The Georgia Statute: The Devil is in the Detail
Although each state may vary in its law, it may be useful to review the most recent Georgia statute in more detail to demonstrate the potential burdens facing retailers.
Effective on January 1, 2019, the Georgia law requires certain retailers to either collect and remit sales and use taxes or provide certain notifications to certain purchasers and the state reflect the new notice and reporting requirements. Certain retailers mean retailers who:
- obtain gross revenue, in an amount exceeding $250,000.00 in the previous or current calendar year, from retail sales of tangible personal property to be delivered electronically or physically to a location within this state to be used, consumed, distributed, or stored for use or consumption in this state; or
- conduct 200 or more separate retail sales of tangible personal property in the previous or current calendar year to be delivered electronically or physically to a location within this state to be used, consumed, distributed, or stored for use or consumption in this state.
If the retailer does not collect and remit the tax, the retailer must:
(A) Notify each potential purchaser immediately prior to the completion of each retail sale transaction with the following statement: “Sales 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. ‘;
(B) Send, by the end of January of each year, a sales and use tax statement to each purchaser who completed one or more retail sales with such delivery retailer that total $500.00 or more in aggregate during the prior calendar year in an envelope containing the words ‘IMPORTANT TAX DOCUMENT ENCLOSED’ on the exterior of the mailing by first class mail and separate from any other shipment; and
(C) File by the end of January of each year, a copy of each sales and use tax statement with the department. This statement must:
(A) Be on a form prescribed by the department;
(B) Contain the total amount paid by the purchaser for retail sales from the delivery retailer during the previous calendar year, as well as, if available, the dates of purchases, the amounts of each purchase, and the category of each purchase, including, if known by the retailer, whether the purchase is exempt from taxation; and
(C) Include the following statement: “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.”
Penalties for failure to notify
Unless reasonable cause is shown:
(A) Failure to provide the notice shall subject a retailer to a penalty of $5.00 for each failure;
(B) Failure to send a sales and use statement shall subject a delivery retailer to a penalty of $10.00 for each failure; and
(C) Failure to file a copy of a sales and use tax statement shall subject a delivery retailer to a penalty of $10.00 for each failure.
Why are These Statutes Important?
Even a cursory reading of the above information and notice requirements by remote sellers should make it easier to understand why a retailer might decide for practical business reasons to simply collect and remit the tax rather than choose the comply with the information and notice requirements in Georgia. Justices Scalia and Alito summed it up best referring to the Colorado statute upheld in the Direct Marketing Association case:
Justice Scalia: “This is certainly a very important case because I have no doubt that…every one of the states is going to pass a law like this.”
Justice Alito echoed this conclusion:” … as a small internet business, I will have to submit potentially 50 different forms to all of these States reporting that somebody in South Carolina purchased something from me that cost $23.99…that’s where this all could lead, couldn’t it?” Reporting requirements under these notice-and-reporting statutes are deliberately cumbersome so as to compel collection.
These “creative” state collection tools, combined with the already growing number of different nexus rules around the country, continue to remind companies and their tax advisors of the need for sophisticated tools to track these differences in meeting the demands of state sales and use tax compliance and planning.
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