09.13.2017 | Berdon Industry Insights
Deadline: October 17, 2017
The Multistate Tax Commission (MTC) instituted a limited two-month Voluntary Disclosure Program on August 17, 2017 that concludes on October 17, 2017. The program is open to taxpayers utilizing an online marketplace, such as Amazon FBA (Fulfilled by Amazon), who do not have any other nexus in the participating states other than the marketplace provider storing inventory and fulfilling orders on behalf of the taxpayers in such states.
Twenty-five states are participating in the program, including New Jersey and Connecticut. Under the program, participating states will waive past due tax, penalties, and interest for eligible taxpayers. The program is designed for taxpayers who have not collected tax in the participating states. However, taxpayers who collected but did not remit sales or use tax to the participating states must remit tax, penalties, and interest. Additionally, the program covers both sales/use and income/franchise taxes.
Eligible taxpayers are online marketplace sellers who use a marketplace provider (e.g., Amazon or Etsy) to list or advertise their products for sale on the provider’s website and utilize the provider to collect payments from customers. Generally, under a traditional voluntary disclosure program, the taxpayer will be required to file returns and pay any tax liability, plus interest, for the lookback period enforced by each state. The state will then typically waive tax liability, interest, and penalties for the time period prior to the lookback period.
Under this MTC voluntary disclosure program, taxpayers who meet the above criteria will be eligible for waiver of sales/use and income/franchise tax liabilities, including penalties and interest, for prior tax periods without regard to any lookback period. In exchange, the taxpayer will agree to register as a seller/retailer to collect, report and remit any applicable sales/use and income/franchise tax due for the period beginning no later than December 1, 2017.
The MTC has created an online application form for taxpayers to complete and submit before the applicable deadline. Taxpayers can choose which states and tax type they want to apply for if they do not want to apply in all twenty five participating states. Additionally, applicants can apply anonymously and are not required to disclose their identity until an agreement with the MTC is executed and the taxpayers have registered with each applicable state.
If you believe you are eligible or have any questions, please contact your Berdon advisor.
Berdon LLP, New York Accountants