Do You Have Nexus in Georgia?

See Also >> Multistate Taxation

When business is going smoothly and sales begin to increase nationally, a company owner’s first thought is rarely about out-of-state sales tax. Efforts are often concentrated on enhanced production, target marketing and other operational items to keep momentum going. Yet, with increasing scrutiny by state Departments of Revenue on the collection of sales and use taxes owed by those who offer goods and services outside of their home state, a lack of familiarity with the rules can come back to bite some businesses. However, knowing you have a liability before the state comes to you has a significant advantage. To help clients, prospects and others discover these details, Wilson Lewis has provided the key items to consider and necessary next steps if your company is required to pay Georgia sales tax.

Nexus Defined

Nexus is essentially the term used when an out-of-state taxpayer has a “significant presence” in another state. This could mean temporary or physical nexus (people or property), click-through nexus (for online retailers who sell through certain websites, like Amazon), substantial nexus or economic nexus. For a more detailed explanation of these classifications, read our What Is Nexus & Why Does It Matter blog.

While different states have varying definitions of what would constitute nexus, the result is the same. If a company is found to have nexus, they must register for a state tax license and collect appropriate state – and possibly local – sales taxes for all transactions.

Georgia Nexus Determination

Below is a partial summary of key aspects of which economic activities create nexus, including:

• Be a “retailer,” meaning making sales for distribution, use, consumption or storage for use or consumption in Georgia
• Perform or carry on any employment, trade, business, profession or any other act or activity for financial gain or profit within the state
• Operate personally or through partners, employees, agents or otherwise in Georgia in a way that incurs liability to pay or collect Georgia sales and use taxes
• Be a “dealer,” which constitutes anyone who either:
  • Sells at retail, offers for sale at retail or has in his/her possession tangible personal property for sale at retail or for use, consumption, distribution or storage in Georgia
  • Has sold at retail, used, consumed, distributed or stored tangible personal property for use or consumption in Georgia and who cannot prove that Georgia sales and use tax has been paid
  • Regularly or systematically solicits consumers in Georgia (unless the only activity is the delivery of tangible personal property by common carrier or U.S. mail or advertising or solicitation by direct mail, catalogs, periodicals or advertising flyers, print, radio or television media or telephone, computer, the web, cable or other communication system)
  • Solicits business by an agent, employee, representative or any other person
  • Imports (or causes to be imported) tangible personal property from any state or foreign country for sale at retail or for use, consumption, distribution or storage for use or consumption in Georgia
  • Leases or rents tangible personal property in the state – permitting the use or possession of the property without transferring its title
  • Maintains or utilizes an office, distribution center, sales room or sales office, warehouse, service enterprise or any other place of business in the state
  • Manufactures or produces tangible personal property for sale at retail or for use, consumption, distribution or storage for use or consumption in Georgia
  • Is an affiliate that sells at retail, offers for sale at retail or engages in the regular or systematic solicitation of consumers in Georgia through a related dealer located in the state
  • Makes more than $50,000 in cumulative gross receipts from sales in Georgia during the preceding 12 months from an agreement with one or more Georgia residents to offer commission or other consideration based on completed sales or referrals to potential customers (via website, in-person, telemarketing or otherwise)

Contact Us

The rules regarding out-of-state nexus in Georgia are complicated and in constant flux. For this reason, it’s vital to consult an experienced advisor in the state to determine if a tax liability exists for your company. If you would like additional information on Georgia nexus determination or multi-state tax issues, Wilson Lewis can help! Please call 770-476-1104 or click here to contact us.