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Subject 560-12-5 LOCAL OPTION TAX

Rule 560-12-5-.01 Definitions

(1) The term "Local Jurisdiction" as used in these regulations shall include any county and/or municipality authorized to levy a Local Option Sales Tax under the provisions and conditions of Georgia Laws 1975, pp. 984, 994.
(2) The term "Local Option Tax" as used in these regulations shall mean the 1% sales and use tax for the use of such counties and/or municipalities as authorized under provisions and conditions of Georgia Laws 1975, pp. 984, 994.
(3) The term "State Sales and Use Tax Act" as used in these regulations, shall mean the Georgia Retailers' and Consumers' Sales and Use Tax Act, approved February 20, 1951 (Ga. L. 1951, p. 360) as amended.
(4) The term "Local Option Tax Act" as used in these regulations shall mean Act No. 598 (House Bill No. 150) set forth in Georgia Laws 1975, p. 984, authorizing a 1% sales and use tax for such Counties and/or Municipalities.

Rule 560-12-5-.02 Repealed

Rule 560-12-5-.03 Applicability of State Sales and Use Tax Act and Regulations

(1) All sales and other transactions not taxable under the State Sales and Use Tax Act are not taxable under the Local Option Tax Act. Similarly, all sales and other transactions exempt from the State Sales and Use Tax Act are exempt from the Local Option Tax Act.
(a) Example 1: A sale in interstate commerce by a Georgia dealer is not taxable under the State Sales and Use Tax Act. Consequently, such a sale would not be a taxable sale under the Local Option Tax Act.
(b) Example 2: A sale to the University System of Georgia is exempt under the State Sales and Use Tax Act. Consequently, such a sale is also exempt under the Local Option Tax Act.
(2) Regulations previously or hereafter adopted under the State Sales an Use Tax Act governing taxability under that Act shall apply under the Local Option Tax Act unless expressly stated to be inapplicable to the Local Option Tax.
(3) Regulations previously or hereafter adopted under the State Sales and Use Tax Act governing administrative or remedial procedures or requirements under that Act shall also apply to administration of the Local Option Tax Act unless expressly stated to be inapplicable to the Local Option Tax.

Rule 560-12-5-.04 Taxable Transactions

(1) Sales.
(a) Sales transactions otherwise taxable under the State Sales and Use Tax Act, including both sales and leases, are taxable if the sale occurs within a Local Jurisdiction. A "sale" occurs within a Local Jurisdiction if:
1. in the case of sales of tangible personal property, the transfer of title or possession, or both, takes place within the Local Jurisdiction; provide, however, that no tax shall be imposed upon the sale of tangible personal property which is ordered by and delivered to the purchaser at a point outside the geographical area governed by any of the local governments imposing the tax, regardless of the point at which title passes, if such delivery is made by the seller's vehicle, U.S. Mail, common carrier or by private or contract carrier licensed by the Interstate Commerce Commission or the Georgia Public Service Commission;
2. in the case of leases, the lease is executed within the Local Jurisdiction, or the leased property is transferred to the lessee within the Local Jurisdiction.
(b) A sale of tangible personal property by a seller within the Local Jurisdiction where transfer of both title and possession occurs, in good faith, outside the Local Jurisdiction is not taxable under the Local Option Tax Act. In determining where title passes, the Uniform Commercial Code-Sales, Code 109A-2-401, will be followed.
(c) All sales by a retailer through a place of business located within the Local Jurisdiction are presumed to be taxable under the Local Option Tax Act unless the contrary is shown by the records required herein.
1. All deliveries of tangible personal property must be made in good faith. Delivery will be presumed to have been made in accordance with the usual practices with respect to such sales unless the contrary is shown by the records required herein.
2. Retailers within the Local Jurisdiction, in order to support a claim that a sale through a place of business within the Local Jurisdiction is not taxable under the Local Option Tax Act are required to maintain records supporting that claim, including:
(i) records of the manner in which the order was placed;
(ii) a copy of the order showing the name and address of the purchaser and the sales price;
(iii) a copy of any agreement executed in connection with the sale which governs the passage of title and the transfer of possession;
(iv) records of the manner in which delivery is made and the identity of the person who made delivery.
(d) The rules stated in this provision may be illustrated as follows:
1. Example 1. A purchase order by a person outside the Local Jurisdiction is received through the mail by a Local Jurisdiction retailer. The purchase order provides that seller agrees to deliver the goods to purchaser. The order is filled by mail shipment by the seller to the purchaser. The sale is not taxable.
2. Example 2. Same type of order as in Example 1 except that purchaser or his representative comes within the Local Jurisdiction to receive the goods. The sale is taxable.
3. Example 3. An order is placed with a retail outlet located outside the Local Jurisdiction. The goods are shipped in the seller's vehicles from his Local Jurisdiction warehouse to the store outside the Local Jurisdiction where the customer receives them. The sale is not taxable. If the customer, after placing the order with the branch, comes to the retailer's Local Jurisdiction warehouse to receive the goods, the sale is taxable.
4. Example 4. A Local Jurisdiction retailer receives an order by mail from a location not within that Local Jurisdiction. By written agreement of the parties, the order is filled F.O.B. the seller's place of business, the seller placing the goods with a common carrier for shipment. The sale is not taxable.
(2) Services.
(a) Services otherwise taxable under the State Sales and Use Tax Act are taxable under the Local Option Tax Act if the purchase of the service is made within the Local Jurisdiction. A purchase of a service occurs within the Local Jurisdiction if:
1. the services are performed within the Local Jurisdiction or;
2. the obligation to perform the service is undertaken in the Local Jurisdiction by virtue of performance beginning within the Local Jurisdiction.
(b) The rules stated in this provision may be illustrated as follows:
1. Example 1. A purchaser acquires within or without a Local Jurisdiction an airline ticket for transportation from a point in a Local Jurisdiction to any other point in Georgia. Under subparagraph (2)(a)2. of this regulation, the purchase is taxable under the Local Option Tax Act. If the transportation is from a point without a Local Jurisdiction to a point within a Local Jurisdiction, the purchase is not taxable under the Local Option Tax Act.
2. Example 2. A purchaser acquires within a Local Jurisdiction an airline ticket for transportation between two points lying wholly outside such Local Jurisdiction. Under subparagraph (2)(a) of this regulation, the purchase is not taxable under the Local Option Tax Act.
3. Example 3. A telephone utility provides telephone service to a location within the Local Jurisdiction, but the periodic billings are made to a location outside the Local Jurisdiction. Under regulation (2)(a)1., the charge for such service is taxable. If the hypothetical is reversed so that the service is provided to a location outside the Local Jurisdiction but the billings are made within the Local Jurisdiction, the service would not be taxable under the Local Option Tax Act.
4. Example 4. A taxi operator is engaged by a passenger within a Local Jurisdiction. Performance of this service requires the operator to transport his passenger outside the Local Jurisdiction. Under regulation (2)(a)1., the service is taxable. If the hypothetical is reversed so that the taxi operator is engaged by a passenger outside a Local Jurisdiction but transports his passenger to a point within a Local Jurisdiction, the service is not taxable under the Local Option Tax Act.
(3) Admission charges.
(a) Sales of tickets and charges for admission to places of amusement, sports, or entertainment, otherwise taxable under the State Sales and Use Tax Act, are taxable under the Local Option Tax Act if the place of amusement, sports, or entertainment making the admission charge is located within a Local Jurisdiction, irrespective of where the ticket, if any, is purchased.
(b) Sales of tickets within a Local Jurisdiction are not taxable under the Local Option Tax Act if the place of amusement, sports or entertainment is not located within a Local Jurisdiction.

Rule 560-12-5-.05 Use Tax; Collection by Dealers

(1) Liability.
(a) The owner or user of tangible personal property acquired by a purchase or lease made outside a Local Jurisdiction, shall be liable for a use tax under the Local Option Tax upon the first instance of use, storage, consumption, or distribution of the property within the Local Jurisdiction unless the use is insubstantial.
(b) "Insubstantial use" within the meaning of paragraph (1)(a) means any use occurring solely by virtue of movement of the property through the Local Jurisdiction.
(c) The rules stated in the foregoing paragraphs may be illustrated as follows:
1. Example 1. Y Corporation is engaged in the construction business and maintains its sole office outside the Local Jurisdiction. Y Corporation in performing a contract within the Local Jurisdiction employs certain equipment purchased by it outside the Local Jurisdiction, such as bulldozers, on the construction site. Under paragraph (1)(a), the use of the equipment is taxable.
2. Example 2. Same facts as in Example 1, except that Y Corporation also has a truck which makes deliveries of construction materials from the corporation's office to the construction site and then returns to the corporation's office. Under paragraph (1)(a), use of the truck is not taxable. Use of the construction materials is taxable.
3. Example 3. X Corporation maintains a warehouse in the Local Jurisdiction in which it stores supplies, not held for resale but to be used in its operations outside the Local Jurisdiction. Under paragraph (1)(a), the storage is taxable.
4. Example 4. Z Corporation, a retail chain, maintains a warehouse for its retail goods outside the Local Jurisdiction. Trucks based, serviced and routed from the warehouse are used solely to make shipments from the warehouse to retail outlets in the Local Jurisdiction. Under paragraph (1)(a), the use of the trucks is not taxable. If, however, the truck is assigned to a particular retail outlet in the Local Jurisdiction for the purpose of making retail deliveries in the Local Jurisdiction from the retail outlet, even though returning at the end of the day to the warehouse, the use is taxable.
5. Example 5. Same facts as in Example 4, except the warehouse is located in the Local Jurisdiction and the vehicles are used to make shipments outside the Local Jurisdiction. The use is taxable.
(2) A retailer located outside the Local Jurisdiction is required to collect the use tax under the Local Option Tax Act but only if:
(a) The retailer has a "substantial presence" within the Local Jurisdiction, and;
(b) A retailer shall be deemed to have a substantial presence within the Local Jurisdiction if the retailer:
1. Has a place of business located in the Local Jurisdiction.
2. Solicits sales on a regular and recurring basis within a Local Jurisdiction through agents or representatives, or
3. Delivers goods into the Local Jurisdiction on a regular and recurring basis, or
4. Meets, with respect to the Local Jurisdiction, any of the criteria established by Section 4 of the State Sales and Use Tax Act as to "dealers".
(3) A lessor outside the Local Jurisdiction with a substantial presence within such Local Jurisdiction is required to collect a use tax under the Local Option Tax Act with respect to leases, regardless of where the lease is executed or property transferred, where the lessor acquires notice that the property will be used by the lessee principally within the Local Jurisdiction.

Rule 560-12-5-.06 Sales Prior to Effective Date

(1) The Local Option Tax shall not apply to a sale of goods when the contract was entered into prior to the effective date of the tax, and delivery was completed prior to such effective date; nor to the purchase price, sale or use of building and construction materials when the contract pursuant to which the materials are purchased or used was advertised for bid prior to approval of the levy of the tax by the county or municipality and the contract was entered into as a result of a bid actually submitted in response to such advertisement prior to approval of the levy of the tax.
(2) The rules stated in the amended regulation may be illustrated as follows:
(a) Example 1. A written lease agreement executed prior to effective date of Local Option Tax in a Local Jurisdiction is taxable beginning with the first rental payment made on or after effective date to the extent such payment represents use on or after effective date of such tax.
(b) Example 2. A written contract which was executed prior to the effective date of Local Option Tax in a Local Jurisdiction and which required deliveries of goods in intervals, is taxable under the Local Option Tax with respect to deliveries made on or after effective date of such tax unless such building and construction materials were sold, and subsequently used exclusively, to perform a specific bona fide contract which was advertised for bid prior to approval of the levy of such tax by the county or municipality and which was entered into as a result of a bid actually submitted in response to such advertisement prior to the approval of the levy of the tax.
(c) Example 3. An admission charge for an event is taxable if the event is held on or after effective date of Local Option Tax regardless of when a ticket, if any, was sold.
(3) The use in the Local Jurisdiction of tangible personal property acquired by purchase outside the Local Jurisdiction is not taxable under the use tax provision of the Local Option Tax Act unless delivery was made or passage of title occurred on or after effective date of such tax in the Local Jurisdiction.

Rule 560-12-5-.07 Credit for Taxes Paid

Where a Local Option Sales or Use Tax has been paid with respect to tangible personal property by the purchaser thereof, either in another Local Jurisdiction within the State or in a Taxing Jurisdiction outside the State, where the purpose of the tax is similar in purpose and intent to the tax authorized to be imposed by the Local Option Tax Act, said tax may be credited against the tax authorized to be imposed by the Local Option Tax Act upon the same property. If the amount of sales or use tax so paid is less than the amount of the use tax due as authorized to be imposed by the Local Option Tax Act, the purchaser shall pay an amount equal to the difference between the amount so paid in the other Local Jurisdiction, or in Taxing Jurisdiction outside the State, and the amount due as authorized to be imposed by the Local Option Tax Act. The State Revenue Commis-sioner may require proof of payment in another Local Jurisdiction in this State, or in a Taxing Jurisdiction outside the State, as is deemed to be necessary and proper.

Rule 560-12-5-.08 Penalties and Interest

The amounts and rates of penalties and interest provided for by the State Sales and Use Tax Act and Regulations relating thereto shall apply to liabilities under the Local Option Tax Act. Said penalties and interest are in addition to and separate from the penalty and interest provisions of the State Sales and Use Tax Act and Regulations relating thereto.

Rule 560-12-5-.09 Obligation to Collect and Remit Tax

(1) In the situation where such sales are subject to the Local Option Tax, every dealer making sales of tangible personal property at retail in this State and every dealer making sales of tangible personal property at retail outside this State or the geographic areas of the Local Jurisdiction for distribution, storage, use or other consumption in the Local Jurisdiction shall add the amount of tax imposed by the Act upon the purchaser to the sales price or charge, which shall then be a debt from the purchaser or consumer to the dealer until paid, and shall be recoverable at law in the same manner as any other debt.
(2) The retailer shall collect and the purchaser shall pay the Local Option Tax. Any retailer who shall neglect, fail, or refuse to collect and remit the tax as required by law, upon any, every, and all taxable sales made by him, his agents, or employees, or upon tangible personal property and services which are subject to the Local Option Tax Act, shall be liable for and pay the tax himself.
(3) Each sales tax return remitting Local Option tax, shall separately identify the location of each retail establishment at which any of the Local Option Tax remitted was collected and shall specify the amount of sales and amount of taxes collected at each such establishment for the period of the return so as to thereby facilitate determination of the State Revenue Commissioner that all Local Option Tax is collected and distributed according to situs of sale.

Rule 560-12-5-.10 Determination of Entitlement and Qualification

(1) Funds will be certified for disbursement by the Revenue Commissioner pursuant to this Act only to those jurisdictions which have certified to the Commissioner their qualifications and entitlement to receive disbursements thereunder.
(a) With respect to those jurisdictions which, by their own authority, impose the tax, the resolution which imposes the tax and which is forwarded to the Commissioner as provided in the Act shall constitute such certification.
(b) With respect to those jurisdictions which do not impose the tax, but which claim entitlement to receive proceeds therefrom, such certification shall be provided to the Commissioner upon forms prescribed by him for that purpose.
(2) Before certifying disbursements to any county imposing the tax, the Revenue Commissioner shall notify the governing authority of such county of the names and the populations of those Municipalities within such county to which the Commissioner proposes to certify disbursements.
(3) Any jurisdiction, person, or other entity which desires to contest the authority of any jurisdiction to levy the tax or to contest the qualifications of any jurisdiction claiming the status of a Municipality, as defined in the Act, may file a written protest with the Commissioner of Revenue setting forth in detail wherein such jurisdiction does not qualify as a Municipality within the meaning of the Act or is without authority to impose the tax.
(4) Upon receipt of any protest filed pursuant to Paragraph 3 above, the determination of authority or qualification challenged therein shall be deemed a contested case within the meaning of the Georgia Administrative Procedure Act and further proceedings with respect to said determination shall be in accordance with the provisions of said Act.