Sales and Use Taxes in Georgia

April 13, 2006

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Georgia assesses a sales tax on the retail sales price of tangible personal property. Also, if you are a service provider who transfers tangible personal property to your customers as part of the service you provide, sales tax will be incurred on the tangible personal property transferred. So, if your business buys, sells or uses tangible personal property in Georgia, a sales or use tax liability will probably be incurred.

Liability for sales tax. Georgia is a state that assesses a sales tax on sellers for the privilege of doing business in Georgia. What this means for those of you who are retailers is that you're going to be required to collect and pay a 4 percent sales tax on all sales you make in Georgia. However, the state requires you to obtain reimbursement for this tax from your customers. So, if you fail to remit the correct amount of taxes on a given transaction, the state can go directly to your customer and collect the right amount of tax. While going after each purchaser to collect the right amount of sales tax may be impracticable, the state clearly intended to reserve that right for itself.

Liability for use tax. In order to avoid losing tax revenues on sales transactions taking place outside the state, Georgia also imposes a 4 percent use tax. The use tax is assessed against all persons who store, use, or otherwise consume tangible personal property in Georgia that was purchased out-of-state. If the out-of-state seller you purchase property from is a registered retailer in Georgia, you should pay the use tax to the retailer. If the retailer is not registered in Georgia, you should pay the use tax directly to the state.

Sales or use taxes on services. In Georgia, certain types of services will be subject to sales or use tax. A 4 percent rate of sales tax will apply to the following services:

admissions to places of amusement
coin-operated musical or amusement devices
transportation
local telephone service
lodgings

All other service businesses will be exempt from sales tax.

Sales and use taxes on leased property. In general, all leases and rental agreements involving tangible personal property are treated as sales. As a result, leased and rented property is subject to sales tax.

The following discussions address additional sales and use tax issues that many small business owners face.