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More Online Businesses to Collect Sales Taxes

October 12, 2012
A mother and daughter shop online.

In an effort both to make the retail market fair for all business owners and to draw more revenue for state programs, the General Assembly passed legislation that requires more online retailers to collect sales taxes starting this month.

Under the state's previous law, only online businesses that also had a physical presence in the state needed to collect state and local sales taxes, and individual taxpayers who purchased goods online through sites such as Amazon.com were meant to note their purchases on state tax forms and then pay a use tax on those products. As few individual taxpayers either knew about or heeded this state tax requirement, the online retail community has increasingly attracted customers with "tax-free" books, clothing, electronics and media.

With House Bill 386 now in effect, out-of-state online retailers that have ties to offices, warehouses or maintenance facilities within the state and online retailers that work with in-state affiliates to market products must also collect these sales taxes. By promoting this standard sales tax collection, the new law should reopen portions of the market for brick and mortar businesses that have struggled in years past to compete with their online counterparts. 

In a still recovering economy, the state also hopes the online sales tax collection will buoy program budgets. Current estimates indicate that online retailers will remit an additional $18 million to the Georgia Department of Revenue this coming year. 

If you decide to read the text of House Bill 386, review Section 6-1, which outlines these new sales tax regulations.