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Amazon not collecting sales tax in Georgia

Georgia's new online retailers tax law went into effect on January 1, but according to the Atlanta Journal-Constitution, Amazon, the largest online retailer in the world, is not collecting sales tax on purchases made by Georgia customers. The state had expected the new law to generate $16 million a year in new tax revenue.

Amazon has made no statements regarding the tax collection. The state would expect the payment to be made on a monthly basis, so any payment to Georgia would not occur until February, but there is speculation that Amazon will not make the payment and provoke the Georgia Department of Revenue to institute a sales tax audit.

All local retailers in Georgia are expected to collect the state sales tax on every transaction. Online retailers generally are not required to collect sales tax for states where they do not have a physical presence.

Under U.S. Supreme Court precedent, for a state to have jurisdiction to tax an entity, they have to have "minimum contacts" with that state, typically a physical presence. The Georgia law attempts to capture online retailers like Amazon by changing the definition of physical presence. If a retailer obtains traffic from a website that does have a physical presence in Georgia, the law obligates them to pay Georgia sales tax.

Amazon has fought other states that have attempted to tax its online sales, and legal experts in the story expected that Georgia would have to resort to litigation to collect the tax. One law professor is quoted as say, "They [Amazon] probably feel comfortable not collecting [the tax]..."

Georgia, like most states facing challenging budgets, will probably take up the litigation. For owners of businesses in Georgia, failure to pay state sales tax will generate an enforcement action from the Department of Revenue. If you have been audited, you need experienced legal counsel to represent your interests in all your interaction with the Department of Revenue.

Source: The Atlanta Journal-Constitution, "Amazon fails to collect new Georgia tax," Arielle Kass, January 23, 2013

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