Ga. Comp. R. & Regs. r. 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. Cite as Ga. Comp. R. & Regs. R. 560-12-5-.05 Authority: Ga. L. 1975, pp. 984, 985, 986, 987, 994. History. Original Rule entitled "Use Tax; Collection by Dealers" was filed an January 12, 1976; effective February 1, 1976.