The US sales tax regime is complicated as a seller is required to collect and remit taxes in each state where they have a ‘nexus’. A ‘nexus’ is place of business, but can be complicated if you for instance us Amazon FBA and your products are stored in multiple states for taxation purposes. This has led to many sellers potentially having tax liabilities for which they’ve filed no returns and not only the tax but also penalties for late filing and payment are due.
Following discussions as this year’s Prosper Show in the US, a number of US States have come together to offer an amnesty for Amazon sellers who may not have been remitting the sales tax due on their activities.
The Multistate Tax Commission in conjunction with 13 member states have announced the rollout of the sales tax amnesty program aimed at helping online sellers to become compliant with sales tax nexus regulations. The amnesty runs from the 17th of August 17 until the 17th of October 2017.
The Multistate Tax Commission’s voluntary disclosure agreement provides a way for taxpayers with potential sales tax liability to negotiate a settlement. Taxpayers that have not been previously been contacted by any of the participating states will be able to apply to start remitting sales tax on relevant future sales without penalty or liability for unpaid, prior accumulated sales tax in the participating states.
Eight additional States are considering participation with confirmation due before the 17th of August amnesty start. Some of these additional states may require a limited look-back period for back tax liability. To participate, during the amnesty period sellers must file multi-state voluntary disclosure program paperwork with the Multistate Tax Commission.
States which have confirmed their participation are: Alabama; Arkansas; Colorado; Connecticut; Kansas; Kentucky; Louisiana; Nebraska; New Jersey; Oklahoma; Texas; Utah; and Vermont. Moving forwards, the taxpayer is required to file returns, pay the tax due under the returns, and register with the State (if required) in return for waiver of penalty for the duration of the look-back period, as agreed in the voluntary disclosure agreement.
Updated 7th August 2017
Since publication the number of participating States has increased to 15 with the addition of Idaho and Iowa