Sales tax on invoices in Georgia

In Georgia, a contractor who furnishes materials and performs services to construct, alter, repair or improve real property is the consumer of all the property it uses, and pays the tax on it, even on jobs for government agencies. When a Georgia retailer sells goods, it adds the tax to the price by itemizing it, or by including it and telling each customer in writing.

Registering: dealers and contractors

Georgia sales and use tax generally applies to all tangible goods sold, and you file and pay it through the Georgia Tax Center (GTC). Anyone meeting the definition of a “dealer” in O.C.G.A. §48-8-2 must register for a sales and use tax number, even if all its sales are online, out of state, wholesale or exempt. Sales tax is a trust fund tax that the dealer collects from the customer for the state, and the dealer’s certificate of registration must be conspicuously displayed at the place it’s issued for.

All contractors, resident or nonresident, general or sub, must register too. Under the Department of Revenue’s rule 560-12-2-.26, every contractor or subcontractor improving real property in Georgia applies for a Certificate of Registration (CRF-002) as a contractor before its first construction activity in the state. Contractors file a sales and use tax return every month, even with no sales or use activity.

Contractors: consumers of their materials

Anyone who contracts to furnish tangible personal property and perform services in constructing, altering, repairing or improving real property in Georgia is the consumer of all the property used or consumed in the contract. You pay the tax when you buy, use, store or consume it in Georgia, whichever comes first. A general or prime contractor is one that contracts with the owner, lessee or other person with authority over the property.

• No exempt purchases: you can’t buy that property tax-free, even for contracts with government agencies.
• Materials supplied without tax: if you receive materials on which no sales tax was paid, and they’ll become part of the real property on the job, accrue use tax on them.
• School construction: qualifying construction materials used in capital outlay projects for educational purposes are exempt from local sales and use tax only, from April 1, 2025 until the exemption’s repeal on December 31, 2033. The exemption is by refund to the local school system only; contractors can’t claim it and must pay state and local tax when buying or using the materials.

Nonresident contractors: bonds and withholding

A nonresident contractor, general or sub, is one that hasn’t had a permanent place of business in Georgia for at least a year. On a contract of $10,000 or more, it must submit, through a surety, a nonresident performance tax bond of at least 10% of the contract price, and pay a $10 fee for each contract over $10,000. Resident contractors have no bonding requirement.

The Department’s Contractor FAQs add that when a nonresident contractor’s contract is $250,000 or more, 2% must be withheld for the state unless the general contractor receives the Department’s confirmation of the nonresident’s bond. Rule 560-12-2-.26 counts a general or prime contractor’s aggregate contracts with a single subcontractor on one project: at $250,000 or more, it withholds 2% of the payments due unless an approved surety bond has been filed, and within 30 days of the contract it files Form S & U T 214-1 with the commissioner, naming each such subcontractor and contract amount.

Services: most are exempt

Most services are exempt in Georgia. The state taxes the retail sales price of tangible personal property and certain services: accommodations, in-state transportation of individuals such as taxis and limos, admissions, and charges for games and amusement activities. Charges by the seller that are necessary to complete a sale of taxable property are taxable too. A service provider that also sells tangible personal property collects tax on those sales, and is in most cases the end user, liable for tax on the property it uses to provide its service.

Tax line on a retail sale: itemized, or included with notice

Rule 560-12-2-.21 has each retailer add the sales and use taxes to the sales price, either by itemizing the price and the tax separately or by including the tax in the total charge. A retailer that includes it must give each customer written notification that the charge includes sales tax.

That rule covers your retail sales. On a contract to construct, alter, repair or improve Georgia real property, Rule 560-12-2-.26 makes you the consumer of the materials, and you pay the tax on them yourself when you buy, use or store them.

A Georgia retailer may not advertise or represent that it will absorb the tax or relieve the purchaser of paying it, unless the advertisement says the retailer will remit any tax the purchaser doesn’t pay, and the purchaser gets written notice that the retailer is liable for that tax.

Labor on goods you sell or repair, not real-property work, has its own rules:

• Installation labor: charges for installing, applying, remodeling or repairing tangible personal property you sold aren’t part of its sales price when billed separately. Unless that labor is separately stated on the invoice, the total charge is taxable.
• Fabrication labor is taxable whether or not you state it separately.
• Repairs: labor to repair and restore an article to its original form, billed separately from materials, isn’t taxable when the same article goes back to the customer. If you itemize parts and materials at a retail price and state labor separately, tax applies only to the parts and materials; if you don’t, it applies to the total charge.

Local rates: the delivery county, and where contractors use materials

In most cases, sales tax is due at the rate of the county where the customer takes delivery, and in the City of Atlanta a city sales tax generally applies as well. A dealer collects at the rate of the jurisdiction where the product is delivered even without a presence there. The Department updates its rate charts each quarter.

For contractors, the Department’s examples tie the rate to where materials are used:

• bought without tax: accrue use tax at the rate where you use them;
• tax paid at a lower rate than where you use them: accrue the difference, so materials taxed at 6% and used in an 8% jurisdiction owe 2% use tax;
• tax paid at a higher rate: you owe nothing more, but get no credit or refund for the overpayment.

You report these on your Form ST-3 return. Tax paid to another state is credited like tax against like tax: state tax against state tax, local tax against local tax.

Landscaping: plants sold and planted

Retail sales of flowers, potted plants, shrubbery and nursery stock are taxable in Georgia. When a nurseryman, florist or other seller sells shrubbery or similar items at retail and, as part of the sale, agrees to transplant them on the buyer’s land for a lump sum, tax applies to the total charge, unless the installation is billed separately.