Voluntary disclosure for online sellers offered in 24 states

Between now and Oct. 17, 2017, the Multistate Tax Commission (MTC) is offering a voluntary disclosure program for certain online marketplace sellers that use marketplace providers to facilitate sales into a state, such as Fulfillment by Amazon (FBA) or similar platforms. The program is available and provides relief for sales/use tax, income/franchise tax or both, and includes related interest and penalties. Currently, 19 jurisdictions are participating for all tax periods and another five — Colorado, District of Columbia, Massachusetts, Minnesota and Wisconsin — are providing their own specific requirements pertaining to lookback periods.

Participating states: Alabama, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Idaho, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, Missouri, Nebraska, New Jersey, North Carolina, Oklahoma, South Dakota, Tennessee, Texas, Utah, Vermont and Wisconsin.

Eligibility: To be eligible to participate in this program, the taxpayer must:

  • not be registered with the state taxing authority, nor filed tax returns, made payments or had any other prior contact with the state regarding the tax liability;
  • use a marketplace provider to facilitate sales into a state where it does not have physical nexus, except for the inventory stored in a third-party warehouse or fulfillment center, or other nexus-creating activities of the marketplace provider on behalf of the online marketplace seller in the state;
  • timely apply;
  • register for sales/use tax with the state, timely collect, report and remit the tax, and file returns on all taxable sales to customers prospectively as of the effective date of the voluntary disclosure agreement (VDA), but not later than Dec. 1, 2017; and
  • agree to file income/franchise tax returns and pay taxes due commencing with the tax year including the effective date of the VDA, but not later Dec. 1, 2017.

If the taxpayer has any collected but unremitted sales/use tax, then the taxpayer agrees to remit such tax to the state, including penalties and interest.

Confidentiality: A taxpayer will not be required to disclose its identity until the execution of the VDA and registration with the state. Participating states have agreed not to disclose the identity of taxpayers applying for this VDA program to other jurisdictions, except as required by law, pursuant to a court order or in response to an inter-government exchange of information agreement.  

For more information on this topic, or to learn how Baker Tilly tax specialists can help, contact our team.