Georgia House Bill 993 Defines Affiliate Nexus Law
Hailing as the shortest bill of the year that I have read so far, Georgia House Bill 993 (HB 993), also seems have had the most discussion in the news surrounding its initial review and testimony in the Georgia State Legislature.
This bill revises Code Section 48-8-2, paragraph 4 to read “(4) ‘Business’ means any activity engaged in by any person or caused to be engaged in by any person with the object of direct or indirect gain, benefit, or advantage.” It then closes with the statement that anything that conflicts with this rewording is automatically repealed by passage of the Act.
Georgia affiliate Chuck Shiflett states in his Backroom Report that Georgia-based affiliates “…earned approximately $483 million in commissions in 2010 and paid $29 million in Georgia income taxes.” His analysis is that “By passing HB-993, Georgia will still not be able to force Internet merchants to collect sales tax on purchases made by Georgia residents….”
Georgia Retail Association President, Rick McAllister, is quoted as saying “…traditional, brick and mortar merchants have been at a disadvantage in competing with the affiliatesbecause consumers see a 7 percent price difference since the tax isn’t included.”
Large retailers such as Home Depot are cited as businesses that support the bill. However, Greg Hoffman, an “…Internet marketing consultant and member of the Performance Marketing Association, said the bill would harm 6,000 small-business owners who serve as affiliates.” It is the firm belief of the association and at least a number of outspoken affiliates that their Internet retail partners will sever affiliate relationships in Georgia if HB 993 is passed.
According to GeorgiaInternetLaw.com, the “…Georgia Retail Association estimates that uncollected sales tax from all Internet sales to Georgia residents amounts to about one-half billion dollars per year, and about $20 million of that comes from Amazon.com transactions alone. The specific transactions that are the subject of the House bill would bring in about $18 million per year to the Georgia Department of Revenue.”
A recent InternetMarketingGorilla.com blog declares the bill is now being used for “dirty politics.” A amendment to the bill seems to be planned: add in not only the slightly reworded existing legislation, but tack on the return of a sales tax holiday that might create a “revenue neutral” situation.
Proponents and opposition each express that there is a human factor to this debate. Proponents remind us that “We could fill this room with your friends, your neighbors, who are suffering under this inequity,” (of sales tax-free shopping online while brick and mortar businesses lose sales). Opposition points out that there are 6,000 affiliates in the state who stand to lose their income as a result of the bill passing in Georgia.
In the coming week, we will watch and wait and see if this uniquely worded bill gains traction for passage.
I will be selling clothes soon on the internet but need clarifaction on the collection of taxes. What percentage tax do I collect? is it based on the county / state I am shipping to or the county in Georgia where I am shipping from?
Thanks
Hi Gary,
I recommend consulting a professional accounting service. They will be able to help your business meet the challenges of sales and use tax compliance.
Well, there goes my affiliate job!!!!!!
Already been dumped by some major retailers. Stupid Georgia republicians. These companies will not pay the sales tax they will just put people like me out of work. Why would anyone want to give the government more money to waste or abuse???? Our government wants to cry we have no money after they outsourced all of our good paying jobs to China. The internet was not created for taxation it is supposed to be free. And maybe if mom and pop stores had better pricing they would have more sales. Stop trying to kill a person on every sale made. $1.80 for a soda??? then you pay your employees $2.00 an hour?? Go out of business if you cannot treat your people right.