Georgia Sales Tax Exemption Certificate
When you are under a sales tax audit and want to convince an auditor that you sold merchandise to other non-retailers, you will need to produce form ST-5, for the wholesalers that you sold merchandise.
There is no sales tax liability on raw materials. These are business-to-business transactions that simply need to be documented correctly.
It is very common that in a sales tax audit the State’s auditor will apply sales tax to all of the transactions regardless of whether they were sold to the general public at retail or whether they were actually sold to an entity that is an exception to the routine sales tax laws. For example, if you sold merchandise to a non-profit organization, you will need to have their sales tax exempt certificate as well as their 501(c)(3) tax exempt status. Or, if you are a reseller of raw materials, you will have to prove that you are in fact a reseller of raw materials and you will need to show the tax exempt certificates of your buyers.
In a recent audit, we had a client that made two critical errors:
1. The client did not ask their client’s for their sales tax certificates;
2. The client did not save the non-profit exemption forms for their client.
#2 became even more complicated as it came to light that some of our client’s customers were in fact running charitable/non-profit organizations that did not renew their organization’s status with the IRS and/or state. The outcome was mitigating damages as a result of our client’s customers that were in fact defrauding our client by showing him false and/or expired certificates.
Protect your business and defend yourself and your company’s future during your sales tax audit.
Georgia Sales Tax Exemption Certificate
