United States

Georgia provides guidance on economic sales tax nexus

TAX ALERT  | 

On Oct. 1, 2018, the Georgia Department of Revenue issued Policy Bulletin SUT-2018-07, providing guidance on Georgia’s economic sales tax nexus provisions enacted through House Bill 61, effective Jan. 1, 2019.

The guidance explains that remote sellers without a physical presence in Georgia are required to collect and remit sales tax on Georgia retail transactions of tangible personal property as if the taxpayer has established a physical presence in the state if:

(1) the remote retailer’s gross revenue from sales into Georgia in the current or previous calendar year exceeds $250,000; or

(2) the remote retailer makes 200 or more sales transactions into Georgia. Gross revenues are based on tangible personal property delivered electronically or physically to a location within the state to be used, consumed, distributed, or stored for use or consumption in the state.

If a remote seller that met one of the thresholds chooses not to collect and remit sales tax, beginning Jan. 1, 2019, the seller is required to notify each potential purchaser of the obligation to remit sales and use tax immediately and prior to the completion of a retail sale transaction. For years beginning after Jan. 31, 2020, the remote seller is required to mail a written statement to each purchaser stating the obligation to remit sales and use tax. Remote sellers that fail to collect and remit or notify the purchasers of the sales and use tax obligations are subject to penalties.

Takeaways

Georgia’s economic sales tax nexus will become effective for remote sellers on Jan. 1, 2019. Taxpayers should act now to evaluate whether a physical presence has been established, and thus a current sales tax liability may exist, or whether the remote seller will meet either of the sales or transaction thresholds and then determine to collect the tax or engage in use tax notice and reporting.

Currently, almost three dozen states have adopted some form of economic sales tax nexus provisions with varying effective dates through statute, regulation or policy and guidance. Taxpayers with questions about Georgia’s upcoming nexus provisions, or economic sales tax nexus generally, should speak to their state tax advisers. For more information on Wayfair, please read our article, Wayfair, sales tax, and economic presence laws.

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