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Monday, October 8, 2012 - 12:00pm

New Online Sales Tax

Online retailers must now collect sales tax on all purchases, whether or not the seller has a store in Georgia. The new law levels the playing field for smaller, brick and mortar retailers.

Before the law went into effect October 1st, only retailers with an actual business presence in Georgia, like Home Depot or Walmart were required to collect taxes for online purchases. It meant that smaller, brick and mortar businesses often got “shopped”—shoppers could go in person to check out a product—then buy the same thing online without paying the sales tax.

Joe Mediate, co-founder of Koo Koo Bear Kids in Roswell saw it happen all the time:

“Why are you coming to see the product, in my store, getting all the benefits of viewing, it touching it feeling it, comparing prices and then just because Georgia doesn’t charge sales tax, they go buy it out of state. That’s why we’re excited, look at the money we spend on rent, on sales tax, on payroll tax, all the money it takes to keep a business open.”

Gary Share, owner of City Music in Brunswick, says online sales made him decide to change his inventory:

“In my industry we have some products that you need to test, like guitar effects pedals, and they would come into the store and test on the products and they’d come in a week later and I’d say, ‘Are you ready to purchase it?’ And they’d say, ‘I already did, online,’ so in return I stopped selling those items.”

Internet retailers that fail to collect the sales tax will be hit with a “use tax” paid to the Georgia Department of Revenue through income tax. The new law could bring as much as 18 million dollars in new revenue to Georgia.