Georgia sales tax guide

Sales tax is a tax paid to a governing body (state or local) on the sale of certain goods and services. Georgia first adopted a general state sales tax in 1951, and since that time, the rate has risen to 4 percent. On top of the state sales tax, there may be one or more local sales taxes, as well as one or more special district taxes, each of which can range between 0 percent and 5 percent. Currently, combined sales tax rates in Georgia range from 4 percent to 9 percent, depending on the location of the sale.

As a business owner selling taxable goods or services, you act as an agent of the state of Georgia by collecting tax from purchasers and passing it along to the appropriate tax authority. Sales and use tax in Georgia is administered by the Georgia Department of Revenue (DOR).

Any sales tax collected from customers belongs to the state of Georgia, not you. It’s your responsibility to manage the taxes you collect to remain in compliance with state and local laws. Failure to do so can lead to penalties and interest charges.

When you need to collect Georgia sales tax

In Georgia, sales tax is levied on the sale of tangible goods and some services. The tax is collected by the seller and remitted to state tax authorities. The seller acts as a de facto collector.

To help you determine whether you need to collect sales tax in Georgia, start by answering these three questions:

1. Do you have nexus in Georgia?
2. Are you selling taxable goods or services to Georgia residents?
3. Are your buyers required to pay sales tax?

If the answer to all three questions is yes, you’re required to register with the state tax authority, collect the correct amount of sales tax per sale, file returns, and remit to the state.

Failure to collect Georgia sales tax

If you meet the criteria for collecting sales tax and choose not to, you’ll be held responsible for the tax due, plus applicable penalties and interest.

It’s extremely important to set up tax collection at the point of sale — it’s near impossible to collect sales tax from customers after a transaction is complete.

The need to collect sales tax in Georgia is predicated on having a significant connection with the state. This is a concept known as nexus. Nexus is a Latin word that means "to bind or tie," and it’s the deciding factor for whether the state has the legal authority to require your business to collect, file, and remit sales tax.

Nexus triggers

Sales tax nexus in all states used to be limited to physical presence: A state could require a business to register and collect and remit sales tax only if it had a physical presence in the state, such as employees or an office, retail store, or warehouse.

In June 2018, the Supreme Court of the United States overruled the physical presence rule with its decision in South Dakota v. Wayfair, Inc. States are now free to tax businesses based on their economic and virtual connections to the state, or economic nexus.

While physical presence still triggers a sales tax collection obligation in Georgia, it’s now possible for out-of-state sellers to have sales tax nexus with Georgia.

Out-of-state sellers

Out-of-state sellers with no physical presence in a state may establish sales tax nexus in the following ways:

Affiliate nexus: Having ties to businesses or affiliates in Georgia. This includes, but isn’t limited to, the design and development of tangible personal property (goods) sold by the remote retailer, or solicitation of sales of goods on behalf of the retailer. Nexus is presumed when an out-of-state vendor with a related member in Georgia engages in any of the following activities:

• Selling the same or a similar line of products as the out-of-state vendor under the same or similar name
• Using the same or similar trademark, service mark, or trade names as the out-of-state vendor
• Maintaining or utilizing an office, distribution center, salesroom, warehouse, or other place of business (owned by the vendor or any other person other than a common carrier acting in its capacity as such)
• Assembling, delivering, installing, or providing maintenance services for the out-of-state vendor’s Georgia customers
• Facilitating the out-of-state vendor’s delivery of property to Georgia customers (allowing products to be picked up at their place of business)
• Conducting any other activities in Georgia that are significantly associated with the out-of-state vendor’s establishment or maintenance of a Georgia market

Click-through nexus: Having an agreement to reward a person(s) in the state for directly or indirectly referring potential purchasers of goods through an internet link, website, or otherwise, and:

• Vendors have earned more than $50,000 of cumulative gross receipts from in-state referrals (in exchange for a consideration) during the preceding 12-month period

Economic nexus: Having a certain amount of economic activity in the state. For sales made on and after March 2019, a remote seller must register with the state then collect and remit Georgia sales tax if the remote seller meets either of the following criteria (the economic thresholds):

• Gross revenue exceeding $250,000 (gross revenue exceeding $100,000 as of January 1,2020); or 
• 200 separate retail transactions in the previous calendar year.

Marketplace sales: Making sales through a marketplace. Effective April 1, 2020, marketplace facilitators with taxable retail sales of $100,000 or more in aggregate in the state in the current or previous calendar year are required to collect and remit sales tax on behalf of marketplace sellers in Georgia. 

Inventory in the state: Storing property for sale in the state. This includes merchandise owned by Fulfillment by Amazon (FBA) merchants and stored in Georgia in a warehouse owned or operated by Amazon.

Trade shows: Even when nexus is not otherwise established, out-of-state vendors must apply sales tax to any orders taken or sales made during convention or trade show activities (using form FS-32 Miscellaneous Events for remittance).

If you have sales tax nexus in Georgia, you’re required to register with the DOR and to charge, collect, and remit the appropriate tax to the state.

For more information, see O.C.G.A. § 48-8-2 and O.C.G.A. § 48-8-59; Section 6-1 of House Bill 386 (2012); HB 276, and the Georgia Department of Revenue Out-of-State Sellers page.

Non-collecting seller use tax reporting

The Georgia Department of Revenue requires non-collecting sellers to notify customers about their potential use tax liability, provide customers with an annual purchase summary, and provide the state with a customer information report. The precise nature of these requirements varies from state to state; for more state-specific information, see Georgia House Bill 61 (2018).

As of January 1, 2020, non-collecting seller use tax reporting is eliminated in Georgia. For more information, see House Bill 182.

Trailing nexus

Sales tax nexus can linger even after a retailer ceases the activities that caused it to be “engaged in business” in the state. This is known as trailing nexus. As of May 2019, Georgia does not have an explicitly defined trailing nexus policy.

Fulfillment by Amazon (FBA)

If you’re an active Amazon seller and you use Fulfillment by Amazon (FBA), you need to know where your inventory is stored and if its presence in a state will trigger nexus. FBA sellers can also download an Inventory Event Detail Report from Amazon Seller Central to identify inventory stored in Georgia.

If you sell taxable goods to Georgia residents and have inventory stored in the state, you likely have nexus and an obligation to collect and remit tax. To begin to understand your unique nexus obligations, check out our free economic nexus tool or consult with a trusted tax advisor.

Sourcing sales tax in Georgia: which rate to collect

In some states, sales tax rates, rules, and regulations are based on the location of the seller and the origin of the sale (origin-based sourcing). In others, sales tax is based on the location of the buyer and the destination of the sale (destination-based sourcing).

Georgia is a destination-based state. This means you’re responsible for applying the sales tax rate determined by the ship-to address on all taxable sales.

After determining you have sales tax nexus in Georgia, you need to register with the proper state authority and collect, file, and remit sales tax to the state. We get a lot of questions about this and recognize it may be the most difficult hurdle for businesses to overcome. Avalara Licensing can help you obtain your Georgia business license and sales tax registration.

How to register for a Georgia seller's permit

You can register for a Georgia sales and use tax number online through the Georgia Tax Center (GTC). To apply, you’ll need to provide the GTC with certain information about your business, including but not limited to:

• Business name, address, and contact information
• Federal EIN number
• Date business activities began or will begin
• Projected monthly sales
• Projected monthly taxable sales
• Products to be sold

Cost of registering for a Georgia seller's permit

There is currently no cost to register for a sales and use tax number in Georgia.

Acquiring a registered business

You must register with the Georgia Department of Revenue if you acquire an existing business in Georgia. The state requires all registered businesses to have the current business owner’s name and contact information on file.

Streamlined Sales Tax (SST)

The Streamlined Sales and Use Tax Agreement (SSUTA), or Streamlined Sales Tax (SST), is an effort by multiple states to simplify the administration and cost of sales and use tax for remote sellers. Remote sellers can register in multiple states at the same time through the Streamlined Sales Tax Registration System (SSTRS).

Georgia became a full member of the SST on July 1, 2011.

Once you've successfully registered to collect Georgia sales tax, you'll need to apply the correct rate to all taxable sales, remit sales tax, file timely returns with the Georgia Department of Revenue, and keep excellent records. Here’s what you need to know to keep everything organized and in check.

How you collect Georgia sales tax is influenced by how you sell your goods:

Brick-and-mortar store: Have a physical store? Brick-and-mortar point-of-sale solutions allow users to set the sales tax rate associated with the store location. New tax groups can then be created to allow for specific product tax rules.

Hosted store: Hosted store solutions like Shopify and Squarespace offer integrated sales tax rate determination and collection. Hosted stores offer sellers a dashboard environment where Georgia sales tax collection can be managed.

Marketplace: Marketplaces like Amazon and Etsy offer integrated sales tax rate determination and collection, usually for a fee. As with hosted stores, you can set things up from your seller dashboard and let your marketplace provider do most of the heavy lifting.

Mobile point of sale: Mobile point-of-sale systems like Square rely on GPS to determine sale location. The appropriate tax rate is then determined and applied to the order. Specific tax rules can be set within the system to allow for specific product tax rules.

Georgia sales tax collection can be automated to make your life much easier. Avalara AvaTax seamlessly integrates with the business systems you already use to deliver sales and use tax calculations in real time.

Tax-exempt goods

Some goods are exempt from sales tax under Georgia law. Examples include some prescription drugs, medical supplies, and manufacturing equipment. Non-prepared food items are exempt from state sales tax, but are subject to local sales taxes.

We recommend businesses review the laws and rules put forth by the Georgia Department of Revenue to stay up to date on which goods are taxable and which are exempt, and under what conditions.

Some customers are exempt from paying sales tax under Georgia law. Examples include government agencies, some nonprofit organizations, and merchants purchasing goods for resale.

Sellers are required to collect a valid exemption or resale certificate from buyers to validate each exempt transaction.

Misplacing a sales tax exemption/resale certificate

Georgia sales tax exemption and resale certificates are worth far more than the paper they’re written on. If you’re audited and cannot validate an exempt transaction, the Georgia Department of Revenue may hold you responsible for the uncollected sales tax. In some cases, late fees and interest will be applied and can result in large, unexpected bills.

Sales tax holidays

Sales tax holidays exempt specific products from sales and use tax for a limited period, usually a weekend or a week. Approximately 17 states offer sales tax holidays every year.

As of May 2019, however, there are no sales tax holidays in Georgia.

You're registered with the Georgia Department of Revenue and you've begun collecting sales tax. Remember, those tax dollars don't belong to you. As an agent of the state of Georgia, your role is that of intermediary to transfer tax dollars from consumers to the tax authorities.

How to file

Once you’ve collected sales tax, you’re required to remit it to the Georgia Department of Revenue by a certain date. The Georgia Department of Revenue will then distribute it appropriately.

Filing a Georgia sales tax return is a two-step process comprised of submitting the required sales data (filing a return) and remitting the collected tax dollars (if any) to the DOR. The filing process forces you to detail your total sales in the state, the amount of sales tax collected, and the location of each sale.

Georgia sales and use tax filing form ST-3 is available for download from the Georgia DOR. Online filing via the Georgia Tax Portal is required for all businesses owing more than $500 in sales and use tax.

Filing frequency

The Georgia Department of Revenue will assign you a filing frequency. Typically, this is determined by the size or sales volume of your business. State governments generally ask larger businesses to file more frequently. See the filing due dates section for more information.

Georgia sales tax returns and payments must be remitted at the same time; both have the same due date.

Online filing

You may file directly with the Georgia Tax Center by visiting their site and entering your transaction data manually. This is a free service, but preparing Georgia sales tax returns can be time-consuming — especially for larger sellers.

Using a third party to file returns

To save time and avoid costly errors, many businesses outsource their sales and use tax filing to an accountant, bookkeeper, or sales tax automation company like Avalara. This is a normal business practice that can save business owners time and help them steer clear of costly mistakes due to inexperience and a lack of deep knowledge about Georgia sales tax code.

Filing when there are no sales

Once you have a Georgia seller's permit, you’re required to file returns at the completion of each assigned collection period regardless of whether any sales tax was collected. When no sales tax was collected, you must file a "zero return.”

Failure to submit a zero return can result in penalties and interest charges.

Closing a business

The DOR requires all businesses to "close their books" by filing a final sales tax return. This also holds true for business owners selling or otherwise transferring ownership of their business.

Timely filing discount

Many states encourage the timely or early filing of sales and use tax returns with a timely filing discount.

As of May 2019, the DOR offers a discount of 3 percent on the first $3,000, with 0.5 percent on any remaining taxes owed.

It's important to know the due dates associated with the filing frequency assigned to your business by the Georgia Department of Revenue. This way you'll be prepared and can plan accordingly. Failure to file by the assigned date can lead to late fines and interest charges.

The DOR requires all sales tax filing to be completed by the 20th of the month following the tax period. Below, we've grouped Georgia sales tax filing due dates by filing frequency for your convenience. Due dates falling on a weekend or holiday are adjusted to the following business day.

Filing a Georgia sales tax return late may result in a late filing penalty as well as interest on any outstanding tax due. For more information, refer to our section on penalties and interest.

In the event a Georgia sales tax filing deadline was missed due to circumstances beyond your control (e.g., weather, accident), the DOR may grant you an extension. However, you may be asked to provide evidence supporting your claim.

Hopefully you don't need to worry about this section because you're filing and remitting Georgia sales tax on time and without incident. However, in the real world, mistakes happen.

If you miss a sales tax filing deadline, follow the saying, “better late than never,” and file your return as soon as possible. Failure to file returns and remit collected tax on time may result in penalties and interest charges, and the longer you wait to file, the greater the penalty and the greater the interest.

If you’re in the process of acquiring a business, it’s strongly recommended that you contact the DOR and inquire about the current status of the potential acquisition. Once you've purchased the business, you’ll be held responsible for all outstanding Georgia sales and use tax liability.

If you’re collecting sales tax from Georgia residents, you’ll need to consider how to handle taxes on shipping and handling charges.

Taxable and exempt shipping charges

Georgia sales tax generally applies to delivery, freight, transportation, shipping, and handling charges for taxable sales, whether separately stated or included. Delivery charges for exempt sales are generally exempt.

There are exceptions to almost every rule with sales tax, and the same is true for shipping and handling charges. Specific questions on shipping in Georgia and sales tax should be taken directly to a tax professional familiar with Georgia tax laws.

For additional information, see Georgia Department of Revenue guidelines.