Month-end close: sales tax in Georgia

Georgia's state rate is 4%, local tax follows where the customer takes delivery, and a client that owes over $500 must file and pay electronically.

This is part of the sales tax checklist. Georgia sales and use tax is filed with the Georgia Department of Revenue (DOR) through the Georgia Tax Center.

Rate. 4% state sales tax plus local sales taxes, often 1% each, so the total runs higher by county: 8% in Muscogee County and 9% in Ware County. The rate is generally that of the county where the customer takes delivery.

Filing. Most taxpayers file monthly, and can ask in writing to change. A return is filed even when there were no sales. A dealer whose state tax in the previous year was over $60,000 also prepays 50% of its estimated tax.

Due. No later than the 20th day of the month after the period being reported.

The trap. A dealer collects at the rate of the place of delivery even with no presence there. A late return or payment costs the greater of 5% or $5, plus the same again for each late month, up to the greater of 25% or $25.

The month-end steps

1. Check how the client files. A client that owes more than $500 on any return must file and pay electronically through the Georgia Tax Center. A client not required to file electronically may use paper Form ST-3 [1]. Done when the client files in the way the $500 rule requires.
2. Confirm the filing frequency. For most taxpayers returns are due every month. A taxpayer can submit a written request to change its frequency [1]. Done when the frequency on file matches the DOR's records.
3. Check the rate on every sale. The statewide rate is 4%. In most instances sales tax is due at the rate of the county where the customer takes delivery, and if delivery is in the City of Atlanta a city tax generally applies as well. A dealer collects the local rate of the place of delivery even if it has no presence there [2]. For example, the rate in Muscogee County is 8% (4% state plus four local taxes of 1% each) and in Ware County 9% (4% plus five local taxes) [2]. Done when each taxable sale carries the state rate plus the local rates for its delivery location.
4. Check for prepaid estimated tax. A dealer whose tax liability in the previous calendar year was greater than $60,000, excluding local sales taxes, must remit prepaid estimated tax of 50% of its estimated tax. The estimate is the dealer's average monthly state tax payments for the last calendar year, adjusted for any change in the state rate [1]. Done when each client over the $60,000 line has its prepayment on the calendar.
5. File on time, including nil returns. Returns and payments are due no later than the 20th day of the month after the period reported. A return must be filed even when no tax is due or no sales were made [1]. Done when each return's due date is on the client's calendar.
6. Know what late costs. Failing to file, and failing to pay, each cost the greater of 5% of the tax or $5, plus the same again for each additional late month, up to the greater of 25% of the tax or $25 [3]. Failing to file electronically when required costs the greater of $25 or 5% of the tax due, and failing to pay electronically costs 10% of the tax due [3]. Interest runs at the Federal Reserve prime rate plus 3%, reviewed each January [3]. Done when each return and payment went in by its due date, or the late ones are flagged for the client.
7. Tie the liability. Done when the sales tax payable account is at zero after the month's payment, or equals the tax not yet due.