The State of Georgia has been busy making numerous updates to its tax laws over the last few months. Credits and incentives, motor vehicle taxes, and compliance measures are the focus of these revisions. One notable change made by the State legislature was lowering the threshold for imposition of online sales tax collection. HB 182, enacted in April 2019, reduces the “nexus” threshold from $250,000 in gross revenue per year to $100,000.
This means, beginning on January 1, 2020, remote sellers who sell and deliver tangible personal property in Georgia will have to collect and remit sales tax if they: 1) have gross revenue of over $100,000 in the previous or current calendar year, or (2) conduct 200 or more separate retail sales per year. Reducing the threshold for sales from $250,000 to $100,000 is likely to greatly expand the number of online sellers subject to Georgia sales tax collection. Of course, this also means that Georgia consumers will be paying more taxes on online sales.
Notice and Reporting Option Repealed Mid-Year
Guidance out of the Georgia Department of Revenue (DOR) also explains that the notice and reporting option, which allowed online sellers to file use tax statements with buyers and the DOR instead of collecting tax, has been repealed. Now all sellers coming within the thresholds must withhold and remit the tax themselves. It is important to note that this requirement became effective April 28, 2019. A remote seller that has met one of the thresholds for calendar year 2019, and has complied with the notice requirements prior to April 28, 2019, may no longer choose the notice and reporting option. Sellers must start withholding and remit sales taxes for the balance of 2019.
Other Georgia Changes
Other changes to Georgia tax law are in the following areas:
Credits for historic structures, quality jobs, and investment property. HB 224 amends various Georgia credits and incentives. For the state’s historic rehabilitation credit, taxpayers are now allowed to use the credit up to two years after they place a certified structure or historic home into service. The law also revises the quality jobs tax credit by lowering the number of jobs that must be created to qualify for the credit. The new law also creates guidelines for the investment tax credit for manufacturing or telecommunications facilities that locate in one of the state’s rural counties. Credits are only available for property costing more than $100,000 and are capped at $1 million per employer and $10 million in total.
Georgia sales tax exemption for projects with regional significance. Georgia has extended for two years the sales and use tax exemption for tangible personal property used for the construction of competitive projects deemed to be of “regional significance.” The credits are given for large projects such as an Amazon-type relocation to the State. (See HB 352)
Georgia motor vehicle taxes reduced. SB 65 decreases the rate of the combined state and local title ad valorem tax from 7% to 6.6% of the fair market value of motor vehicles. This change is effective for January 1, 2020 through June 30, 2023. The law also changes the way fair market value is calculated. Finally, the legislation exempts from ad valorem taxes transfers of title from one legal entity to another if common owners hold at least a 50% interest in each entity. The exemption only is allowed if the transferring entity has been paying the alternative ad valorem tax on the vehicle.
Credit Card Transaction Reporting. Under SB 183, Georgia will now require the filing of Form 1099-K, Payment Card and Third Party Network Transactions, with the State. This form requires credit card companies to report third party settlement payments made to businesses if the payments exceed $20,000 or 200 transactions per year to that business. Tax authorities use this information to check the accuracy of a business’s income reporting.
Underreported Income from Partnerships. A new Georgia law says that, if the DOR Commissioner determines that a partnership or tiered partner fraudulently underreported its income on a return, any income attributable to a tiered partner will be apportioned and allocated entirely to Georgia to the extent the direct and indirect partners are resident partners. This change is included in Georgia’s 2019 federal conformity bill, HB 419, which adopts many federal provisions at the state level. (See earlier coverage.)