Georgia Sales Tax Guide
Chapter 8: Understanding Georgia sales tax rules for shipping & handling
If you have nexus in Georgia and you ship orders to customers in Georgia, here are some simple guidelines for charging sales tax on your shipping charges.Is Shipping Taxable in Georgia?
Like most states (and most everything in the world of sales and use tax), the answer is…it depends. However, in Georgia, situations where shipping and handling are not taxed are much more rare than most states. There are a number of factors that impact whether the Georgia Department of Revenue will require you to collect sales tax on shipping and handling. We’ll outline some of those situations below. As is always the case, specific questions on shipping in Georgia and sales tax should be taken directly to a tax professional familiar with Georgia tax laws.It’s All About the Delivery
Georgia defines “delivery” to include everything from handling and packing charges to postage and freight. The state’s rules are pretty clear: All these charges are taxable, with very few exceptions.
You can put shipping on a separate line on your invoice; you can charge your customer the exact cost to ship their package; and you can give the customer the option to pick up the item at your location instead of having it shipped. None of that matters in Georgia — shipping is still taxable.
The same rule applies to personal delivery. If you deliver items to your customer in your own vehicle and charge for delivery, that charge is taxable.Tax Exempt Sales
If you are shipping an order of tax-exempt items, then shipping and handling are exempted from taxes as well.
For packages containing a mixture of taxable and tax-exempt goods, Georgia’s rules allow you to simply collect and remit sales tax on the whole amount of the shipping. If you don’t want to do that, you can charge sales tax on shipping for the portion of the package that is taxable. You can calculate the taxable and tax-exempt shipping cost proportions according to the weight or the amount you charge for taxable and tax-exempt items.The Exception to the Rule
If you really, really don’t want to charge sales tax on shipping in Georgia — or your customer doesn’t want to pay it — there is a workaround, but it may be more trouble than it’s worth, depending on whether you are a B2B or B2C business.
If you charge the shipping to your customer’s FedEx or UPS account rather than your own, then shipping is not taxable because the customer pays the carrier directly. If you sell to business customers, who are likely to have accounts set up with their preferred carriers, this might be an easy option. If you’re selling to individual consumers, it is probably a non-starter.
The other way to avoid charging sales tax on shipping is to set up a separate escrow account for delivery charges, invoice your customer separately for delivery charges, keep good records of the money going in and out of your customer’s shipping escrow account, and put language in your contract stating that you (the seller) are not allowed to mark up delivery charges. Sellers are also prohibited from financing shipping charges: The buyer’s money has to be in the escrow account before the shipping charge comes due.
This scheme might only be worthwhile if you sell something very heavy (gold ingots? cement blocks?), so the savings in sales tax would be worth the hassle of maintaining an escrow account.Georgia’s Sales Tax on Shipping is Just Peachy
If your shipping costs aren’t huge in comparison to the cost of your goods, you can keep your sales tax collection simple and simply charge sales tax on shipping in Georgia. The Georgia Department of Revenue (GDOR) has examples of different tax scenarios to help you figure it all out. A representative from the GDOR pointed out that the rules were updated in August of 2014 and the information on the webpage is very up to date.