Georgia has enacted legislation that will expand the sales and use tax definition of “dealer” and also impose a new use tax notice requirement. The legislation will go into effect January 1, 2019, and will be applied on a prospective basis on sales made on or after that date.
The term “dealer” will be expanded to include those who, in the previous or current calendar year, generated retail sales of tangible personal property for electronic or physical delivery within Georgia or for use, consumption, distribution, or storage in the state in accordance with certain thresholds. To be considered a “dealer” under this expansion, the retail sales of tangible personal property, in the previous or current calendar year must amount to more than $250,000 in gross revenue or result from at least 200 separate retail sales of tangible personal property. Also, the Georgia Department of Revenue (“DOR”) can establish a collection obligation by filing a declaratory judgment action in the state’s superior court against those falling under either category. However, taxpayers do have a defense if they are able to file a motion to enjoin the state from enforcing the collection obligation with a valid constitutional argument.
Additionally, the legislation imposes a use tax notice requirement on any “delivery retailer.” A “delivery retailer” is a non-collecting retailer who had more than $250,000 in gross revenue or conducted at least 200 separate retail sales of tangible personal property, in the previous or current calendar year, from retail sales of tangible personal property for electronic or physical delivery in the state, or for use, consumption, distribution, or storage in the state. Accordingly, a “delivery retailer” must collect and remit the tax or do all of the following:
- alert any potential “purchaser” immediately before the completion of a retail sale that “[s]ales or use tax may be due to the state of Georgia on this purchase. Georgia law requires certain consumers to file a sales and use tax return remitting any unpaid taxes due to the State of Georgia”;
- by January 31 each year, send a sales and use tax statement to each of its purchasers who completed one or more retail sales that totaled at least $500 in the aggregate during the prior calendar year; and
- by January 31 each year, file a copy of each of the above statements with the DOR on a form prescribed by the DOR.
A “purchaser” includes any person, or their agent, who gives consideration to a delivery retailer in exchange for tangible personal property for electronic or physical delivery to a Georgia location or tangible personal property used, consumed, distributed, or stored for use or consumption in the state. It is important that delivery retailers adhere to these provisions. Absent reasonable cause, delivery retailers will be subject to a $10 penalty for each failure to send statements to purchasers or to file statements with the DOR.
When delivery retailers are completing these statements please remember that the statements must (1) be in an envelope marked “IMPORTANT TAX DOCUMENT ENCLOSED”; (2) be mailed first class mail and separate from any shipment; (3) state the total amount the purchaser paid for retail sales from the delivery retailer during the previous calendar year; (4) if available, list the dated of purchases, the amounts of each purchase, and the category of each purchase, including, if known by the retailer, whether the purchase is exempt; and (5) include the notice, “Sales or use taxes may be due to the State of Georgia on the purchase(s) identified in this statement as Georgia taxes were not collected at the time of purchase. Georgia law requires certain consumers to file a sales and use tax return remitting any unpaid taxes due to the State of Georgia.” Additionally, absent reasonable cause, delivery retailers are subject to a $5 penalty per failure to include the notice on the statement.
If you conduct business within Georgia, this may affect you. To register to pay tax in Georgia, you will need to visit the Georgia Tax Center Website. If you would like to apply for a voluntary disclosure you can apply using the Voluntary Disclosure Application. A qualified tax attorney can assist with the execution of the application and potential questions or concerns that may arise in the process.
Jeanette Moffa is an attorney who concentrates on state and local taxes at Moffa, Sutton, & Donnini, P.A. She is also an adjunct professor and assistant editor to the American Bar Association’s The Sales and Use Tax Deskbook. For more information please call us at 888-966-8216.