The Multistate Tax Commission announced a special limited-time amnesty program for online marketplace sellers that will run August 17 to November 1, 2017. The program will allow qualified sellers in many states to collect sales tax on prospective sales without paying sales tax, interest or penalties on prior sales. The initiative is available for both sales/use tax and income/franchise tax.
This special disclosure program is available in these states:
- Will provide back tax liability relief for sales/use tax, but will require payment of back tax liability and interest for a four-year lookback period for income/franchise tax
- District of Columbia
- New Jersey
- North Carolina
- South Dakota
- Will require payment of back tax and interest for a lookback period starting January 1, 2015, for sales/use tax and the prior tax years of 2015 and 2016 for income/franchise tax
To participate in the program, taxpayers must meet various eligibility criteria, including:
- No prior contacts with the state’s taxing jurisdiction regarding the tax type for which the disclosure relief is requested
- The taxpayer is an online marketplace seller using a marketplace provider/facilitator (such as the Fulfillment by Amazon program or similar platforms or programs) and the taxpayer has no location, property, employees or agents in the state except for the online marketplace seller’s inventory stored in a third-party warehouse or fulfillment center located in the state or other nexus-creating activities of the marketplace provider/facilitator on behalf of the online marketplace seller in the state
- The taxpayer seeks relief from past-due sales/use tax, interest and penalties and, if applicable, income/franchise tax liability, interest and penalty in exchange for future compliance. Taxpayers must start collecting sales/use tax no later than December 1, 2017, or not later than 30 days after the taxpayer receives notice that the state has signed the voluntary disclosure agreement, whichever date is later. If subject to income/franchise tax, the taxpayer further agrees to file income/franchise returns on time and pay taxes due, commencing with the tax year including the effective date of the voluntary disclosure agreement, by December 1, 2017, or not later than 30 days after the taxpayer receives notice that the state has signed the voluntary disclosure agreement, whichever date is later
- The disclosure application includes an estimate of back-tax liability and the application is timely filed
The disclosure applications can be filed anonymously, and taxpayers may remain anonymous until the disclosure agreement is executed with the particular state. The states participating in this limited-time program have agreed not to disclose the identities of participating taxpayers to other taxing jurisdictions.
To learn more about this amnesty program, contact your BKD advisor.