TITLE 48
REVENUE AND TAXATION
ARTICLE 1
STATE SALES AND USE TAX
48-8-63. "Nonresident subcontractor" defined; payment of tax by contractors; liability of seller; withholding of payments due subcontractor; rate; bond; exemption of property unconsumed; property deemed consumed; property of the state or of the United States.
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As used in this Code section, the term "nonresident subcontractor" means a person who does not have a bona fide place of business in Georgia through the maintaining of a permanent domicile or business facility engaged in contracting real property work and who contracts with a prime or general contractor to perform all or any part of the contract of the prime or general contractor or who contracts with a subcontractor who has contracted to perform any part of the contract entered into by the prime or general contractor.
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Each person who orally, in writing, or by purchase order contracts to furnish tangible personal property and to perform services under the contract within this state shall be deemed to be the consumer of the tangible personal property and shall pay the sales tax imposed by this article at the time of the purchase. Any person so contracting who fails to pay the sales tax at the time of the purchase or at the time the sale is consummated outside the limits of this state shall be liable for the payment of the sales or use tax. This Code section shall not relieve the dealer who made the sale from such dealer's liability to collect and pay the tax on purchases by a contractor.
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Each person who contracts to perform services in this state and who is furnished tangible personal property for use under the contract by the person, or such person's agent or representative, for whom the contract is to be performed, when a sales or use tax has not been paid to this state by the person supplying the tangible personal property, shall be deemed to be the consumer of the tangible personal property so used and shall pay a use tax based on the fair market value of the tangible personal property so used irrespective of whether any right, title, or interest in the tangible personal property becomes vested in the contractors.
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Each person who orally, in writing, or by purchase order contracts to perform any service the principal part of which is the furnishing of machinery which will not be under the exclusive control of the contractor shall be liable to collect a sales tax on the rental value of the machinery so used. If labor and other charges are not separated from the rental charge, the person so contracting shall be liable to collect a sales tax on the entire contract price.
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Any subcontractor who enters into a construction contract with a general or prime contractor shall be liable under this article as a general or prime contractor. Any general or prime contractor who enters into any construction contract or contracts with any nonresident subcontractor, where the total amount of such contract or contracts between such general or prime contractor and any nonresident subcontractors on any given project equals or exceeds $250,000.00, shall withhold 2 percent of the payments due the nonresident subcontractor in satisfaction of any sales or use taxes owed this state.
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The prime or general contractor shall withhold payments on all contracts that meet the criteria specified in paragraph (1) of this subsection until the nonresident subcontractor furnishes such prime or general contractor with a certificate issued by the commissioner showing that all sales taxes accruing by reason of the contract between the nonresident subcontractor and the general or prime contractor have been paid and satisfied. If the prime or general contractor for any reason fails to withhold 2 percent of the payments due the nonresident subcontractor under their contract, such prime or general contractor shall become liable for any sales or use taxes due or owed this state by the nonresident subcontractor.
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Whenever a nonresident subcontractor holding a contract with a general or prime contractor has posted with the commissioner either a good and valid bond with a surety company authorized to do business in this state or legal securities in an amount of not less than $5,000.00 nor more than $50,000.00, as determined by the commissioner, conditioned that all sales and use taxes which may accrue to this state on account of the execution of contracts that meet the criteria established in paragraph (1) of subsection (e) of this Code section by nonresident subcontractors will be paid when due, no general or prime contractor shall withhold any sums due the nonresident subcontractor under their contract with respect to sales and use taxes.
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Nothing contained in this Code section shall be construed to impose any sales or use tax with respect to the use of tangible personal property owned by the United States in the performance of contracts with the United States when the property is not actually used up and consumed in the performance of the contract. Tangible personal property incorporated into real property construction which loses its identity as tangible personal property shall be deemed to be used up and consumed within the meaning of this subsection.
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Nothing contained in this Code section shall be construed to impose any sales or use tax with respect to the use of tangible personal property owned by the State of Georgia, the University System of Georgia, or any county, municipality, local board of education, or other political subdivision of this state in the performance of contracts with such entities when the property is not actually used up and consumed in the performance of the contract. Tangible personal property incorporated into real property construction which loses its identity as tangible personal property shall be deemed to be used up and consumed within the meaning of this subsection. Any governmental entity which furnishes tangible personal property to a contractor for incorporation into a construction, renovation, or repair project conducted pursuant to a contract with such governmental entity shall issue advance written notice to such contractor of the amount of tax owed for such tangible personal property. The failure of the governmental entity to issue such advance written notice to the contractor of such tax liability shall render such governmental entity liable for such tax.
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This subsection shall not apply with respect to the use of tangible personal property owned by the United States.
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The commissioner is authorized to prescribe forms and promulgate rules and regulations deemed necessary in order to administer and effectuate this Code section.
(Ga. L. 1955, p. 389, §§ 1, 2; Code 1933, § 91A-4536, enacted by Ga. L. 1978, p. 309, § 2; Ga. L. 1979, p. 5, § 97; Ga. L. 1989, p. 62, § 9; Ga. L. 2000, p. 411, § 2; Ga. L. 2005, p. 498, § 1/HB 306; Ga. L. 2006, p. 59, § 2/HB 111; Ga. L. 2012, p. 774, § 1/HB 932.)
Law reviews.
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For survey article on recent developments in Georgia state and local taxation, see 34 Mercer L. Rev. 400 (1982). For annual survey of construction law, see 57 Mercer L. Rev. 79 (2005). For annual survey on administrative law, see 69 Mercer L. Rev. 15 (2017).
JUDICIAL DECISIONS
Taxation of materials used by building contractor.
- When building materials are purchased by a contractor to be used in the construction, improvement, or repair of the house of the party who engages the contractor, such materials are not bought for the purpose of resale within the meaning of Ga. L. 1951, p. 360 (see O.C.G.A. Art. 1, Ch. 8. T. 48), so as to be exempt from sales tax. Troup Roofing Co. v. Dealers Supply Co., 91 Ga. App. 880, 87 S.E.2d 358 (1955).
Contractor was responsible to pay the sales tax related to material purchased for a contract with the United States Department of the Army and shipped to Afghanistan as the material was purchased and stored in Georgia before being shipped to Afghanistan and, thus, the contractor fell under the contractor-as-consumer rule. Inglett & Stubbs Int'l, Ltd. v. Riley, 339 Ga. App. 375, 791 S.E.2d 642 (2016).
Exclusive control of dock cranes.
- Dock cranes furnished by a port authority to a stevedore were under the "exclusive control" of the port authority within the meaning of O.C.G.A.
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48-8-63(c), when the port authority retained total operational control over the cranes. Southeastern Maritime Co. v. Collins, 258 Ga. 725, 374 S.E.2d 197 (1988).
No exemption for agent of tax exempt entity.
- Taxpayer, a for-profit corporation based in Illinois, that made purchases as an agent for a hospital authority, a tax exempt entity, was liable for sales and use taxes under O.C.G.A.
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48-8-63(b) or (c). There was no derivative exemption based upon the taxpayer's relationship with the authority. Resourcing Servs. Atlanta, LLC v. Ga. Dep't of Revenue, 288 Ga. App. 532, 654 S.E.2d 649 (2007).
Cited in
Strickland v. Sperry Rand Corp., 248 Ga. 535, 285 S.E.2d 1 (1981); Strickland v. W.E. Ross & Sons, 251 Ga. 324, 304 S.E.2d 719 (1983).
OPINIONS OF THE ATTORNEY GENERAL
Taxation of raw materials from roadway used by contractor in constructing highway.
- When contractor on highway project uses raw materials from roadway in construction of highway, those materials are not subject to sales and use tax, but when the subcontractor processes materials for the contractor's use, such processed materials are subject to tax. 1962 Op. Att'y Gen. p. 559.
Sales tax on materials must be paid by contractor even though state work is being done,
when contract is for services including materials. 1962 Op. Att'y Gen. p. 560.
Use tax on property furnished to contractor by government.
- When a government contractor under a fixed-price type maintenance, overhaul, and modification contract uses up and consumes government furnished property in performing the contract, although having previously purchased such property as agent for the government, the contractor becomes liable for the use tax based upon the fair market value of the property so used up and consumed. 1962 Op. Att'y Gen. p. 547.
Materials purchased for construction of a church are subject to sales tax.
1957 Op. Att'y Gen. p. 325.
Construction with other bond provisions.
- Minimum requirements of the bond called for in former Code 1933, Ch. 92-4 do not meet the minimum requirements of this section, and a qualifying subcontractor should, therefore, post both bonds. 1960-61 Op. Att'y Gen. p. 545.
RESEARCH REFERENCES
C.J.S.
- 84 C.J.S., Taxation,
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159 et seq., 503 et seq., 596 et seq.
ALR.
- Computer software or printout transactions as subject to state sales or use tax, 36 A.L.R.5th 133.
