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.
House Bill 276
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:
- providing any physical or electronic infrastructure to to bring “purchasers and marketplace sellers together”;
- transmitting or communicating any offers (or acceptance of offers) between purchasers and sellers;
- processing and collecting payments from purchasers on behalf of sellers;
- taking orders or reservations on behalf of sellers; or
- providing advertising, marketing, or other promotional services.
To put this in practical terms, HB 276 would likely apply to the following situations:
- A resident of Macon, Georgia, purchases a computer on eBay from an out-of-state seller. HB 276 requires eBay to collect and remit the Georgia sales tax on this purchase.
- A group of friends in downtown Atlanta arrange for a ride via the Uber app. HB 276 requires Uber to collect and remit the sales tax on this sale.
- Out-of-state tourists arrange to stay in a private home in Augusta by making a reservation using Airbnb. Now Airbnb must then make sure to collect and remit the sales tax.
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.
GA Stands to Receive Millions from Online Sites
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:
- Ride Sharing — $26.1 million in combined state and local sales tax revenue for FY 2021; this is based on estimated growth rates for Uber and Lyft.
- Lodging Network Services — $29.1 million in combined FY 2021 sales taxes; this is based primarily on third-party analysis of Airbnb data.
- Auction Sites for Tangible Personal Property — $87.8 million in combined FY 2021 sales taxes; this is based almost exclusively on estimating the taxable sales in Georgia conducted on ebay.
Awaiting Action from Senate, Governor
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.
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: providing any physical or electronic infrastructure to to bring “purchasers and marketplace sellers together”; transmitting or communicating any offers (or acceptance of offers) between purchasers and sellers; processing and collecting payments from purchasers on behalf of sellers; taking orders or reservations on behalf of sellers; or providing advertising, marketing, or other promotional services. To put this in practical terms, HB 276 would likely apply to the following situations: A resident of Macon, Georgia, purchases a computer on eBay from an out-of-state seller. HB 276 requires eBay to collect and remit the Georgia sales tax on this purchase. A group of friends in downtown Atlanta arrange for a ride via the Uber app. HB 276 requires Uber to collect and remit the sales tax on this sale. Out-of-state tourists arrange to stay in a private home in Augusta by making a reservation using Airbnb. Now Airbnb must then make sure to collect and remit the sales tax. 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: Ride Sharing — $26.1 million in combined state and local sales tax revenue for FY 2021; this is based on estimated growth rates for Uber and Lyft. Lodging Network Services — $29.1 million in combined FY 2021 sales taxes; this is based primarily on third-party analysis of Airbnb data. Auction Sites for Tangible Personal Property — $87.8 million in combined FY 2021 sales taxes; this is based almost exclusively on estimating the taxable sales in Georgia conducted on ebay. 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. 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: providing any physical or electronic infrastructure to to bring “purchasers and marketplace sellers together”; transmitting or communicating any offers (or acceptance of offers) between purchasers and sellers; processing and collecting payments from purchasers on behalf of sellers; taking orders or reservations on behalf of sellers; or providing advertising, marketing, or other promotional services. To put this in practical terms, HB 276 would likely apply to the following situations: A resident of Macon, Georgia, purchases a computer on eBay from an out-of-state seller. HB 276 requires eBay to collect and remit the Georgia sales tax on this purchase. A group of friends in downtown Atlanta arrange for a ride via the Uber app. HB 276 requires Uber to collect and remit the sales tax on this sale. Out-of-state tourists arrange to stay in a private home in Augusta by making a reservation using Airbnb. Now Airbnb must then make sure to collect and remit the sales tax. 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: Ride Sharing — $26.1 million in combined state and local sales tax revenue for FY 2021; this is based on estimated growth rates for Uber and Lyft. Lodging Network Services — $29.1 million in combined FY 2021 sales taxes; this is based primarily on third-party analysis of Airbnb data. Auction Sites for Tangible Personal Property — $87.8 million in combined FY 2021 sales taxes; this is based almost exclusively on estimating the taxable sales in Georgia conducted on ebay. 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.
