Multistate Tax Commission Offers Online Sellers Rare, Complete Tax Forgiveness – September 27, 2017

Posted by Patrick Walsh, CPA, MAcc

The Multistate Tax Commission is offering a rare tax amnesty program for certain online marketplace sellers through October 17, 2017. The program waives all tax, penalties and interest from prior years related to income/franchise taxes and sales/use taxes.
 
The Fulfillment by Amazon, or FBA, program has banded together 23 states in a joint effort to attract sellers who do not currently file within a state for income/franchise tax or sales/use tax purposes. The program is available for any online seller that keeps inventory at a third-party fulfillment facility or warehouse, such as Amazon or eBay. Most online sellers meeting this definition will qualify for the FBA program — unless the taxpayer has previously established a filing requirement in the state. Additionally, the FBA program allows the taxpayer to choose either or both tax types when requesting forgiveness.
 
The following states are included in the FBA program offering waived back taxes without limitation:

  • Alabama
  • Arkansas
  • Connecticut
  • Florida
  • Idaho
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Missouri
  • New Jersey
  • North Carolina
  • South Dakota
  • Oklahoma
  • Tennessee
  • Texas
  • Utah
  • Vermont 

It is unique that a tax amnesty program offers complete forgiveness of all income/franchise and sales/use taxes owed for past years including penalties and interest. Typically, such programs require a taxpayer to file a voluntary disclosure agreement, or VDA, to become compliant with a state. However, a VDA only allows for reduced penalties and interest along with payment in full of all back taxes. Certain states not included under the FBA program but that are offering reduced penalties and interest, such as in a VDA, include: 

  • Colorado
  • Massachusetts
  • Minnesota
  • Nebraska
  • Washington DC
  • Wisconsin 

Taxpayers wishing to participate in the FBA program will need to act fast. The program is only accepting applications through October 17th. Contact a member of your state and local tax team for assistance in weighing your options.
 
Cohen & Company is not rendering legal, accounting or other professional advice. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts and circumstances