If you are a vendor in Georgia or doing business in Georgia online, you are probably wondering how all of this affects you. Not to bore you with tax and constitutional jargon, but it is important to know why and how none of this truly makes any legal sense.
The short answer is Yes. Yes, you have an obligation to collect sales tax and remit it to the state of Georgia even if you have no physical presence in the state.
Georgia Sales Tax Collection Formula
You must collect Georgia sales tax if you meet either of the following thresholds:
- Over 200 transactions per year with Georgia residents; and/or
- Over $250,000.00 in gross revenue from business with Georgia residents, including businesses.
Legal Background
Quill Corp. v. North Dakota and the Dormant Commerce Clause
Let’s talk about a case called Quill Corp. v. North Dakota and the Dormant Commerce Clause.
The Dormant Commerce Clause is a law that states that states could not collect sales taxes from purchases made by their residents from out-of-state vendors that did not have a physical presence within that state. In Quill, the Dormant Commerce Clause was upheld. In essence, businesses without a physical presence could conduct as much business as they wanted without any sales tax obligations.
South Dakota v. Wayfair, Inc.
However, the Wayfair decision came along and does exactly the opposite of what we have known to be law and the constitution. In Wayfair, the Court ruled 5-4 that the physical presence rule decided from Quill was “unsound and incorrect” in the current age of internet services.
Legislative Update in Georgia
Georgia House Bill 61
The latest bill to pass the House in Georgia is Bill 61. The most notable change is the expansion of the term “dealer” to include persons:
- Obtaining more than $250,000.00 of gross revenue in the previous or current calendar year from retail sales of tangible personal property to be delivered electronically or physically to a location within Georgia to be used, consumed, distributed, or stored in Georgia, or
- Conducting 200 or more separate retail sales in the previous or current calendar year of tangible personal property to be delivered electronically or physically to a location within Georgia for use, consumption, distribution, or storage within Georgia.
Note: Bill 61 states that every dealer making a retail sale of tangible personal property into Georgia is liable for a tax equal to the greater of 4% of the sales price or the amount of the tax actually collected by the dealer.
Delivery Retailer Responsibilities
Another notable change applies to delivery retailers. These businesses must either:
- Collect Georgia sales tax, or
- Provide sales and use tax statements to each person purchasing $500 or more in aggregate from the delivery retailer during the prior calendar year
- File copies of the statements with the Georgia Department of Revenue (GDOR)
- Provide a warning to customers to remit taxes to the GDOR
Frequently Asked Questions
Do I have to collect Georgia sales tax if I don’t have a physical presence in the state?
Yes. Under Georgia law, even if your business has no physical presence in the state, you are still required to collect and remit sales tax if you meet specific economic thresholds. This includes having more than 200 transactions or $250,000 in gross revenue from Georgia customers annually.
What are the current sales tax thresholds for Georgia?
You must collect Georgia sales tax if you either make over 200 separate retail transactions with Georgia residents or exceed $250,000 in gross revenue from such sales during the previous or current calendar year. These rules apply regardless of whether the goods are delivered electronically or physically.
What is Georgia House Bill 61 and how does it affect me?
House Bill 61 expanded the definition of “dealer” to include out-of-state sellers and delivery retailers who meet the sales thresholds. It also imposes sales tax collection or reporting obligations on these businesses, ensuring broader compliance from online and remote sellers.
What responsibilities do delivery retailers have under Georgia tax law?
Delivery retailers must either collect Georgia sales tax or issue annual statements to customers who purchase $500 or more, file those statements with the Georgia Department of Revenue, and notify customers of their tax obligations to the state.
How did the Wayfair decision impact Georgia’s sales tax rules?
The Supreme Court’s ruling in South Dakota v. Wayfair, Inc. overturned the physical presence standard established in Quill Corp. v. North Dakota. This allowed states like Georgia to enforce sales tax collection from out-of-state businesses based on economic activity rather than physical presence.