Many online retailers will have to start adding a new line to their Georgia customers’ bills — one for sales taxes.
As of Tuesday, online retailers are supposed to charge taxes on their sales to Georgians, something some big companies, such as Amazon, have done for years. That will add the 4 percent state sales tax and any local sales taxes to the cost of online purchases made from companies not currently charging the levies.
Lawmakers approved legislation during the 2018 session supporting a universal sales tax on online sales, and the U.S. Supreme Court in June backed internet sales taxes, knocking down a 1990s decision that limited states in collecting such duties.
President Donald Trump praised the ruling, as did brick-and-mortar store owners who felt they were at a disadvantage against online retailers who could sell products without the tax. They said that allowed internet retailers to undercut them on pricing products.
The change could mean an extra $500 million to $600 million a year in sales-tax collections for state and local governments, according to state estimates.
Under the previous Supreme Court ruling, Georgia and other states could only force online retailers to charge sales taxes if the company had a physical presence within their boundaries, such as Amazon, which has warehouse/distribution centers in Georgia.
NetChoice — a trade group that represents the Chinese internet retail mammoth Alibaba, Overstock.com, eBay, PayPal and others — has said that Georgia’s new law raises privacy concerns. Other critics say it will stifle innovation and hurt small retailers.
Under Georgia's new law, online retailers that make at least $250,000 in sales or 200 individual sales a year in Georgia must either collect and remit to the state sales taxes on purchases or send "tax due" notices each year to customers who spend at least $500 on their sites. If the second option is used, the customer would be obligated to send the taxes to the state Department of Revenue, and retailers would have to send the state copies of the notices to customers.
The Department of Revenue put out a policy bulletin alerting retailers to the provisions of the new law in October.
Georgia House Ways and Means Chairman Jay Powell, R-Camilla, the sponsor of the internet legislation, said the taxes are already owed, but many online retailers without a physical presence in the state haven't collected them.
Powell said his committee will probably make changes to the law during the 2019 General Assembly session — which begins Jan. 14 — based on the Supreme Court ruling.
“We are going to amend what we did last year to reflect some of the new certainties,” Powell said.
That probably means lawmakers will look to eliminate the portion of the law that allows online retailers to send customers “tax due” notices and just force the businesses to collect and remit the levy directly to the state. Based on the Supreme Court ruling, the state could also lower the threshold for online retailers to collect the taxes from at least $250,000 in sales to $100,000. That could mean more Georgians would pay the sales taxes, and state and local governments would receive more money.
Brian Mayfield, who runs Woodstock-based Techquidation, which sells technology to retailers, said he understands what a pain it is for companies to have to charge differing sales taxes based on the location of their customers.
“But I am totally supportive of charging some type of sales tax on internet sales,” he said. “I would think it would help the brick-and-mortar businesses, and it would help them stay competitive in an environment where it’s so easy for online merchants to reach consumers.”
MORE DETAILS
INTERNET SALES FIGURES
- $1 trillion-plus: estimated U.S. online retail sales by the next decade.
- $500 million to $600 million: what the state estimates state government and local governments could take in annually from an internet sales tax the Georgia Legislature approved this year.
WHAT IT MEANS
The new law means online retailers who don’t currently charge sales taxes but make at least $250,000 in sales or 200 individual sales a year in Georgia must either collect and remit to the state sales taxes on purchases or send “tax due” notices each year to customers who spend at least $500 on their sites. Some online retailers, such as Amazon, have been charging sales taxes for purchases in Georgia for a few years.
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