A tax amnesty program for online marketplace sellers that began Aug. 17, 2017, concludes today, November 1, 2017.
The online marketplace seller voluntary disclosure initiative was designed to encourage voluntary collection of sales or use tax and/or income or franchise tax in one or more of the 25 participating states. It’s open only to out-of-state marketplace sellers (e.g., Fulfillment by Amazon, or FBA, sellers) that have inventory stored in a participating state(s) — in a marketplace provider’s fulfillment center, warehouse, or shipping facility — but that aren’t collecting and remitting the state’s tax. Generally, having a physical presence in a state establishes nexus, a tax obligation.
Under the terms of the voluntary disclosure initiative, participating states will waive some or all back sales/use tax, income/franchise tax, or both for applicants that register with the state and collect and remit applicable taxes as of Dec. 1, 2017 — or not later than 30 days after receiving notice that the state(s) has signed the voluntary disclosure agreement. Check out these FAQs for more details.
Third-party vendors interested in taking advantage of this opportunity have until the end of Nov. 1 to submit an application to the Multistate Tax Commission National Nexus Program, which is administering the voluntary disclosure initiative for Alabama, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Idaho, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, Missouri, Nebraska, New Jersey, North Carolina, Oklahoma, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, and Wisconsin.
The online marketplace seller tax amnesty program affords a unique opportunity for sellers to clear themselves of potential back tax liability in the participating states. However, qualifying sellers should not apply without considerable consideration: Once granted amnesty, businesses will have to comply with state tax laws moving forward.