The hunt for the right sales tax rate – Wacky Tax Wednesday
- Sales and Use Tax
- Oct 2, 2019 | Gail Cole
Though it incorporated less than 15 years ago, Sandy Springs, Georgia, is more than a blip on the map; it’s the second largest city in the greater Atlanta area and the sixth largest city in the Peach State. So why is it so hard to find its sales tax rate?
A Georgia Department of Revenue 2014 LGS County and City Sales Tax ID Codes chart lists both Sandy Springs and Atlanta in Fulton County. (County Code 060). Atlanta’s Jurisdiction Code is listed as 9280, while the Jurisdiction Code for Sandy Springs is 4965 — proof that Sandy Springs is, in fact, its own sales tax jurisdiction. Unfortunately, the chart doesn’t include sales tax rates; even if it did, the rates might be out of date.
The website for Sandy Springs gives its combined (state and local) sales tax rate as 7.75 percent, and it wasn’t too hard to find. It’s more difficult to get that information out of the Georgia Department of Revenue (DOR), which administers sales tax for all localities in the state. Sandy Springs isn’t included on the DOR’s Georgia Sales and Use Tax Rate Chart (effective October 1, 2019), because that only lists counties.
To suss out the rate for Sandy Springs from the DOR, you need to know the county it’s in and that it’s not part of Atlanta. The chart includes two rates for Fulton County (called out between the County Code and the combined rate):
- 060 Fulton (Not Atlanta) 7.75
- 060A Fulton (In Atlanta) 8.9
I don’t mean to pick on the Georgia DOR; the department’s website is lovely, easy to navigate, and generally informative. Listing sales tax rates by county rather than city may well lead to accurate city sales tax rates in most cases — after all, the correct rate is listed. The rate for Sandy Springs just doesn’t leap off the page.
Finding accurate local sales tax rates isn’t only a challenge in Georgia. When managed manually, finding sales tax rates usually involves scanning multiple lists and charts, like this one from the Missouri Department of Revenue. Tracking down rate changes often leads to reading multiple notices like the ones listed on the Alabama Department of Revenue Local Tax Notices page or this recent sales tax rate change notice from the Kansas Department of Revenue.
Kansas could be a poster child for complicated local sales taxes; one address can be associated with multiple local tax jurisdictions. The aforementioned notice lists an astonishing array of addresses in the new Salina Downtown STAR and Downtown CID special tax district. These include:
- 100 – 108 S 2nd Street (even addresses)
- 101 – 105 S 3rd Street (odd addresses)
- 100 – 209 E Walnut Street (odd and even addresses)
- 301 – 309 E Walnut Street (odd addresses)
It must be seen to be believed.
Why businesses should care about local sales tax
More and more businesses are now required to collect and remit local sales tax because of the United States Supreme Court’s decision in South Dakota v. Wayfair, Inc. (June 21, 2018), which overruled a physical presence rule that kept states from taxing remote sales. The Wayfair ruling allows states to base a sales tax collection obligation solely on a remote retailer’s sales in the state, or economic nexus.
All but two of the 45 states (plus Washington, D.C.) that have a general sales tax have adopted economic nexus since Wayfair. Today, online sellers and other businesses that sell across state lines can establish an obligation to collect sales tax by making as little as $100,000 in sales or as few as 200 transactions in a state in a year (sales and transaction thresholds vary by state and are available in this state-by-state guide to economic nexus laws).
In most states, businesses need to collect the tax rate in effect at the destination of the sale, or the point of delivery. With more than 12,000 tax jurisdictions in the United States, remote retailers selling nationwide may need to deal with thousands of local rates. It’s a nightmare. Who has time to hunt down the rate for thousands of addresses?
Since lots of people don’t have the time (or patience), they end up using ZIP codes to determine the sales tax rate for a given destination. Unfortunately, ZIP codes are likely to render incorrect reporting codes and rates. As a result, businesses may end up collecting and remitting the wrong tax rate, and localities may not receive the tax revenue they’re owed.
Avalara AvaTax maps rates to exact locations, delivering real-time rates directly into shopping carts or invoicing systems.