Understanding the Casual Sale Exemption in Georgia Sales Tax Audits
If you are a retailer of food and/or food services, is a one-time sale of a desk at retail subject to sales tax? Using the definition of a casual sale, the answer would be no.
If you are undergoing a sales tax audit and the audit is applying sales tax on items that are unrelated to your core business, you might need to explore the casual sale rule.
What Qualifies as a Casual Sale?
A sale that meets the definition of “casual sale” is not subject to sales tax.
Please refer to Ga. Comp. R. & Regs. r. 560-12-1-.07 for the definition of “casual sale.”
For purposes of the casual sale regulation, “business” means:
Any activity engaged in by any person or caused to be engaged in by any person with the object of direct or indirect gain, benefit, or advantage.
This definition is outlined in O.C.G.A. § 48-8-2(4).
Summary Points
- Casual sales are typically exempt from Georgia sales tax.
- A casual sale is usually a one-time sale unrelated to the seller’s core business.
- Refer to Ga. Comp. R. & Regs. r. 560-12-1-.07 for detailed definitions.
- Definitions of “business” align with O.C.G.A. § 48-8-2(4).
Frequently Asked Questions
What is considered a casual sale in Georgia?
A casual sale is typically a one-time transaction that is not part of the seller’s regular business activity. These types of sales are generally exempt from Georgia sales tax, as they do not reflect the seller’s ongoing efforts to generate profit through commerce.
Is a one-time sale of office equipment subject to Georgia sales tax?
No, if the sale is a one-time event and unrelated to the seller’s core business, like a food retailer selling a used office desk, it would be considered a casual sale and exempt from Georgia sales tax under the relevant exemption rules.
How do Georgia tax authorities define “business” for casual sale purposes?
For the casual sale exemption, “business” includes any activity engaged in for direct or indirect gain, benefit, or advantage. This definition ensures that only genuinely incidental or non-recurring sales qualify as casual and tax-exempt.
Where can I find the legal definition of a casual sale in Georgia?
The definition of a casual sale is detailed in the Georgia Compiled Rules and Regulations, specifically Ga. Comp. R. & Regs. r. 560-12-1-.07. It’s important for businesses undergoing audits to reference this regulation when disputing tax on non-core business items.
Can casual sales be subject to audit scrutiny in Georgia?
Yes, during a sales tax audit, the Department of Revenue may initially include all sales. However, if a sale qualifies as a casual sale, you can present supporting documentation and legal definitions to claim an exemption and reduce your tax liability.