Good news for marketplace sellers! Starting April 1, 2020, the state of Georgia will require marketplaces to collect sales tax on behalf of sellers on online marketplaces like Amazon or eBay.
This means that if you sell on a platform like Amazon, then Amazon will collect sales tax from your Georgia buyers on your behalf, and remit it to the state.
But as usual, eCommerce sales tax isn’t as simple as we all wish it were.
This post will explain what online sellers need to know about the Georgia marketplace facilitator law, and answer your frequently asked questions.
Overview of the Georgia Marketplace Facilitator Law
Georgia’s marketplace facilitator law states that marketplace facilitators who generate in excess of $100,000 on behalf of 3rd party sellers are subject to collecting and remitting sales tax on sales made through the marketplace.
Quick Facts about the Georgia Marketplace Facilitator Law
- Effective date: April 1, 2020
- Threshold: Marketplace facilitators who generate in excess of $100,000 on behalf of 3rd party sellers are subject to collecting and remitting sales tax on sales made through the marketplace.
- State law information: Read the full text of the Georgia Marketplace Facilitator Law
Frequently asked Questions about Marketplace Facilitator Laws
What exactly is a marketplace facilitator in Georgia?
Georgia law defines marketplace facilitators as a “a person that contracts with a seller in exchange for any form of consideration to make available or facilitate a retail sale that is taxable under this chapter on behalf of such seller by directly or through any agreement or arrangement with another person.”
Online sales platforms like Etsy and Walmart are considered marketplace facilitators under Georgia law.
A software like Shopify or Magento that allows online sellers to build and manage their own stores would not be considered a marketplace facilitator.
Does this mean I can stop collecting Georgia sales tax?
It depends. Every business’s sales tax situation is unique to that business.
Let’s look at a couple of common scenarios for businesses who have sales tax nexus in Georgia.
Example #1: You only make sales on online marketplaces.
In this example, you only sell on Amazon and eBay. Because Amazon and eBay are both now collecting sales tax from buyers on your behalf, you are not required to collect sales tax from your buyers. (However, if you are registered to collect sales tax in Georgia you will still be required to file periodic sales tax returns. See “Does this mean I can cancel my Georgia sales tax permit?” below.)
Example #2: You sell on online marketplaces and your own online store and/or brick and mortar store.
In this case, you’d still be required to collect sales tax from buyers who purchase from you through your own online store (for example, via your Magento or Ecwid store). And you would still be required to collect sales tax from your brick and mortar customers.
Marketplace facilitator laws only cover marketplaces. The state still requires that merchants collect sales tax from buyers via sales channels where the marketplace facilitator laws do not apply.
Does this mean I can cancel my Georgia sales tax permit?
Georgia’s marketplace facilitator law does not affect the sales tax registration requirements for existing sellers. So if you have already registered to collect sales tax in Georgia, this means you are still required to file sales tax returns on due dates set for you by the state. (See “Do I still need to file a Georgia sales tax return?” below.)
Do I still need to file a Georgia sales tax return?
If you are registered to collect sales tax in Georgia (i.e. you have an active Georgia sales tax permit) then the state still requires that you file sales tax returns.
If you only make sales via marketplaces, and all of your marketplaces collect sales tax from buyers on your behalf, then you may only be required to file a “zero return.” (This is a return showing that you do not have any sales tax to remit to the state.)
What do I do with any Georgia sales tax I have already collected?
If you have already collected Georgia sales tax from buyers, it is vital that you remit that amount to the state. The only way to get in serious criminal trouble in sales tax is to collect sales tax from buyers on the state’s behalf but keep it in your own pocket.
Let’s say you sell on Amazon and Georgia requires you to file and remit sales tax quarterly. Though Amazon began collecting sales tax on your behalf on April 1, 2020, if you have any sales tax in your bank account that you collected during Q1 2020, you will still need to remit that to the Georgia Department of Revenue or face a penalty.
Does TaxJar handle this for me?
TaxJar AutoFile Handles Georgia Sales Tax Automatically
TaxJar AutoFile automatically compiles your sales tax data the way the state of Georgia wants it filed. If you currently AutoFile your Georgia sales tax returns, you don’t need to do a thing. It’s handled!
TaxJar Reports Give You all the Info You need to File Manually
If you prefer to file manually, your TaxJar Reports also reflect what the Georgia Department of Revenue wants to see on your tax return.
Also don’t worry that you will double pay. TaxJar accounts for sales tax collected on your behalf, and only shows you the amount you owe to the state out of your pocket.
Further reading on Georgia sales tax and marketplace facilitator laws:
- TaxJar’s Marketplace Facilitator FAQ
- State by State: Marketplace Facilitator Laws Explained
- Georgia Sales Tax Guide for Businesses
Do you have questions or something to say about the Georgia marketplace facilitator law? Start the conversation in the comments!