Georgia Sales Tax Rounding Rule

Georgia has modified their state law regarding brackets for collection of sales and use tax and implemented a rounding rule. The Department of Revenue amended Rule 560-12-1-.05, now titled “Rounding Rule for the Collection of Sales and Use Tax” to read that “[t]he computation of sales and use tax must be carried to the third decimal place.”

Retailers or sellers who collect and remit sales and use taxes at the state and local level, must apply the rounding rule to the aggregated state and local taxes. However, the seller “…may computer the tax due on a transaction on either an item basis or an invoice basis.”

Depending on how the seller computes the task, may determine the total sales tax to be higher or lower per this example:

Example 1:

“Dealer sells the following items to Purchaser, and the tax rate is 7%:

1 chair for $19.65

1 cushion for $3.56

If Dealer elects to collect tax on a per item basis, the tax on the chair is $1.38 because .07 x $19.65 = $1.3755 and the third decimal place is greater than four. The tax on the cushion is $.25 because .07 x $3.56 = $.2492 and the third decimal place is greater than four."

Example 2:

“The facts are the same as paragraph (a) except Dealer elects to collect tax on an invoice basis. The tax is $1.62 because .07 x $23.21 = $1.6247 and the third decimal place is not greater than four.”