Voluntary disclosure program for online sellers ends Oct. 17, 2017
Posted On: 8-23-2017 | Posted By: By Jessica Lehmen, CPA
The Multistate Tax Commission (MTC), an intergovernmental state tax agency working on behalf of states and taxpayers, has announced a voluntary disclosure program for certain online marketplace sellers who might have been remiss with some of their state tax filings.
Applications will be considered through October 17, 2017, so immediate attention for applicable online sellers is required.
Online marketplace sellers who use a marketplace provider/facilitator – such as the Fulfillment by Amazon program – but have not been filing state taxes in the states where the provider/facilitator has been storing the seller’s inventory potentially qualify for the program.
Over the last few years, it has been very difficult for sellers to keep track of state nexus in the ever-changing world of online selling. When a seller enlists a marketplace provider/facilitator to help facilitate a sale and that provider stores the seller’s inventory in a state, that state will likely claim the seller has state tax nexus due to the physical presence of the seller’s inventory. Sellers often haven’t been filing sales, use, income, or other state taxes in those states for a variety of reasons, one of which may be that they have not always been aware of the locations of their inventory held by the providers.
Many states have had some sort of voluntary disclosure program for years. Usually, taxpayers are required to file back returns for a few years but in return are often given protection on older, unfiled years and are not required to pay the full amounts of penalties and interest that would normally be assessed on late returns. This program is unique because unlike most voluntary disclosure programs, many of the states participating do not require filing of prior year returns. Twenty-four states are participating in some form of this program.
There are many factors to consider in preparing an application for the program, so please contact your WK advisor at (573) 442-6171 or (573) 635-6196 to discuss how you might proceed if you think this might apply to you.