Win for Counties in Supreme Court Sales Tax Decision

ACCG Analysis:

In late June, the U.S. Supreme Court issued its decision in South Dakota v. Wayfair, which opens the door for Georgia to collect more state and local sales taxes from online transactions. Under earlier Supreme Court rulings, states have been allowed to require sales tax collections only from vendors who have a “physical presence” within that state. That rule excluded many online retailers who have substantial sales to Georgia customers but which have no physical location in the state. In Wayfair, the Court overruled those earlier cases, saying that the physical-presence requirement is an incorrect legal test.

After overruling the previous physical-presence requirement, the Supreme Court held that the South Dakota law – which applies sales tax collection duties only to out-of-state vendors who deliver more than $100,000 in goods or services into the state or engaged in 200 or more transactions with South Dakota buyers annually – is legally permissible because it applies only to vendors whose activities have a “substantial nexus” with the state.

With specific application to Georgia, this decision likely paves the way for implementation of House Bill 61, passed and signed into law this year. HB 61 creates a process similar to South Dakota’s, with an even higher threshold: $250,000 in sales or 200 or more transactions. Beginning in January of 2019, such vendors will be required to either collect Georgia state and local sales taxes or provide purchasers with an annual tax statement reflecting their purchases, with a copy of that statement provided to the state. Once the Georgia Department of Revenue develops the necessary administrative procedures to enforce this new law, Georgia counties should begin to see increases in sales tax receipts. 

Click here to read NACo's newsletter about the Supreme Court sales tax decision.