In Georgia, the Department of Revenue sets and enforces tax laws. If you sell taxable goods or services, you are legally required to collect sales tax from your customers, file tax reports, and pass the sales tax along to the state. If you do not pay or file on time—or at all—you could be hit with penalties and more severe consequences.
Learn more about your requirements as a business owner, how to stay compliant, and what will happen if you fall short.
Key Takeaways
- The Georgia Department of Revenue assesses penalties for failing to pay sales tax and failing to file sales tax returns.
- This penalty starts at 5% and is capped at 25% of the tax due, accruing over several months.
- Penalty waivers may be available for those with reasonable cause and a strong history of tax compliance.
- Changing your sales tax documentation and protocols may help you avoid penalties.
Understanding the Obligation to Pay Sales Tax in Georgia
Any business with nexus in Georgia must collect and remit sales tax to the GA Department of Revenue unless they are otherwise exempt. The state sales and use tax rate is 4%, but you must also account for the local sales and use tax rate in each jurisdiction. In most areas, local rates range from 3% to 5%, creating a total sales tax rate of 7% to 9%.
Sales tax requirements can be confusing, particularly for new business owners. The Georgia Department of Revenue provides additional information on sales and use tax.
What is Nexus?
Businesses can have a physical or economic nexus in Georgia. Businesses have physical nexus if they have a location in Georgia, and they have economic nexus if their gross revenue is either more than $100,000 or at least 200 separate retail sales transactions in a year. Unlike many other states, digital goods are generally exempt.
Sales Tax Due Dates and Filing Frequencies
Most taxpayers are required to file and pay monthly. Sales tax returns must be filed and paid no later than the 20th day of the month after the time period being reported. A company must file monthly unless it requests and is granted permission to follow a quarterly or annual filing schedule.
Quarterly filing may be permitted for those whose sales and use tax has been less than $200 monthly for at least six months in a row. Annual filing may be permitted if their average monthly amount due is less than $50 for at least six months in a row. If the 20th falls on a weekend or holiday, the next business day is the due date.
Penalties for Late Payment of Georgia Sales Tax
Failing to pay by the 20th of the month following the end of the reported period will result in penalties and interest charges, both of which can increase your total amount due very quickly.
Late Payment Penalty
The late payment penalty for sales and use tax is either 5% of the tax due or $5, whichever is greater. That same amount is charged for each additional month that the payment is late. The maximum amount the penalty can reach is either $25 or 25% of the tax due, whichever is greater.
Imagine a business owner who owes $1,000 in sales tax for the month of May. That amount is due by June 20th. They miss the June due date and make their payment on July 5. The initial penalty is $50. Because they were more than one month late, they were charged an additional $50 for the second month. So, a total penalty of $100.
Interest on Unpaid Tax
The Department of Revenue charges interest on past-due taxes from the due date until the date of payment. The interest rate is equal to the Federal Reserve prime rate plus 3%. As of May 2025, the prime rate is 7.5%, so the current interest rate for past-due sales and use tax in Georgia is 10.5%.
Imagine again a balance due of $1,000. Interest alone would add over $100 to the balance after one year. However, the Department of Revenue charges both interest and penalties. That means the interest will be even higher, as it accrues on the penalties as well.
Other Penalties Related to Sales Tax Non-Compliance
The Department of Revenue may charge additional penalties in addition to the late payment penalty. The failure to file penalty is either 5% of the total amount due or 5%, whichever is greater. That amount is added to the balance for each month that the return is not filed. Like the late payment penalty, it is capped at 25% of the amount owed.
Note that the failure to pay and failure to file penalties can only reach a total of 25% of the unpaid tax. So, these penalties can stack each month but can’t exceed 25%.
Filing a false or fraudulent return also comes with a sizable penalty in Georgia. False and fraudulent returns are hit with a penalty equal to 50% of the total amount due.
Loss of Vendor Discounts
Georgia is one of many states that gives business owners a vendor discount. Basically, the state lets you keep a bit of the collected sales tax to cover the time you spend collecting it and remitting payment. However, you only get the discount if you pay and file on time.
As of 2025, the discount is 3% of the sales tax up to $3,000 and 0.5% of the sales tax over that amount. So, if you owe $3,000, your vendor discount is $90. If you owe $4,000, your vendor discount is $95. If you file late, you don’t get the discount. You also lose the discount if you file on paper when you’re supposed to file electronically.
Criminal Penalties
Beyond the civil penalties a taxpayer may owe for paying late, the DOR may also pursue criminal penalties for intentional or willful failure to collect or remit sales tax, as well as the willful filing of fraudulent returns.
Per Georgia Code 48-8-7, willful failure to collect or remit sales tax is a misdemeanor. If a taxpayer is convicted, they are punished by a fine of no more than $5,000, imprisonment for up to one year, or both. The second and subsequent convictions are felonies, and they lead to penalties as high as $10,000 and imprisonment for up to five years.
Penalty Waivers and Abatement
The Georgia Department of Revenue does allow taxpayers to request penalty waivers if they have a valid reason for failing to pay their taxes on time. It’s important to note that sales tax is considered a trust fund tax, which means that a business cannot use the money collected as sales tax for any purpose.
The DOR released a policy statement outlining the situations in which they would consider penalty waivers. The DOR may consider waiving your penalties if you paid late due to :
- False information provided by DOR employee
- Death or serious illness of the taxpayer or party responsible for making payments
- The taxpayer’s unavoidable absence
- Destruction by fire of the business or personal records
- Reliance on tax advisors who provided incorrect information due to a misunderstanding of the law
- Recently discovered embezzlement or other type of criminal act by a responsible party
The DOR also explicitly states that the taxpayer’s previous filing and payment history will be taken into account. If you have a strong history of paying and filing on time, that may work in your favor when you request penalty abatement.
Voluntary Disclosure Agreement
If you have unfiled sales tax returns, the Georgia Department of Revenue has a special settlement program called the Voluntary Disclosure Agreement (VDA). Under this program, you can avoid late-filing and late-payment penalties and potentially limit the sales tax returns that need to be filed.
To qualify for the VDA, you must apply before Georgia reaches out to you to inquire about the unfiled returns. If Georgia has already approached you, you cannot pursue this program. If you are accepted, you will pay only the outstanding tax and interest that is owed, and Georgia will waive all penalties.
To apply, you submit an initial, anonymous application requesting approval into the program. If approved, Georgia will send you an agreement detailing the scope of the settlement and confirming that penalties will not be assessed against the taxes owed under the settlement.
If you did not collect sales tax on your taxable sales and fail to remit them to the state, Georgia will limit the filing look-back period to 36 months. This means you would only have to file the last 36 months worth of sales tax returns, even if you otherwise would have had to file back further.
How to request penalty abatement for late sales tax payments
You can request penalty abatement online via the Georgia Tax Center. Have the Letter ID from your assessment ready. You can also print Form TSD-3, Request for Penalty Waiver, and mail it to the Department of Revenue.
The form requires you to provide a clear reason for your penalty waiver request, so be ready to explain why you could not comply with state tax laws. You can also provide additional documentation to back up your reason, for example, medical records to show that you were ill.
It is rare for state tax agencies to waive interest, but the Georgia Department of Revenue does allow for relief from interest if the delay in payment is the result of the DOR’s action or inaction.
Consequences Beyond Penalties and Interest
It is crucial to address your past-due sales and use tax as soon as possible, because the consequences can quickly escalate beyond just penalties and interest. The Georgia Department of Revenue reserves the right to rescind a business’s sales tax license if it continuously fails to file returns or pay its tax bill.
If efforts to collect taxes are unsuccessful, the Department may place a lien (or State Tax Execution) on the business’s assets or levy its assets to cover the amount due. A 20% collection fee will be added if the state must issue a State Tax Execution.
How to Avoid Sales Tax Penalties
With careful documentation, collection, and payment protocols, you can avoid unnecessary sales tax penalties that cut into your business’s profits. We recommend:
- Reviewing state tax laws regularly. Filing requirements may change at any point, and if they do, you are responsible for knowing your obligations as a taxpayer. By staying on top of changes as they arise, you can fulfill your obligations more easily.
- Keep in-depth records of sales tax you collect and pay. Comprehensive records of all taxable transactions and sales tax collections make filing and paying your tax return on time much easier. This also ensures you’re ready to provide paperwork in case of an audit.
- Use online resources to keep track of your payments and submissions. Your online account with the Georgia Tax Center can streamline many of your tax obligations. If you currently use paper records and filing procedures, look into using the Georgia Tax Center.
- Keep sales tax separate from other business funds. Since sales and use tax is a trust fund tax, it is owed directly to the state. The Department of Revenue does not allow it to be used for any other purpose. You may want to keep your sales tax in a separate account to simplify matters.
- Consult a tax pro to keep you on track. Many businesses start out by handling their taxes on their own, but as their operations grow and become more complex, this may no longer be feasible at some point. If you’re struggling to stay on top of your tax obligations and filing deadlines, a business CPA can save you time and money.
What to Do If You Cannot Pay Sales Tax on Time
First, make sure you file your sales tax return anyway. People often hold off on filing a return until they know that they can pay in full, but this just ramps up the amount you end up paying in penalties. Pay as much as you can afford when you file — a partial payment is better than nothing.
You can then reach out to the Georgia Department of Revenue to discuss options for your late payment — being proactive often gives you access to a wider variety of options. You may be able to seek relief via a payment plan or offer in compromise if you meet the requirements for either option.
Filing tax returns and paying on time must be a top priority for your business. Failing to meet these requirements can lead to excessive penalties, interest charges, and aggressive collection actions. Business owners wanting to learn more about their obligations can consult the Georgia Department of Revenue for in-depth information.
Are you worried about past-due sales tax returns and payments? We can help. Call Wiggam Law at (404) 233-9800 or schedule online to discuss your concerns with our team.
