Should you collect sales tax in Georgia?
Sales tax is levied on retail sales of tangible personal property to customers, including leasing or renting. However, you will collect the sales tax if you determine the nexus in Georgia. A nexus is a presence that may come physically or economically.
Physical nexus is typically created when your business has a store, warehouse, or any office location in Georgia. An economic nexus is intertwined when you cross paths with threshold limits as already stipulated by the state. These thresholds can be on revenue or some other transactional basis.
Let’s explore if your business has a Physical nexus in Georgia.
A physical nexus is integrated when your business is engaged in the following in Georgia:
- Servicing tangible personal property in Georgia.
- Maintaining, occupying or using a place of business or an office in Georgia.
- Employing or retaining any contractor, including an agent, representative, or salesman, by whatever name is called, engaged in activities relating to selling, delivering, installing, or taking business orders.
- Having a stock of goods in Georgia.
You may also refer to the Georgia Revenue Department advisory to learn more about business activities that may create a sales tax nexus within the state.
Constituting an Economic nexus in Georgia?
You must comply with and register under sales tax rules if you are a remote seller (i.e., you don’t have a physical presence in the state). Your business sales in Georgia exceed $100,000 during the current or previous calendar year or if you make 200 or more separate retail transactions or deliveries into the state.
You may also refer to the Georgia Revenue Department advisory to learn more about business activities that may create an economic nexus within the state.
How can you Register for Sales tax in Georgia?
You must apply online to get the sales tax permit by visiting the Georgia Tax Centre. The processing time of your application is 15 minutes. You will receive the tax account number from your email. The state doesn’t impose any sales tax permit fee.
Additionally, before applying for a new tax account number, make sure you have the following information handy:
- EIN and Social Security numbers of all officers, partners or owners.
- Address details (physical and mailing).
- Business incorporation dates in Georgia.
- Contact information.
- Estimated total monthly sales.
- Nature of business.
Is your product or services liable to Sales tax in Georgia?
Tangible Property: Sales tax in Georgia is imposed primarily on the retail sale of tangible personal property, such as Furniture, giftware, toys, etc.
Services: Although services are not subject to sales tax in Georgia, a few exceptions include service or labor costs leading to the creation of tangible personal property, computer services, maintenance contracts, etc. For more information, click here.
Digital Product: Georgia charges sales tax on digital products. You must collect sales tax if you sell digital products such as software, streaming services, e-books, etc. Visit here for more information.
SAAS: SAAS is software that allows users to connect to the cloud and use it over an internet connection. It is non-taxable in Georgia. Click on this link to see the guidance issued by the state.
The state provides certain exemptions from sale tax, such as medical equipment, prescription drugs, machines, and equipment used for water conservation. Read the complete list of exemptions here.
You can read further by visiting the department website to know exactly what’s included in your list of items bound to pay sales tax.
How should you collect and calculate state taxes in Georgia?
Collecting and computing accurate sales tax to be remitted to the state may involve stratospheric efforts, especially when you are not in Georgia, as the sales tax is destination-based in Georgia, which means you must collect taxes on tangible property sold to buyers based in Georgia.
Complexities involved where you have a business nexus even if not in the state. Any default may lead to severe concerns, penalties, or fines by the state. That is what TaxDo is here for you! Our specialized sales tax calculator and professional services will simplify your job and lighten your compliance burden.
Georgia has a base sales tax rate of 4%, followed by local tax rates, which can be up to 5% based on the cities and municipalities. Click here for the city-wise sales tax rates (including local rates).
Below is the simple formula you can use to calculate your sales tax collection on each merchandise sold:
Sales Tax collectible = Sale value * (4% plus local tax rate)
Do you need to collect sales tax on Shipping Charges?
If non-taxable items are sold, shipping charges associated with such a sale are not subject to sales tax. However, when a sale includes taxable and non-taxable items, shipping charges need to be apportioned relatively between the taxable and non-taxable parts of the sale. Accordingly, sales tax applies to the taxable portion of the sale. Click here for the guidance issued by the state.
How should you file sales tax in Georgia?
E-file: You can e-file your return using the Georgia Tax Centre. You can use form ST-3 if you are not required to file electronically.
Payments are to be made along with the filing. The state accepts payment through multiple modes, including EFT, ACH, and Credit cards. However, if you select EFT as an option to pay, you must file the return electronically. Here is what the state has to say for payment and filing requirements.
Filing frequencies and due dates
Based on your reported sales tax or estimated taxable sales, the Georgia Department of Revenue assigns you a filing frequency, which can be Monthly, Quarterly, or Yearly. According to your filing frequency, the due date for filing sales tax is the 20th day of the month following the relevant reporting period, with only a few exceptions. Visit this link to find out your due date.
Note: If the due date is a holiday or weekend, the next business day would be considered the final due date.
Are there any fines or penalties for default in filing or paying sales tax?
The state levies a penalty of up to 5% of sales tax per month due if returns are filed after the due date, subject to a maximum of 25% of tax. Also, interest is charged at 1% per month for delay in paying the sales tax. Here is the complete guidance on penalties and interest.
However, assigning your tax burden to TaxDo would not result in you paying any penalty or interest. We will adhere to the due dates.
Sales tax Holiday
Georgia provides a sales tax holiday for motor fuel. Here is what Georgia Department of Revenue has something to say about tax holidays or suspensions.