Impact of Wayfair v. South Dakota on Georgia Online Sales Tax
Until the Wayfair v. South Dakota decision, online and out-of-state buyers in Georgia were enjoying a 7% savings. I know this because I always thought to myself that I am saving 7% on every online purchase that I made. Since 2018, retail giants like Amazon have been collecting their 7% sales tax and remitting it to the State of Georgia’s Department of Revenue.
From Physical Nexus to Economic Nexus
The old rule of “systematic and continuous contacts” has been expanded to include an economic nexus. This describes that an aggregate amount of sales over $250,000.00 per year by any single seller into the state of Georgia creates an economic nexus.
What is an economic nexus?
Yes, so now if you do away with the physical presence test of a physical nexus it all makes sense. There is no longer a physical presence test that requires a brick-and-mortar presence and/or salespeople.
New Law Means New Obligations for the Seller
The new law requires online retailers who make at least $250,000 or 200 sales a year in Georgia to either:
- Collect and remit to the state sales taxes on purchases
OR - Send “tax due” notices each year to customers who spend at least $500 on their site
How to Handle Sales Tax Compliance in Georgia
If you are an online retailer selling into the state of Georgia, contact our office if you are at controversy with the GDOR (Georgia Department of Revenue).
Frequently Asked Questions
What is the Wayfair v. South Dakota case about?
The Wayfair v. South Dakota Supreme Court decision in 2018 allowed states to require out-of-state and online sellers to collect and remit sales taxes, even if they do not have a physical presence in the state. This overruled the previous physical nexus standard.
How did this ruling affect Georgia’s sales tax collection?
Following the ruling, Georgia began enforcing economic nexus laws. Online retailers like Amazon now collect a 7% sales tax on purchases shipped to Georgia, which is then remitted to the Georgia Department of Revenue.
What is an economic nexus in Georgia?
Economic nexus in Georgia means that if a business exceeds $250,000 in sales or 200 transactions annually into the state, it must collect and remit sales tax, even without a physical location in Georgia.
What are a seller’s obligations under Georgia’s economic nexus law?
Sellers who meet the economic nexus threshold must either collect and remit Georgia sales tax or send annual notices to customers who spend $500 or more, informing them that use tax may be due.
What should I do if I’m a seller facing issues with Georgia sales tax?
If you’re an online retailer and have questions or disputes related to Georgia sales tax compliance, it’s advisable to contact a tax professional or attorney experienced in Georgia Department of Revenue matters.