Limited Time Only Amnesty Program for Remote Sellers
For the 60-day period between August 17, 2017 – October 17, 2017, select states are offering tax debt forgiveness to eligible taxpayers who voluntarily come forward and agree to begin collecting sales/use tax no later than December 1, 2017 and income/franchise tax starting with the 2017 tax year.
In an effort to promote prospective compliance, the Multistate Tax Commission (MTC) is offering a limited time, multi-state voluntary disclosure initiative for remote sellers that engage in “marketplace sales” through Amazon’s Fulfillment by Amazon (FBA) or other online marketplaces.
Nowadays, many retailers use Amazon or other third-party warehouses to store inventory and reach a larger customer population. What these retailers may not realize, however, is that storing inventory in a state creates nexus in that jurisdiction. And, by establishing nexus in a jurisdiction, those retailers also create an income/franchise tax filing responsibility and a sales tax collection and filing responsibility in the state.
If you are a remote seller who has established nexus through the use of a third-party warehouse or fulfillment center, you may benefit from this program. To take advantage of this limited-time offer, you must apply before October 17, 2017.
Which States are Participating?
Alabama, Arkansas, Colorado, Connecticut, Florida, Idaho, Iowa, Kansas, Kentucky, Louisiana, Nebraska, New Jersey, Oklahoma, South Dakota, Tennessee, Texas, Utah, Vermont, and Wisconsin. Please refer to the MTC website for the official list of Participating States.
About the Program
Unlike a typical voluntary disclosure program, which usually has a three to four year lookback period, the amnesty program requires prospective compliance only. (Exact terms of participation may vary by state.) There is no prior-year lookback period for sales tax liabilities, and income tax reporting begins for the tax year 2017.
While a number of states are participating the amnesty program, a taxpayer need not register in all states in order to take advantage of the amnesty program. The application can be submitted anonymously, and there is no specific information-sharing between states.
Interested? What’s Next?
If you are interested in this program, we encourage you to reach out to one of our professionals so that we can help you determine if this program is a good fit for your business. Our professionals can do more than help you initiate the process. We can also help you ensure eligibility requirements are met, evaluate where you have nexus (i.e., a filing responsibility), consider risks and opportunities with determining where to file, and help you fully understand the terms of the agreement.
This program will not be available after October 17, 2017. If you are interested in learning more, contact True Partners Consulting today.
Donald R. Bast