Earlier this week, Georgia Governor Brian Kemp signed legislation (SB 56) that will require retailers to collect sales tax on in-state sales of digitally downloaded products, including books, video games, music, artwork and photographs. This law is effective January 1, 2024.
The purpose of this law is an attempt to ensure parity between online digital purchases and similar sales made in local stores that generally charge state and local sales taxes. Notably, while previous proposals on taxing digital products included video and music subscriptions, such as Netflix and Spotify, Georgia’s new law only deems sales of downloaded books, video games, music and other digital products where the buyer retains possession as subject to sales tax.
Georgia’s expansion of its sales tax base comes as no surprise as previous efforts have resulted in significant revenue surpluses over the past two fiscal years. In fact, Georgia estimates that this new law will increase state revenue by $80 million in the upcoming fiscal year.
As a reminder, this law does not impact whether a taxpayer has established Georgia sales tax nexus (see here for a general overview of sales tax nexus).
How Bennett Thrasher Can Help
Bennett Thrasher’s state and local tax team is uniquely positioned to help your business:
- Determine when and where you are required to collect and remit sales taxes under the new economic nexus rules;
- Determine whether your products and/or services (such as digital product sales) are subject to sales tax in those states;
- Assist with navigating any historical liability, such as registrations, back-filing and voluntary disclosure agreements; and,
- Find a sales tax compliance solution (including management of exemption certificates) that fits your business’s needs.
Additionally, our state and local tax team can advise on internal sales and use tax procedures, prepare your business for a future sale and assist with many other state and local sales or income tax matters.