Individual Income Tax Deadline Extended
What is Subject to Sales and Use Tax?
What sales are subject to sales tax in Georgia?
In general, Georgia imposes tax on the retail sales price of tangible personal property and certain services. While most services are exempt from tax, Georgia does tax the sale of accommodations, in-state transportation of individuals (e.g., taxis, limos), sales of admissions, and charges for participation in games and amusement activities. O.C.G.A. §§ 48-8-2(31), 48-8-30(f)(1). In addition, Georgia imposes tax on charges by the seller that are necessary to complete the sale of taxable property. O.C.G.A. § 48-8-2(34)(A). For example, if a seller charges $20 for a shirt and $5 to deliver the shirt, sales tax is imposed on $25 ($20 for the shirt plus $5 for delivery).
If a provider of a nontaxable service makes sales of tangible personal property, the service provider must collect and remit sales tax as appropriate. Service providers are, in most instances, end users and liable for sales or use tax on all tangible personal property used by them to provide their service. O.C.G.A. § 48-8-63.
What is use tax?
Use tax is tax imposed on non-exempt items brought into Georgia. “Use tax” is also a term commonly used to refer to the tax imposed on taxable goods and services that were not taxed at the point of sale.
Tax imposed on non-exempt items brought into Georgia
Use tax is imposed upon the first instance of use, consumption, distribution, or storage in Georgia of non-exempt tangible personal property purchased at retail outside of Georgia. (Note that property brought into Georgia as a result of a change of domicile is generally exempt as long as the property is not brought into Georgia for use in a trade, business, or profession. O.C.G.A. § 48-8-3(19).)
If the property was used for six months or less outside of Georgia prior to its first use inside Georgia, then use tax is imposed upon the purchase price of the property at the state and local sales tax rate. O.C.G.A. §§ 48-8-30(c)(1), 48-8-30(e), 48-8-82(a), 48-8-102(b)(1), 48-8-109.3(b), 48-8-110.1(c), 48-8-201(b), 48-8-241(d), 48-8-269(a).
Property used longer than six months outside of Georgia prior to its first use inside Georgia is taxed at the state and local sales tax rate on the lesser of the purchase price or the fair market value of the property. O.C.G.A. §§ 48-8-30(c)(2), 48-8-82(a), 48-8-102(b)(1), 48-8-109.3(b), 48-8-110.1(c), 48-8-201(b), 48-8-241(d), 48-8-269(a).
Generally, the applicable local sales tax rate is the rate imposed in the county where the buyer receives the goods. O.C.G.A. § 48-8-77. A taxpayer’s use tax liability will be reduced by like taxes previously paid in another state. O.C.G.A. §§ 48-8-30(c)(3), 48-8-30(e), 48-8-42(a).
Example: A contractor buys a bulldozer in another state and pays state sales tax but no local sales tax. The following week the contractor transports the bulldozer into Georgia and performs a job in Hall County. The contractor now owes Georgia state use tax on the purchase price of the bulldozer at a rate of 4%. His Georgia state use tax liability will be reduced by the sales tax previously paid in the other state. In addition, he owes Hall County use tax on the purchase price of the bulldozer at the Hall County sales tax rate.
Tax imposed on non-exempt items and taxable services that were not taxed at the point of sale
If a taxpayer purchases taxable goods or services in Georgia without the payment of tax, the taxpayer must accrue and remit the tax. O.C.G.A. § 48-8-30(g).
Example: A retailer buys light bulbs tax free under terms of resale to sell in her store. She takes the light bulbs out of inventory to light up the store. She now owes sales tax on the price for which she purchased the bulbs. The sales tax in this case is commonly referred to as “use tax” because it is not paid at the point of sale, but accrued at the time of use.
Example: Joe purchases a bicycle online. The seller does not charge sales tax. The bicycle is delivered to Joe in Georgia. Joe now owes “use tax” on the bicycle’s sales price.
What elements must be included in, or excluded from, the sales price (tax base) of an item?
O.C.G.A. § 48-8-2(34) provides:
(A) The term “sales price” applies to the measure subject to sales tax and means the total amount of consideration, including cash, credit, property, and services, for which personal property or services are sold, leased, or rented, valued in money, whether received in money or otherwise, without any deduction for the following:
i. the seller's cost of the property sold;
ii. the cost of materials used, labor, or service cost, interest, losses, all costs of transportation to the seller, all taxes imposed on the seller, and any other expense of the seller;
iii. charges by the seller for any services necessary to complete the sale;
iv. delivery charges;
(B) The term “sales price” does not include the following:
i. discounts, including cash, term, or coupons that are not reimbursed by a third party that are allowed by a seller and taken by a purchaser on a sale;
ii. interest, financing, and carrying charges from credit extended on the sale of personal property or services, if the amount is separately stated on the invoice, bill of sale, or similar document given to the purchaser;
iii. any taxes legally imposed directly on the consumer that are separately stated on the invoice, bill of sale, or similar document given to the purchaser;
iv. installation charges if they are separately stated on the invoice, billing, or similar document given to the purchaser;
v. telecommunications nonrecurring charges if they are separately stated on the invoice, billing, or similar document; and
vi. credit for any trade-in.
How is the tax applied to a charge made for a tattoo?
A charge made for a tattoo is not subject to the tax as the transaction is neither the sale of tangible personal property nor the sale of a taxable service. The tattoo artist will owe tax on all tools and materials used to create the tattoo.
How is the tax applied to a charge made for piercing?
Piercing is not a taxable service. However, if the piercing charge is a mandatory charge associated with a taxable sale – such as the sale of earrings – then the piercing charge is subject to the tax.
How is the tax applied to charges made for use of a tanning bed?
Charges from a salon owner to a customer for use of a tanning bed are not subject to the tax. The salon owner is liable for tax on its purchase or lease of the bed. Sales of tanning products, accessories, and other tangible personal property are subject to the tax.
Are charges for parking spaces taxable?
In most instances, parking charges are not subject to tax.
Are charges for storage spaces taxable?
Generally, a charge made for the use of a storage space is not taxable.
A $1.00 per tire disposal fee is imposed on the retail sale of replacement tires. Is the fee taxable?
Because the $1.00 per tire disposal fee is not imposed on the seller, the fee is not subject to sales tax when it is itemized on the customer’s invoice. O.C.G.A. §§ 12-8-40.1(h)(1), 48-8-2(34)(B)(iii). If the fee is not itemized on the invoice, the portion of the total charge to the customer equal to the fee is not subject to tax if the seller maintains records to show that the seller collected and remitted the fee. O.C.G.A. § 48-8-2(31)(G).
Are delivery, transportation, freight, or shipping and handling charges taxable?
Charges made for delivery, transportation, freight, or shipping and handling are part of the sales price and subject to sales tax in the same manner as the underlying sale. Thus, if a taxable item is sold, and the seller makes a separate charge for delivery, transportation, freight, or shipping and handling, the separate charge is taxable. O.C.G.A. §§ 48-8-2(34). Charges for delivery that are not associated with the sale of taxable property are not taxable.
Is property tax on leased personal property subject to sales tax?
The question of whether a tax should be included in the sales price (and therefore subject to sales tax) depends on whether the legal incidence of the tax falls on the seller or the purchaser. If the legal incidence of the tax falls on the seller, the tax is included in the sales price, like any other portion of the price designed to recoup the seller's expenses. O.C.G.A. § 48-8-2(34).
Therefore, if a tax on personal property that is held for lease is imposed on the seller/lessor and the seller/lessor requires the customer/lessee to pay this amount, such amount must be included in the sales price and is subject to sales and use tax.
Are itemized charges for repair labor or installation labor taxable?
Itemized charges made for repair labor or installation labor are not subject to sales tax. O.C.G.A. §§ 48-8-2(34)(B)(iv), 48-8-3(23).
Are mandatory gratuities subject to sales tax?
Mandatory gratuities associated with a taxable sale are subject to sales tax. Voluntary gratuities are not taxable. O.C.G.A. § 48-8-2(34)(A), Ga. Comp. R. & Regs. r. 560-12-2-.115.
Are restocking fees subject to sales tax?
At times, when a customer returns an item, the seller requires the customer to pay a restocking fee, thus resulting in only part of the original sale price being refunded to the customer. Because sales tax can only be refunded to the extent the original sales price was refunded, when a restocking fee is charged, tax can only be refunded on the amount of the sales price refunded to the customer. Therefore, amounts designated as “restocking fees” are subject to sales tax because such amounts are refund reductions.
Are newspapers taxable?
Retail sales of newspapers, magazines, periodicals, etc. are subject to Georgia sales and use tax. O.C.G.A. § 48-8-30(b). Publications sold by subscription are subject to sales tax based on the subscription price. Ga. Comp. R. & Regs. r. 560-12-2-.77. Newspapers are often sold for a single amount, with sales tax included in this amount (i.e., the stated price of the newspaper includes the taxable sales price of the paper and the sales tax).
Are aircraft and watercraft sales subject to sales tax when the buyer takes delivery in this state?
Aircraft and watercraft sales are taxable in the same manner as the sale of any other tangible personal property. Tax is due at the rate of the jurisdiction where the buyer takes delivery. O.C.G.A. §§ 48-8-30, 48-8-77.
Does Georgia have an exemption for aircraft or watercraft purchased in this state when the aircraft or watercraft will be immediately removed from this state?
The sale of aircraft and watercraft in Georgia is subject to the tax even when the aircraft or watercraft sold will be immediately removed from this state. However, there is a specific exemption for aircraft, watercraft, motor vehicles, and other transportation equipment manufactured or assembled in this state when
1. sold by the manufacturer or assembler for use exclusively outside this state and
2. possession is taken from the manufacturer or assembler by the purchaser within this state for the sole purpose of removing the property from this state under its own power when the equipment does not lend itself more reasonably to removal by other means. O.C.G.A. § 48-8-3.
Can the sale of an aircraft or watercraft be excluded from the tax when the transaction meets the requirements of a casual sale?
Yes. The sale of aircraft or watercraft is not subject to sales tax when the sales transaction meets the requirements of a casual sale. Ga. Comp. R. & Regs. r. 560-12-1-.07.
Is sales and use tax due on motor vehicles?
If the vehicle is subject to Title Ad Valorem Tax (TAVT), no sales and use tax is due on the vehicle. When applying for a Georgia title and license plate for a vehicle that was not subject to TAVT and purchased from an out-of-state or country dealer or an out-of-state business or a Georgia business, Georgia sales tax must be paid at the time of registration or proof submitted that the sales tax has already been paid. If the selling dealer used an incorrect sales tax rate to calculate the amount of Georgia sales tax due, then any additional sales tax due must be paid at the time of registration or proof of payment submitted.
A Georgia title and license plate will not be issued until any Georgia sales tax due is paid. The amount of sales tax due is based on the vehicle’s purchase price or the vehicle’s fair market value if a sales invoice is not submitted. See the sales tax rate in your county. The published sales tax rates for counties include the State of Georgia’s sales tax rate.
Please visit the webpage When & Where to Register Your Vehicle for more information about the vehicle registration process. For additional information regarding sales tax, please contact the Department of Revenue’s Regional office serving your county.