Sales Tax Articles
Sales Tax State Activity Update - May 2006
Georgia Offers a Peachy Definition for Non-Resident Subcontractors
The Georgia General Assembly enacted legislation updating Georgia State Law 48-8-63 relating to contracts that furnish tangible personal property and perform services under the contract. The enacted legislation defines the term "non-resident subcontractor" for sales and use tax purposes.
"Non-resident subcontractor" refers to a person who:
- Does not have a bona fide place of business in Georgia through the maintaining of a permanent domicile or business facility.
- Must be engaged in contracting real property work and contract with a prime or general contractor to perform all or any part of the contract of the prime or general contractor .
- Contracts with another subcontractor who has contracted to perform any part of the contract entered into by the prime or general contractor.
General contractors contracting with "non-resident subcontractors" in amounts of two-hundred fifty thousand or more, must withhold four percent of payment to the "non-resident subcontractor" until receipt of a certificate issued by the commissioner establishing the sales and use taxes accruing from the contract were paid by the "non-resident subcontractor".
If the general contractor fails to withhold four percent of the payment, then the general contractor is liable for any sales and use taxes owed by the "non-resident subcontractor".
The "non-resident subcontractor" may post a good and valid bond with a surety company authorized to do business in the state or legal securities in amounts specified by the commissioner to relieve the general contractor of its obligation to withhold payment from the "non-resident subcontractor".
View the full text on the Georgia General Assembly Website.
(General Assembly of Georgia, House Bill 111, effective 7/1/06)
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