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Limited Time Voluntary Disclosure Program for Remote Sellers

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Businesses selling products online through a marketplace may create nexus and a filing requirement in a state by using a fulfilment service (such as Amazon FBA). This is because states have been interpreting the presence of the business’ inventory, even when stored by a third party, to be a physical presence of that business in that state, which creates nexus.

Most states require the filing of sales/use tax returns back to when nexus was first created. This can result in a large assessment if the business has significant sales, as several years may be assessed along with penalties and interest. In an effort to help these businesses come into compliance, the Multistate Tax Commission (MTC) is offering a voluntary disclosure program running now through Oct 17, 2017. The benefits and requirements of the program are:

  • A separate application is required for each state, which means businesses can choose where they want to apply and register.
  • Qualifying businesses must not have any other nexus creation in a state except maintaining inventory in a marketplace provider/facilitator’s warehouse.
  • Qualifying business have not previously been registered, filing, or contacted by the state in question regarding these taxes.
  • Applications must be submitted electronically and include good faith estimates of sales/use taxes owed for the prior four years.
  • Any collected but unremitted sales/use taxes are not covered by the program, and penalties and interest will apply.

Full details of the program, and state specific requirements can be found on the MTC website. Applications should be submitted in advance of the deadline, and can be filed anonymously. Currently the following states have indicated they are participating, but visit the MTC website for the most up to date list.

Participating states: AL, AR, CO, CT, DC, FL, ID, IA, KS, KY, LA, MA, MN, MO, NC, NE, NJ, OK, SD, TN, TX, UT, VT, and WI.

If you have any questions about the requirements or benefits of the limited time Voluntary Disclosure Program, please contact your Berntson Porter representative at 425-454-7990. We’re here to help!