Georgia Sales & Use Tax Issues
Georgia Sales and Use Tax
The Litwin Law Firm, P.C., located in Atlanta, helps businesses resolve Georgia sales and use tax issues. The Firm represents businesses in several industries, including transportation, telecommunications, computer services, professional services, retailers and wholesalers, real estate investors, and commercial and residential construction contractors. Clients include Fortune 50 companies, private companies, partnerships, limited liability companies and sole proprietorships. The Firm counsels multi-state businesses throughout the country and businesses within Georgia on sales and use tax issues. Businesses face a range questions as both the seller and purchaser of goods and services, including:
- Must sales and use tax be collected if a seller has no locations in Georgia or sales to customers located inside Georgia?
- For a seller that has no locations in Georgia, what minimum nexus (contacts or links) must the seller have to obligate the seller to collect Georgia sales and use tax on sales to customers located in Georgia?
- Is the sale exempt, due to the type of product sold, the identity of the customer buying the product, or how the product will be used by the customer?
- Is the seller engaged in a transaction not subject to sales and use tax because the seller does not sell tangible personal property or because the seller sells a service?
- If the transaction is part tangible personal property and part service, should tax be collected on the entire transaction?
- Is a lease subject to sales and use tax?
- If the seller does not collect sales tax, must the seller get a "resale" or "exemption" certificate from the purchaser?
- Must the seller collect sales and use tax on charges for freight and delivery, labor, or fabricated labor?
- Must the seller pay sales and use tax on withdrawals from inventory, samples or other uses of the seller's inventory?
- When are sales of products over the Internet or by mail-order subject to sales and use tax?
Sellers and purchasers also face compliance-related issues including:
- Types of sales records that must be maintained and the length of time that the records must be kept
- Sales and use tax returns that must be filed and the due dates for the returns even for months in which no sales are made
- Types of documentation that must be obtained on a sale on which no sales and use tax is collected or paid
- Billing procedures for sales of services that involve an incidental sale of property
- If your business is exempt for income tax purpose (such as a 501(c)(3) entity), is it required to collect sales and use taxes on its sales? Must it pay sales and use taxes on its purchases?
Not to be overlooked are procedural issues:
- When will a delinquency notice be issued by the Department of Revenue?
- What is the statute of limitations where no returns are filed?
- What is the statute of limitations where returns are filed?
- Must the Department of Revenue issue a Notice of Proposed Assessment before it issues an Official Assessment?
- Where returns are filed, but sales and use taxes not paid, must the Department of Revenue issue an Official Assessment and Demand for Payment prior to issuing a state tax FiFa?
- Under what circumstances is an officer or employee liable personally for a business' unpaid sales and use taxes?
- Can a successor business be liable for the predecessor business' unpaid sales and use taxes?
Attorney Richard Litwin is an AV-rated* lawyer who specializes in state and local taxation issues. If you have a question about your sales and use tax obligations, if you have been contacted by the Georgia Department of Revenue, or if one of your customers believes your business should be collecting sales tax, trust our law firm to advise and represent your business.
Sales and Use Tax — Do You Owe It?
Many businesses believe they are operating properly with respect to sales and use tax until they receive a letter from the Georgia Department of Revenue. The types of taxation issues with which we have experience and can offer representation include:
- Trust fund collection issues — Were taxes collected but not remitted to the state?
- Exemption issues — Did you not collect sales and use taxes based on your belief that your sales are exempt? Exemptions include: items that are resold, rented or leased; materials that are part of a manufacturing process; machinery used to manufacture goods; and materials, goods or services used by schools or government entities.
- Under-collection or underpayment issues — Did you collect the wrong amount? Can we prove that you collected the proper amount?
Georgia Nexus Analysis
Nexus is a connection — a link or tie — that a business has with another state for state tax purposes. If your business has "nexus" with a state, the business may have significant tax compliance obligations in that state, even if the business has no physical location in the state. A nexus analysis examines the connections that a business has to other states that require the business to collect the other state's sales and use tax on the business' sales of a product or service.
Georgia, like many other states, has government budget concerns. It should not be surprising that the state of Georgia will seek to collect sales and use taxes for businesses that are located in another state but do a nominal amount of business in Georgia.
The Litwin Law Firm can conduct a nexus analysis to determine whether you should be collecting and paying Georgia sales and use taxes. Whether you have been collecting and should not be required to, or have not been collecting and are required to, we can help.
Penalties for Failure to Collect or Pay Sales and Use Tax
The penalties for failure to collect sales and use taxes, or failing to remit collected sales and use taxes, are significant. If you believe you should have collected sales and use tax, but did not, our law office can assist with a voluntary disclosure to the Department of Revenue. If you did not collect sales and use taxes, or you collected monies but did not pay them to the state, you could face criminal and civil penalties including:
- A 25 per cent penalty for any uncollected or unpaid funds older than five months
- The potential for being charged with an aggravated misdemeanor (first offense)
- The potential for being charged with a felony for theft (third offense)
Specializing in State and Local Tax Law — Call (678) 990-0600
At our Atlanta-based law firm, we focus on state and local tax law. For knowledgeable advice from an experienced tax law attorney, call or contact our law office.
* CV, BV, and AV are registered certification marks of Reed Elsevier Properties Inc., used in accordance with the Martindale-Hubbell certification procedures, standards, and policies. Martindale-Hubbell is the facilitator of a peer review rating process. Ratings reflect the confidential opinions of members of the Bar and the judiciary. Martindale-Hubbell ratings fall into two categories: legal ability and general ethical standards.