Georgia Computer, Software, and SaaS Tax Guide

Prepared by Sales Tax Helper

Table of Contents

1. Introduction
2. Nexus Considerations
3. General Rules and Compliance Considerations
4. Specific Exemptions
5. Sourcing Rules
6. Audit Considerations
7. Voluntary Disclosure Agreements (VDAs)
8. Conclusion
9. References & Resources

1. Introduction

For software companies, SaaS providers, and technology firms conducting business in Georgia, the state's sales and use tax rules present unique challenges. Georgia's approach to taxing software and digital products has evolved significantly in recent years, creating complex considerations for businesses in the technology sector.

Unlike traditional tangible goods, digital products and software transactions can involve both
taxable and non-taxable components. Georgia's tax treatment of software and technology-related services depends on multiple factors, including whether software is delivered in tangible or electronic form, whether it is prewritten or custom, and whether services provided qualify for exemptions.

Purpose of This Guide

This guide is designed to help businesses navigate Georgia's sales and use tax rules related to
software and technology services. It focuses on:

• Nexus Considerations: Understanding when businesses must register and collect
  Georgia sales tax due to physical or economic presence.
• Taxability of Software & Services: Clarifying the tax treatment of prewritten vs. custom
  software, cloud computing services, and related technology offerings.
• Sourcing Rules: Determining how and where transactions are taxed based on customer
  location and method of software delivery.
• Audit Considerations: Identifying common tax audit triggers and best practices for
  compliance.
• Voluntary Disclosure Agreements (VDAs): Explaining the process for businesses to
  rectify past noncompliance while mitigating penalties and limiting back-tax liability.

Why This Matters for Technology Companies

Georgia's sales tax laws impact software companies, SaaS providers, and technology firms in
multiple ways:

• Sales Tax Obligations: Businesses that sell software or related services to Georgia
  customers may have a duty to collect and remit Georgia sales tax, depending on how the
  product is classified.
• Digital Products Complexity: Georgia's tax treatment of electronically delivered
  software and cloud-based services can be confusing, as many sources initially indicated
  taxation of these items, but more recent rulings have clarified that they are generally not
  subject to sales tax.
• Compliance Risks: Failure to correctly assess and collect sales tax can result in
  significant penalties, interest, and extended audit exposure.

This guide will walk through Georgia's specific sales tax rules governing software, SaaS, and
technology-related services while referencing applicable statutes, administrative rules, and
Georgia Department of Revenue guidance.

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