Like almost every state in the Union, Georgia has a statewide sales tax that is levied on many retail purchases. As a destination-based state, orders that are shipped to a different location will be taxed at the rate of the delivery address, not the rate of the shipper. Different locations have different rates, due to the fact that local tax is often applied in addition to the state tax. Read on to discover how sales tax works in the state of Georgia and how it applies to your business.
Georgia sales tax varies by location. There is a state sales tax as well as local tax in many counties. Georgia’s statewide sales tax rate is 4%, but local rates typically vary from 7-8% (4% for state, plus an additional 3 or 4% for local). The city of Atlanta charges a 1.9% local tax rate, for a total rate of 8.9%. Sales tax is due for the retail sale of certain services, and for storage, use, and consumption of all tangible personal property.
The state of Georgia is a destination-based state. This means that for orders shipped from one location to another, the applicable tax rate is that of the destination address. So if you are a retailer shipping orders from Atlanta, and a customer places an order in your store and has it shipped to Savannah, you need to charge that customer sales tax using the rate for his or her location in Savannah. You cannot use your local Atlanta rate for all orders.
If you have nexus in Georgia, then you are required to collect sales tax on applicable sales, and file and remit that tax to the state. Nexus is simply defined as a significant connection to a state. Specifically in Georgia, the following activities give rise to economic nexus:
Amazon sellers should note that there are Fulfillment by Amazon (FBA) warehouses in the state of Georgia and that storing goods for sale through FBA in Georgia warehouses gives rise to nexus and therefore sales tax responsibilities.
Please refer to the state of Georgia for a complete and up-to-date list.
In addition to the situations that establish physical nexus in the State of Georgia, Georgia has also established an economic nexus law as of January 1, 2020. The new law requires that vendors who make more than $100,000 in sales each year or in the previous calendar year in the state, or that have completed 200 or more transactions in the state are required to collect and remit sales tax from buyers in Georgia.
Most goods and just a few services may be subject to Georgia sales tax. For goods, it’s easy – the sale of all tangible personal property is taxable. There is a limited list of exemptions including some groceries, prescription medications, some medical devices, and any equipment or materials used in the research and development process.
Georgia also holds two sales tax holidays including a back-to-school holiday in July-August and an energy savings holiday in October.
Most services in Georgia are not subject to sales tax. So if you perform automotive repair or pet grooming services (and sell no products), then you don’t need to worry about sales tax. However, there are a few services that are taxable. These are:
Of particular note to ecommerce stores, among the list of taxable services above, is that shipping charges are taxable. This would apply to any other charge by the retailer that is "necessary to complete the sale of taxable property, " including handling costs.
Short answer: Yes. The amount you charge your customers for shipping costs should be included in the amount taxed.
Goods purchased from outside the state are subject to use tax, payable by the purchaser. For example, if someone buys a product from an online retailer, or by phone or mail order, from outside the state and is not charged sales tax, then the buyer owes use tax instead.
A few products are exempt from sales tax, including non-prepared food (groceries) and durable medical equipment. Click here for a complete list.
Anyone who qualifies as a dealer under Georgia law is required to register for a sales and use tax number, regardless of the manner in which sales are made or whether the sales are taxable or exempt. Registration is done online at the Georgia Tax Center. You will be required to enter a corporate officer’s social security number, because officers are personally liable for any unpaid sales tax. Once you’ve completed your application, your sales tax account number will be sent via email within 15 minutes.
The Georgia Tax Center has an excellent set of instructional videos to assist businesses with registration and other activities. Click here for the video that walks you through their registration process.
See the Georgia Department of Revenue or the Georgia Tax Center to:
Georgia’s website prevents us from linking directly to the internal pages. So to do any of the above tasks, go to https://gtc.dor.ga.gov/ and from the three links under the photograph of the city, choose “Business”. Then select the appropriate link in the section below.
You may file a Georgia sales tax return via paper Form ST-3 or electronically via the Georgia Tax Center or approved software vendors. If you owe more than $500, you will be required to file electronically. If you owe less, you may choose either method. However, if you submit funds via ACH then you must also file your return electronically, regardless of the amount.
You must file a return even if no sales tax is due.
Vendors are allowed to keep a percentage of the tax collected, known as the Vendor’s Compensation. The deduction consists of 3% of the first $3000 collected, and 0.5% of any amount collected over $3000. For example, if you collected $5000 in taxes, your deduction would be $100. That’s $90 for the first $3000, and $10 for the next $2000. The Vendor’s Compensation can only be taken for returns that are filed and paid on time.
During the first 6 months, you must file your tax returns monthly. After that, you can continue to file monthly, or you may be able to file with a different frequency. Before doing so, you must make a written request and receive written approval. If you do this, your filing frequency depends on the amount of tax you’ve collected and owe, as follows:
After six months you may also request a different filing period, known as special period filing.
Georgia sales tax returns and remittances are due on the following schedule.
Returns for monthly filers are due on the 20th of the following month. If the 20th falls on a weekend, legal holiday, or any day when the Federal Reserve Bank is closed, the return and payment will be due on the following business day.
Returns for monthly filers are due on the 20th of the month following the end of the quarter.
|January – March (Q1)||April 20|
|April – June (Q2)||July 20|
|July – September (Q3)||October 20|
|October – December (Q4)||January 20|
Returns for annual filers are due on January 20th of the following year.
|January – December||January 20 (following year)|
Sales tax returns are considered late if not complete by the 20th of the month following the end of the sales tax period (see tables above). For returns that are mailed via US mail, the return must be postmarked by the due date. For electronic payments, the Electronic Funds Transfer (EFT) must be completed by the due date. (Therefore it’s a good idea to submit it a few business days in advance.)
Delinquent returns/payments forfeit the Vendor’s Compensation amount. In the case of a delinquent filing, the entire tax collected is due.
Late returns, late payments, or partial payments are subject to the following penalties:
The penalty for any single violation is not to exceed 25% of the total tax due on the return date.
If a sales tax return is fraudulent or late with willful intent to defraud the state, a penalty of 50% will be assessed.
In addition to penalties, unpaid taxes are also subject to interest. Interest is charged at the annual prime rate plus 3%, and accrues monthly. Interest begins to accrue on the due date, if unpaid.
Because Georgia is a destination-based state, you need to be able to determine the correct rate based on your customers’ shipping addresses. Our TaxTools software can help. It accurately calculates and collects Georgia sales tax on your website. AccurateTax finds the right sales tax for every US address and applies the tax to each order accordingly. Configuring sales tax on your ecommerce store has never been easier. Contact us for more information or register for a free trial of AccurateTax’s TaxTools software.
You can also use our free sales tax calculator to look up the rate for any Georgia address.