Can a repair seller avoid Georgia sales tax by accepting an unregistered coordinator's resale certificate or the truck owner's exemption certificate?

Plain-English summary

A truck-body producer also repaired its own and competitors' truck bodies. A separate customer coordinated repairs for truck owners: the owner contacted the coordinator, the coordinator arranged the work, the repair shop invoiced the coordinator, and the coordinator invoiced the owner. The coordinator never owned, touched, or used the truck and was not registered to collect Georgia sales and use tax.

The repair shop asked whether it could avoid collecting tax from the coordinator by accepting either the coordinator's resale certificate or an exemption certificate belonging to the truck owner.

The Department ruled no on both documents:

• The coordinator's resale certificate could not be accepted in good faith because the coordinator lacked a valid Georgia sales-tax number, could not fully complete the certificate, and did not appear to be in the business of making taxable repair or parts sales.
• The truck owner's exemption could not support the shop's sale because the shop's purchaser was the coordinator, not the owner. A seller may accept an exemption certificate from its purchaser under the good-faith rules, not a third party's exemption passed through by that purchaser.

The seller therefore could not use either certificate to establish that it was excused from collecting Georgia sales and use tax from the coordinator.

What this means for you

Repair shops and parts sellers

Follow the invoice chain. The customer you sell to must supply a properly completed certificate that reasonably applies to that customer's business and purchase. An end user's exempt status does not automatically pass through an intermediary.

Repair coordinators and service administrators

Coordinating and rebilling a repair does not itself establish a valid resale claim. Under the facts here, the coordinator's lack of registration and taxable-sales activity prevented good-faith acceptance of its certificate.

Sales-tax teams

Validate the registration number and retain the verification with the exemption document, as the ruling's footnote instructs. Georgia also requires supporting purchase and sales records to be kept for at least three years.

Common questions

Q: Can the repair shop accept the coordinator's resale certificate?

A: No. The coordinator could not fully complete it, lacked a valid Georgia sales-tax number, and did not appear to make taxable sales of repairs or parts.

Q: Can the coordinator give the shop an exemption certificate from the truck owner?

A: No. The coordinator was the shop's purchaser. The owner's third-party exemption did not document the transaction between the shop and the coordinator.

Q: What makes an exemption certificate acceptable in good faith?

A: The ruling lists requirements including completeness, the proper form, an exemption available for the transaction's date and jurisdiction, applicability to the item, and reasonableness for the purchaser's business.

Q: Who bears the burden if the seller lacks an acceptable certificate?

A: The seller bears the burden of proving the sale was for resale or exempt and remains responsible for collecting and paying the tax if it cannot do so.

Q: Can another repair business rely on this ruling?

A: No. The answer is limited to the requesting seller, purchaser relationship, certificates, and represented facts.

Citations and references

Statutes:

• O.C.G.A. § 48-8-2(31) -- retail sale and resale
• O.C.G.A. § 48-8-38(a)-(e) -- exemption certificates and good-faith acceptance
• O.C.G.A. § 48-8-52 -- minimum three-year record retention

Source

• Landing page: Georgia Sales & Use Tax Letter Rulings
• Original PDF: LR SUT-2017-16

Original ruling text

Georgia Letter Ruling Number: LR SUT-2017-16
Topic: Exemption Documentation
Date Issued: November 30, 2017
This letter is in response to your letter ruling request dated September 22, 2016 regarding the application of Georgia
sales and use tax to certain sales made by [Redacted] (“Taxpayer”).
Facts as Presented by Taxpayer
Taxpayer is a producer of truck bodies that are built and installed on the customer’s chassis. Taxpayer maintains parts
and service centers throughout the country that provide service and repairs for all truck bodies including truck bodies
produced by competitors.
Taxpayer has a customer, [Redacted] (“Customer”), who is not registered to collect sales and use tax in Georgia.
Customer coordinates repairs for truck body owners (“Owner(s)”). When a repair is needed, the Owner will contact
Customer who will then coordinate the repair with Taxpayer. When the repair is complete, Taxpayer will invoice
Customer for repair labor and parts. Customer then invoices the Owner. Customer coordinates truck body repairs
and does not own, touch, or use the truck being repaired.
Issue
Can Taxpayer, by accepting a resale certificate from Customer or by accepting an Owner’s exemption certificate from
Customer, establish that Taxpayer is not required to collect from Customer Georgia sales and use tax on the above
repair transactions?
Analysis
Georgia levies and imposes a tax (subject to certain exemptions) on the retail purchase, retail sale, rental, storage, use,
or consumption of tangible personal property and on certain enumerated services. 1 “Retail sale” means any sale, lease,
or rental for any purpose other than for resale, sublease, or subrent. Sales for resale must be made in strict compliance
with the Department’s rules and regulations. Any dealer making a sale for resale which is not in strict compliance with
the Department’s rules and regulations will be liable for and must pay the tax. 2
All gross sales of a retailer are subject to sales and use tax until the contrary is established. The burden of proving that
a sale is not a sale at retail is upon the seller unless the seller, in good faith, accepts from the purchaser a certificate of
exemption stating that the property is purchased for resale or is otherwise tax exempt. 3
A certificate is taken in good faith when a seller obtains from the purchaser a certificate:

1

•

That is fully completed, including, but not limited to, the name, address, sales tax number, and signature of
the taxpayer when required;

•

In a form appropriate for the type of exemption claimed;

•

Claiming an exemption statutorily available on the date of the transaction in the jurisdiction where the
transaction is sourced;

•

Claiming an exemption that could be applicable to the item being purchased; and

•

Claiming an exemption that is reasonable for the purchaser’s type of business.4

O.C.G.A. §§ 48-3-1 and 48-8-30.
O.C.G.A. § 48-8-2(31).
3
O.C.G.A. § 48-8-38(a).
4
O.C.G.A. § 48-8-38(b).
2

Georgia Letter Ruling Number: LR SUT-2017-16
Topic: Exemption Documentation
Date Issued: November 30, 2017
Page 2 of 2

A certificate is taken in good faith and relieves the seller from the burden of proof on sales made for resale when the
seller acquires a properly completed certificate from the purchaser and the purchaser:
•

Is engaged in the business of selling tangible personal property;

•

Has a valid sales tax registration number at the time of purchase and has listed his or her sales tax number on
the certificate; and

•

The seller has no reason to believe that the purchaser does not intend to resell it in his or her regular course
of business.5

An exemption certificate must include information as determined by the commissioner and must be signed by the
purchaser if it is a paper exemption certificate. A seller must obtain the same information for proof of a claimed
exemption regardless of the medium in which the transaction occurred. 6 Dealers must maintain records to support all
purchases and sales for a period of no less than three years. 7
As the seller, Taxpayer bears the burden of proving that a sale is a tax-free sale for resale or an exempt sale unless
Taxpayer takes from the purchaser a properly completed certificate pursuant to Georgia’s good faith standard. Based
on the facts provided, Taxpayer could not accept a resale certificate from Customer in good faith because Customer
is not engaged in the business of selling repairs or repair parts and because Customer does not have a valid Georgia
sales tax registration number to list on the sales tax number on the certificate. 8
Further, Taxpayer transacts business with Customer, not with Owners. Since a seller can only accept in good faith
properly completed exemption certificates from the purchaser under certain circumstances, Taxpayer could not, in
good faith, accept from Customer an exemption certificate which supports a third party’s exemption.
Ruling
Based on the facts provided, Taxpayer cannot, in good faith, accept a resale certificate from Customer because
Customer cannot fully complete the certificate and does not appear to be engaged in the business of making taxable
sales. Moreover, Taxpayer cannot, in good faith, accept an exception certificate from Customer, the purchaser, if the
exemption certificate asserts an Owner’s exemption because Customer, not Owner, is the purchaser. Since Taxpayer
cannot acquire such certificates in good faith, Taxpayer cannot use these documents to establish that Taxpayer is not
required to collect sales and use tax from Customer.
The opinions expressed in this ruling are based upon the information contained in your request and limited to the
specific transactions, facts, circumstances and taxpayer in question. The facts herein are those presented by the
taxpayer, and the Department accepts them as true for this ruling. If the facts presented herein change, are not true,
are different, or material facts have been omitted, the conclusions reached in this ruling may change. In addition,
subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this
advice is based may subject similar future transactions to a different tax treatment than that expressed in this ruling.

5

O.C.G.A. § 48-8-38(c).
O.C.G.A. § 48-8-38(d) and (e).
7
O.C.G.A. § 48-8-52.
8
To verify the validity of the Georgia sales tax number on a certificate, a seller must use the Department’s Sales Tax
Verification Tool, by selecting the “Sales Tax IDs” search option on the Georgia Tax Center (https://gtc.dor.ga.gov).
In addition, the seller must keep a copy of the verification with the exemption document.
6