In the wake of the U.S. Supreme Court’s June 2018 decision in South Dakota v. Wayfair, Inc., a number of states have quickly moved to require out-of-state Internet-based sellers to collect and remit sales taxes on in-state purchases. For example, a new law took effect in Georgia on January 1, 2019, mandating retailers collect that state’s 4 percent sales tax for all online sales.
Now, Georgia legislators may go a step further and compel “marketplace facilitators” like eBay, Uber, and Airbnb to collect state sales tax on transactions completed by their users.
On March 4, the Georgia House of Representatives passed House Bill 276 by a vote of 158-6. HB 276 proposes to expand the definition of what businesses qualify as “dealers” required to collect and remit sales tax. Specifically, the bill states anyone who “[a]cts as a marketplace facilitator to facilitate retail sales” in excess of $100,000 per year is now a dealer.
A “marketplace facilitator,” in turn, is any business that provides services designed to “facilitate a retail sale that is taxable” under Georgia law.
This includes but is not limited to the following:
To put this in practical terms, HB 276 would likely apply to the following situations:
In other words, this Bill shifts the burden of dealing with sales taxes away from the individual sellers; many of whom may be too small to register with Georgia authorities; and places it on the companies that “facilitate” transactions with the purchasers.
According to a Fiscal Note prepared by Georgia’s state auditor and budget director on an earlier draft of HB 276, requiring marketplace facilitators to collect sales taxes would have a significant impact on the state’s bottom line. Based on estimates from Georgia State University’s Fiscal Research Center, the Fiscal Note said Georgia would collect an additional $78.4 million in state revenue, as well as $64.5 million in local (county and city) revenue during the 2021 fiscal year.
The Fiscal Research Center further broke down its calculations by the type of marketplace facilitator:
Although HB 276 passed the state House by an overwhelming margin, it must still be approved by the Georgia Senate and signed into law by Gov. Brian Kemp. If the bill is approved as currently worded, its provisions would apply to all taxable sales on or after July 1, 2019.
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