Brick and mortar businesses have found it increasingly difficult to compete as online retailers like Amazon, the app-based Uber and other online marketplace facilitators continue to surge. There have been several economic factors for these digital economy success stories, but one is the fact that they rarely paid state sales tax.
Governor Brian Kemp and others put a stop to that when the governor signed House Bill 276 into law on January 31. Set to go into effect on April 1, the new law evens the playing field with brick and mortar retailers and services by taxing their online counterparts. Georgia now joins Mississippi and Alabama in charging taxes to web-based retailers that generate $100,000 annually in sales tax.
Many benefits for the state too
This change in law not only goes after digital retailers, but it could also provide an estimated hundreds of millions in revenue for the state’s coffers and balance out what some are calling the sluggish collection of taxes from the digital platforms. The bill was held for months with big businesses fighting the changes, but a recent compromise removed all exemptions. This influx of money would also offset the governmental budget cuts set to go into effect, trimming 4% in 2020 and 6% in 2021. According to Senate Finance Committee Chairman Chuck Hufstetler, “It’s great for cities, counties, schools and Georgia businesses[.]” He also claims the bill could conservatively generate as much as $10 million every month.
New laws mean new compliance issues
Those digital marketplaces doing business in Georgia will have to make changes if they do not want to face fines. Those with questions should talk to an experienced business law firm to discuss the best options for addressing HB 276.