What you need to know about the Amazon FBA and Ecommerce Sales Tax Amnesty Program
Many Illinois businesses that sell goods online also use third-party facilitators in far-flung states to help fulfill orders. While positioning and distributing inventory around the country certainly brings efficiencies such as reduced shipping costs, it can also create a “nexus” with those states that can lead to potential state sales tax liabilities.
Fortunately, businesses facing such exposure have the opportunity to participate in an amnesty program that could result in the forgiveness of those obligations. But the time to act is short: businesses seeking to participate in the Multistate Tax Commission’s (MTC) Online Marketplace Seller Voluntary Disclosure Initiative must submit their applications by October 17, 2017.
What states are participating?
Any e-commerce or other business which may have a nexus in any of the 25 states participating in the amnesty program should first consult with an accounting professional who can discern whether any potential liability exists for past-due sales tax. If there is even a possibility that one of those states could attempt to recover previously due amounts, participating in the amnesty program is a good idea. Eligible businesses will be able to apply to start remitting sales tax on sales going forward without incurring any penalties or liability for unpaid, prior accumulated sales tax.
The states participating in the National Nexus Program are:
- 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
- Wisconsin
Does your company qualify for this sales tax amnesty?
To participate in the amnesty program, a business must meet the following general eligibility criteria as set forth by the MTC:
- The taxpayer has not yet registered with the state taxing authority, filed returns with such state for the tax type that the taxpayer is seeking voluntary disclosure relief for (sales/use tax, income/franchise tax, or both), made payments of such taxes to, or had any other prior contact with the state concerning liability or potential liability for such tax type.
- The taxpayer is an online marketplace seller using a marketplace provider/facilitator (such as the Amazon FBA program or similar platform or program) to facilitate retail sales into the state and represents that it does not have any nexus-creating contacts 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 performed by the marketplace provider/facilitator on behalf of the online marketplace seller in the state.
- The taxpayer is seeking relief from any past due sales/use tax, including interest and penalties, and if applicable, income/franchise tax liability, including interest and penalties, in connection with its online retail sales activity in the state, except for sales/use tax collected but not remitted, with the taxpayer agreeing to register as a seller or retailer with the state and timely collect, report and remit sales/use tax and file returns on all taxable retail sales to customers in the state prospectively as of the effective date of the voluntary disclosure agreement.
Learn more about the sales tax amnesty program.
The are many nuances to the amnesty program which vary from state to state and other specifics which may be relevant to a taxpayer’s individual circumstances. You can learn more about the program on the MTC’s website, and please feel free to contact us with any questions you may have about submitting an application. We welcome the opportunity to assist you.