Georgia, known for its beautiful landscapes and rich history, is also a hub for trade and tourism in the Southeast. Beyond its natural beauty, the state has a growing business scene. But when it comes to handling sales tax in Georgia, it’s important to know the rules and regulations that make the process unique.
This guide breaks down everything you need to know about the Georgia’s sales tax, from determining the right sales tax rates to understanding exemptions and filing processes. By the end of this comprehensive guide, you’ll be equipped to handle Georgia’s sales tax with confidence and ease.
Sales Tax Nexus in Georgia
When a business creates either a physical or economic nexus, it is required to collect sales tax in Georgia.Physical Nexus
A physical nexus means having a significant physical presence or engaging in enough activities within a state to require the collection and payment of sales tax. The factors that determine a physical nexus in Georgia include:- Physical Location: This includes having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business.
- Inventory in the State: This covers situations where you store your products within the state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
- Employees, independent contractors, agents, or other representatives operating on your behalf.
- Affiliate Nexus or Click-through Nexus: You could trigger a physical nexus if you have affiliates, whether they operate online or in-person, who have collectively sold more than $100,000 worth of products for delivery in Georgia in the preceding or current calendar year.
- Presence at Convention or Trade Show: You must collect sales tax at Georgia trade shows or conventions if you participate as an exhibitor and took orders. You will need to remit the tax collected using the Miscellaneous Sales Event Form.
Economic Nexus
States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus. Beginning January 1, 2020, the threshold for economic nexus in Georgia is $100,000 in gross revenue or 200 transactions on the previous or current calendar year’s sales. While the nexus criteria mentioned above generally apply to most businesses, additional methods exist for establishing sales tax nexus. To access a comprehensive list of these rules, please refer to the governing laws for economic sales tax nexus requirements in Georgia.
Georgia Sales Tax on Goods and Services
Knowing whether the goods you’re selling or services you’re offering are taxable in Georgia is one of the first things you need to know.Tangible Products
Almost all goods are taxable in Georgia, including:- Clothing
- Computer Hardware
- Furniture
- Jewelry
- Home Goods
- Over the Counter Medications
- Gifts
- Groceries – Most grocery items are tax-exempt at the state level, but local sales tax rates may apply for various foods. However, prepared food, alcoholic beverages, tobacco, and items like cough drops are taxable.
- Prescription Medications
- Textbooks
- Medical Devices
- Agricultural Supplies – “Animal” refers to living creatures such as chickens, cattle, goats, and hogs, seen as farm animals or those producing goods for sale, but doesn’t include common pets or companion animals.
Services
In Georgia, the majority of service-based transactions, such as medical services, project management, and engineering are not subject to sales tax. However, there are specific situations where certain services are deemed taxable. However, there are specific situations where certain services are taxable. For instance, taxable services are:- Hotel accommodations
- In-state transportation of persons: Common carriers in Georgia are exempt from sales tax on transportation equipment, while contract and private carriers are taxed, with variations based on service type.
- Participation in games and amusements: Most entertainment venues in Georgia, such as theaters and amusement parks, charge a tax on tickets, but fine art events are exempt.
- Sales of Admissions
Software-As-A-Service (SaaS)/Digital Products
SaaS is not taxable in the state of Georgia. Digital products (i.e., ebooks, downloadable video content, mobile apps) will remain exempt from sales tax until the end of 2023. However, following the signing of Georgia Senate Bill 56 on May 2, 2023, digital products, goods, services, and downloaded codes within Georgia will be subject to Georgia sales and use tax starting from January 1, 2024.Shipping/Handling
Shipping and handling expenses are not taxable in the state of Georgia if the item you buy is tax-exempt. But if the item is taxable, the shipping can be fully, partially, or not taxable.Sales Tax Permits and Licenses in Georgia
Now that you’ve got a handle on when sales tax nexus applies and which products are taxable in Georgia, the next important step is getting your Georgia Seller’s Permit, also known as a sales tax permit.Seller’s Permit
You can register for a Georgia sales tax permit online at the Georgia Tax Center. Ensure you have specific information on hand when registering for a seller’s permit, including, but not limited to:- Business Identification Information (name, address, phone number, email address)
- Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Owner/Partner/Officer Information
- Business Activity Details (description of products or services sold, sales volume, date of the first sale or the expected date to start dates)
Resale Certificate
A resale certificate is a document that allows businesses to buy products without paying sales tax on them, as long as they plan to resell those items to customers, who will then pay the tax. As a seller, you can also accept resale certificates from others looking to buy for resale. In Georgia, sellers use resale certificates to buy goods from their suppliers that they intend to resell. The issuance of the certificates is always done in good faith that the seller would report tax on the final sale of the items. You can fill out the ST-5 tax exemption certificate form provided by Georgia if you have a sales tax permit in the state. You can also fill out the Streamlined Sales and Use Tax Certificate of Exemption if you would like to get sales tax exemption for multiple states simultaneously. If you don’t want the hassle of registering, sign up for our all-inclusive service that includes sales tax registrationStreamlined Sales Tax (SST)
The Streamlined Sales Tax (SST) is an initiative to simplify and standardize sales tax regulations across multiple states. Georgia is a party to this program, meaning it follows the uniform rules and definitions established by SST. Check with the Georgia Department of Tax/Revenue for the most current information on Georgia’s participation in the Streamlined Sales Tax initiative.Calculating and Collecting Sales Tax in Georgia
Sales Tax Computation
In Georgia, sales tax isn’t just one simple rate; it’s a combination of state and local taxes. To figure out the total sales tax for your calculation, you’ll need to add up the rates for the state, county, and city (if applicable) where your transaction occurs. Use TaxHero’s Georgia Sales Tax Calculator to compute for sales tax. Here’s an example: Suppose an out-of-state seller satisfies the economic nexus criteria in Georgia and sells to a customer in Atlanta, GA, with a ZIP code of 30303. In that case, the seller has to charge the customer a total sales tax, which can be broken down as follows:
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Origin-based vs. Destination-based
When making in-state sales, it is important to determine if you are located in an origin-based or destination-based state to figure out what rate to charge for sales tax. Georgia is a destination-based state, meaning sales tax is determined based on the buyer’s location. That means for a Georgia-based seller, sales tax is generally based on the location of the buyer when selling within the state. For out-of-state or remote sellers, the sales tax rate is always determined by the buyer’s location. For instance, if you’re selling a product from Texas to a customer in Atlanta, Georgia, where you have nexus, you’d apply Atlanta’s sales tax rate to that sale. To make life easier, consider using sales tax software or consulting a tax professional, like TaxHero, to ensure accurate tax calculations and collections. Understanding these tax rules helps you stay compliant, whether you’re in-state or out-of-state.Filing and Remitting Sales Tax Returns in Georgia
The next step after collection is filing and remitting your Georgia sales tax returns. Filing and remittance can vary in frequency, typically monthly, quarterly, or annually. For the first 6 months after registering for sales tax, all businesses are required to file sales tax returns monthly. If you have low sales volume and sales tax liability, you can reach out to the Georgia Department of Revenue to request a quarterly or annual filing. It’s crucial to keep accurate records of your sales and tax collections and adhere to the filing schedule set by the state to remain compliant with Georgia’s sales tax regulations.Due Dates
In Georgia, the due date falls on the 20th day of the following month. For instance, sales tax collected in January is due by February 20th for monthly filers. However, if this day is a holiday, weekend, or in the rare occurrence of a natural disaster, the deadline is typically extended to the next business day. For instance, if you’re a monthly filer and filing sales tax for the month of December, and the January 20th deadline falls on a holiday or weekend, you’ll have until January 22nd, the following business day, to submit.Monthly Prepayments
Businesses with a notable sales tax liability may need to make monthly prepayments ahead of their monthly return filings. The specifics of these prepayments depend on the business’s prior year’s tax liabilities. If a dealer paid over $60,000 in taxes last year (not counting local sales taxes), they need to make a prepayment for the upcoming year. This prepayment is half of their average monthly tax from the previous year, adjusted if the tax rate changes.Filing Sales Tax Returns
To file your sales tax return for Georgia, a few options are available:- File online through Georgia’s Tax Center portal. You are required to file and pay electronically through this portal if you owe more than $500 for sales tax for any filing period.
- File by mail – See return here: Form ST-3
- File with TaxHero – Let TaxHero take care of it so you don’t have to worry about missing a payment or return.
Timely Filing Discount
Some states offer a discount to businesses for collecting, filing, and remitting sales tax on time as an incentive to process sales taxes promptly. Georgia provides a 3% discount on the initial $3,000 of tax owed and a 0.5% discount on any amount beyond that.Sales Tax Holiday
Currently, for 2023-2024, there are no planned sales tax holidays in Georgia.Georgia Sales Tax Penalties
Like in most states, sales tax is a big part of how Georgia generates revenue. Thus, maintaining compliance with sales tax regulations is of utmost importance. Failure to do so can lead to consequences and sales tax penalties. Therefore, it is crucial always to ensure you are up-to-date in filing, collecting, and remitting sales tax to the state. Here are the specific penalties for non-compliance with sales tax regulations in Georgia:- Civil penalties amounting to 50% of the total sales tax due;
- On the criminal side, offenses can be classified as either misdemeanors or felonies, depending on the severity and specific circumstances.
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