New tax code requires online retailers to collect sales tax

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ATLANTA - Online retailers selling in Georgia are now required to collect sales tax.

This is one of many recent changes to the tax code that stand to impact nearly every Georgian.

The online sales tax law went into effect Monday, and aims to give local "brick and mortar" retailers equal footing.

Local business owner Bob Khoury told Channel 2's Carl Willis that he is fed up with a practice called show-rooming.

That is where customers visit stores to check out merchandise with no intent to buy there on the spot.

"We have people come in here, look at the product, pick the brains of my salespeople to find out exactly how it works,"said Khoury.

Then they walk right out and buy it online, because they don't have to pay sales tax.

"We're very much behind the eight-ball because any company that's selling into the state of Georgia at this time has an automatic 8 percent advantage over myself," said Khoury.

The new law is intended to eliminate that advantage over Georgia companies that have to pay state income tax, property tax and sales tax.

"This is a big step," said tax attorney George Abney with the Chamberlain Hrdlicka Law Firm. "Only a handful of states have done this and Georgia is on the cutting edge of trying to impose the taxes against online retailers."

The law requires online retailers to pay sales tax even if the only physical presence in the state is an ad on a Georgia-based website or an affiliate.

Opponents argue these that affiliate business will just pack up and move to neighboring states and negatively impact the state's economy.

"I think there have been some threats of that, but I don't think that's ever happened in any of the other states," said Abney. "I think most of the big online retailers would like to keep selling in Georgia despite the new tax that's going to be imposed."

On the other side, Georgia consumers may not see the same savings from shopping certain websites.

"It might be something they're not too happy with," said Abney. "But I think most business owners will be happy with it."

Some local business owners, including Khoury, said a federal version of the law is still needed.



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