in favor of Wayfair and uphold the status quo, maintaining that physical presence in a state is required before a seller is responsible for collecting and remitting sales tax to a state where sales transactions take place; or
  2. Rule in favor of South Dakota overturning the physical presence requirement and allowing states to require sellers with “economic presence” to collect and remit sales tax. If the court upholds the current “physical presence” requirement, Georgia cannot make out-of-state sellers with no physical presence collect and remit sales tax to the GDOR.

However, now that Georgia has adopted this new legislation, sellers meeting the requirement will be faced with the register/remit or report dilemma. Most sellers will likely choose to register and remit.

If the court rules that physical presence should not be the only factor in determining nexus, then Georgia may consider amending the new law to eliminate the option for sellers to report sales at a certain threshold to the state. Sellers only option would be to collect and remit sales tax if economic thresholds are met.

What’s Next?

Sales tax nexus is a turbulent issue as states and sellers battle to define the boundaries. What is certain is that states are going to extreme efforts to force companies to collect sales tax.

What’s your greatest concern about this new law? Are you more inclined to collect sales tax from your Georgia customers or report sales to the state? Share your thoughts and questions.

About the Author: Lauren Stinson,CMI, is Principal and National Leader - Sales & Use Tax at Cherry Bekaert LLP; a national CPA and consulting firm ranked as one of the top 25 in the country. Previously, Lauren was Owner and President of Windward Tax, a sales and use tax consulting firm. She has more than 25 years experience working with manufacturers on sales and use tax issues. Lauren is pleased to share her expertise with SalesTaxSupport readers as the Manufacturing contributor in SalesTaxSupport’s Industry blog, as well as the Georgia Sales Tax contributor in the States blog.

Comments or questions may be submitted by using the on-page "Comment" feature, subject to disclaimer at bottom of page. More specific questions or requests may be sent to Lauren directly using the orange "REQUEST" link on Lauren's Firm Profile page.

Other recent “Georgia (GA)” posts by Lauren Stinson, CMI:

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