Amazon sellers may be able to avoid paying back sales taxes through a temporary amnesty program in certain states that runs through November 1, 2017 (originally set to expire on October 17, 2017). With online sales, merchants are not required to collect sales tax if they don’t have a physical presence in a particular state. Amazon complicates matters since the Fulfillment by Amazon (FBA) program lets sellers pay a fee to use Amazon’s warehouses and in many cases ship its goods. For businesses that use FBA, their inventory could get shipped to warehouses in certain states, triggering the sales tax (as well as an income tax) requirement. This program could help clients with some of this tax burden in states with significant sales tax exposure.
Alabama, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Idaho, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Minnesota, Missouri, Nebraska, New Jersey, North Carolina, Oklahoma, Rhode Island, South Dakota6, Tennessee, Texas, Utah, Vermont, and Wisconsin are participating in the program (through the Multistate Tax Commission) to offer this sales tax amnesty program for online merchants who sell on Amazon and other sites. Sellers with potential tax liability in the above mentioned states can sign up with the Multistate Tax Commission (MTC), enabling them to become compliant with sales tax. The program is prospective in most states for sales taxes whereby companies would pay taxes only on future sales. In some states, a Company may still be required to file and pay income taxes for up to four years. In order to participate in the program, a voluntary disclosure form would be filled out through the MTC, and indicate which specific states you want to pursue through this amnesty.
For more information on how any of these changes might impact you or your business, please contact your tax advisor or Faith Gorman, Director – State & Local Tax, at [email protected].
Please note this is an update to an article originally published August 7, 2017. Please click here to access the original article.