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In a decision rendered by the 4th Division of the Georgia Court of Appeals, a contractor was required to pay sales and use taxes to the State of Georgia even though the contractor received bid instructions from the County of Fulton to exclude such tax on work that was being performed at the Fulton County Jail. The contractor attempted to provide evidence that no agreement existed as to who would be paying the taxes related to the work being performed. The contractor further stated that in most states where they perform work, an exemption is provided for governmental entities and based upon that past knowledge, no research was performed to review how the State of Georgia treated governmental entities. The court indicated, citing Georgia statute OCGA Sec. 48-8-63, that regardless of the government’s status, the contractor would still be liable for the sales tax. Furthermore, the evidence of sales and use tax liability not being addressed in the contract did not relieve the contractor from its responsibilities. (Georgia Court of Appeals, GA – ESI Companies, Inc. v. Fulton County, December 30, 2004)


Georgia and New Jersey have recently passed legislation that will require out-of-state contractors and their affiliates to register to collect sales and use taxes in these states where business is conducted. Effective May 13, 2004, Georgia’s new law requires registration with the state and the remittance of sales and use tax on all retail purchases within the state for any nongovernmental vendor or its affiliates with a state agency contract that exceeds $100,000 per year. Effective September 1, 2004, New Jersey requires similar expansion in the registration and tax collection program. Contractors, subcontractors and their affiliates entering into contracts with various levels of New Jersey educational and governmental units as well as water utilities and casinos, must collect New Jersey use tax on all sales of tangible personal property delivered into the state. Other states are jumping on the bandwagon with these states nexus and registration legislative changes. Please contact your state’s department of revenue for further information. (Georgia Act 499 (HB1457), New Jersey Chap. 57 (AB3130), effective as noted above.)


Effective July 1, 2004, interest will not be allowed on refunds of sales and use taxes if a taxpayer does not obtain and use the required sales and use tax exemption certificate or determination letter prior to the initial purchase of the tangible personal property. (H.B. 1239, effective as noted above)


Clothing, personal computers and school supplies will be exempt from state and local sales taxes in Georgia from July 29 through August 1, 2004. In order to qualify for the exemption articles of clothing and footwear must be $100 or less, personal computers and related accessories purchased in a single transaction must be $1,500 or less and general school supplies intended for classroom use must have a selling price of $20 or less per item. The exemption does not apply to items purchased for business or resale or items purchased at theme parks, entertainment complexes, hotels, restaurants, or airports. (Georgia House Bill 1184)


From May 5, 2004 until September 1, 2009, sales of tangible personal property used directly for the construction of a new symphony hall is exempt from sales tax. The construction cost of the facility must be equal to or more than $200 million and the organization owning or operating the hall must be exempt from taxation under Section 501(c)(3) of the Internal Revenue Code. (Section 48-8-3(78)(A), May, 2004)



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