Georgia looks to tax more remote sales
- Feb 13, 2019 | Gail Cole
Update 5.3.2019: HB 182 has been enacted. The changes described below take effect January 1, 2020.
A law imposing a sales tax collection obligation on remote businesses with a certain amount of economic activity in Georgia took effect on January 1, 2019. If a bill recently introduced in the Georgia Legislature becomes law, the economic threshold will be lowered, requiring even more out-of-state businesses to collect and remit Georgia sales tax.
As of January 1, 2019, out-of-state businesses with more than $250,000 in sales or at least 200 retail sales in the state in the current or preceding calendar year are required to collect and remit Georgia sales tax.
House Bill 182 would change the $250,000 sales threshold to $100,000, leaving the 200 retail sales transactions threshold intact. Thus, a remote retailer would trigger a sales tax collection obligation once it reaches the $100,000 sales or 200 transactions threshold. The threshold is based on retail sales of tangible personal property delivered electronically or physically to a location in Georgia.
The measure would also eliminate an option currently available to remote retailers. Under the existing economic nexus law, remote businesses meeting the $250,000 sales/200 transactions threshold must collect and remit tax on their taxable sales into the state. If they choose not to collect, they must comply with certain notice and reporting requirements for non-collecting sellers (learn more about Georgia’s current remote sales tax policy). HB 182 removes the non-collecting seller notice and reporting option, so all remote businesses that surpass the threshold would have to collect and remit.
If HB 182 is enacted as written, it would take effect January 1, 2020.
Georgia is one of approximately 35 states that has adopted an economic nexus law to capture more revenue from remote sales since June 21, 2018, when the Supreme Court of the United States overruled a long-standing physical presence rule. Prior to its decision in South Dakota v. Wayfair, Inc., states were largely limited to taxing sales by businesses with a physical presence in the state. Post Wayfair, states have the authority to tax remote sales.
Like Georgia, North Dakota has proposed a measure to amend an existing economic nexus law. It would remove the transaction threshold from the equation, so remote sellers wouldn’t need to maintain a running count of how many taxable transactions they make in the state.