South Carolina Goes After Amazon as Marketplace Facilitator | All Internet Retailers and Marketplace Providers Under Attack

WARNING: All Internet retailers and marketplace providers should pay attention.

South Carolina is going after Amazon (the marketplace facilitator) for not collecting sales tax on behalf of the businesses that use the marketplace to sell products to SC residents (see CNBC article, "Amazon faces a tax fight in South Carolina that could change how online sellers do business").

This is a very interesting development since the Multistate Tax Commission is trying to get retailers that sell through marketplace facilitators to collect sales tax (see MTC Voluntary Disclosure initiative).

According to the CNBC article, "South Carolina is arguing that under state law, Amazon is considered the seller because the company controls a large part of the sales process for its third-party merchants."

Each state has different imposition statutes and ability to reach a conclusion that South Carolina is attempting to reach. But as the article suggests, if South Carolina is successful, other states will play the copycat game; OR perhaps South Carolina is the one playing the copycat game, since Minnesota, Washington and Rhode Island recently passed legislation to impose sales tax collection responsibilities on marketplace providers.

Minnesota and Washington laws are already under attack (see BNA articles, "Minnesota Marketplace Law Ripe for Legal Challenge" and "Washington’s Marketplace Sales Tax Law Heading for Battle"). Washington's definition of seller “includes marketplace facilitators, whether making sales in their own right or on behalf of marketplace sellers, and referrers.” Rhode Island describes marketplace providers as "retail sale facilitators." Check out Rhode Island's website for more notices and details.

All of the above is going on at the same time that states are imposing burdensome use tax notice and reporting requirements on retailers that are NOT currently collecting sales tax (because they don't have a legal obligation to do so). Consequently, states are forcing retailers to simply take the easier compliance task of collecting and remitting sales tax (versus complying with use tax notice and reporting requirements). 

It's a whole new world where states are trying to get sales tax revenue from anyone and everyone. Stay tuned.

MTC Voluntary Disclosure Initiative for Online Marketplace Sellers (i.e., Amazon FBA program)

If you sell products via Amazon, and have inventory in Amazon warehouses, please pay attention.

The Multistate Tax Commission is offering a special limited-time voluntary disclosure initiative for online marketplace sellers, in which the following states are participating:

• Alabama
• Arkansas
• Colorado 
• Connecticut
• Florida
• Idaho
• Iowa
• Kansas
• Kentucky
• Louisiana
• Nebraska 
• New Jersey
• Oklahoma
• South Dakota 
• Tennessee
• Texas
• Utah
• Vermont
• Wisconsin

The States listed above will consider applications for voluntary disclosure received by Multistate Tax Commission (MTC) staff during the time period August 17, 2017 through October 17, 2017 from taxpayers meeting the eligibility criteria.

PLEASE BE CAREFUL and READ ALL OF THE CRITERIA to AVOID UNINTENDED CONSEQUENCES.

For all the details, check out the MTC's website.

Many CPA firms and consultants have been publishing alerts regarding this matter (KPMG and Deloitte have some good summaries). The question remains - SHOULD YOU TAKE ADVANTAGE OF IT?

MOST participating states have agreed to forego any tax, penalty, and interest for prior periods in return for participating sellers beginning to collect and remit sales and use tax by December 1, 2017, and beginning to file income / franchise tax returns for the 2017 tax year. Consequently, there is no lookback period in MOST cases. This is a reason to do the program. Generally, voluntary disclosure programs require 3 to 4 year lookback periods requiring taxpayers to remit taxes and interest for the previous 3 or 4 tax years.

NOTE:

• Colorado will waive any back tax liability for uncollected sales/use tax. However, Colorado will not waive back tax liability for income tax beyond its normal four-year lookback period. Colorado notes that it already has a small seller income tax nexus exception for sales less than $500,000 into the state. 
• Nebraska will consider waiving back tax liability for uncollected sales/use tax and income tax. 
• South Dakota imposes sales/use tax but does not impose income tax. ↩
• Wisconsin will require payment of  back tax and interest for a lookback period commencing January 1, 2015 for sales/use tax, and including the prior tax years of 2015 and 2016 for income/franchise tax.

I don't care if you consult with me, BUT PLEASE consult a qualified state tax professional before utilizing this program. Good consultants to contact include: Dillon Tax Consulting, Yetter Tax Consulting, PrietoDion Consulting Partners LLC, Gable Tax Group, or Miles Consulting Group.

20 State Tax & Business Developments You May Want to Know - August 14, 2017

The following are state tax and business developments I have curated since August 9th, and posted in the LEVERAGE SALT LinkedIn group:

1. Cook County’s Sweetened Beverage Tax effective August 2, 2017; first returns due September 20, 2017

2. State Rundown 8/9: And Then There Were Three

3. Are You Prepared for Oregon’s Move to Market Sourcing?

4. Delaware releases amended draft unclaimed property regulations

5. Foxconn Deal Will Put Wisconsin in Red for At Least 25 Years

6. New York Broker-Dealer Tax Stance Likely to Spark Pushback

7. Mississippi’s Sales Tax Regulatory Smorgasbord Continues—Internet Sellers and Commercial Contractors on the Menu!

8. Dark Property Theory: A balanced review of key components used in property tax appeals

9. When Incentives Matter, Oklahoma’s a Safe Bet

10. Big Data, Big Moves, Big Merger

11. Higher Taxes In a High Tax State Are Highly Problematic

12. Oklahoma Emergency Rules Implement Upcoming Three-Month Amnesty Program that Begins September 1

13. State conformity to federal provisions - Exploring the variances

14. MTC National Nexus Program Now Offering Online Marketplace Seller Voluntary Disclosure Initiative

15. New Rhode Island Law Requires Implementation of 75-Day Amnesty Program Providing for Potential 100 Percent Penalty Waiver and Reduced Interest Due

16. District of Columbia Budget Legislation Codifies Unincorporated Business and Franchise Tax Rate Reductions

17. Minnesota Supreme Court Affirms that Foreign Disregarded Entity Income and Apportionment Factors are Properly Included in Combined Return

18. New York Releases New Guidance for Receipts Factor Methodology for the Owners of SMLLCs That Are Registered Broker-Dealers

19. Pennsylvania DOR Holds that Certain Online Information Retrieval Products Constitute Taxable TPP

20. New Rhode Island Law Contains Economic Nexus Provisions, Information Reporting and Notice Requirements

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LS to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a fixed-fee or subscription basis. Contact me at strahle@leveragesalt.com.

27 State Tax & Business Developments You May Want to Know - August 9, 2017

The following are state tax and business developments I have curated since August 2nd, and posted in the LEVERAGE SALT LinkedIn group:

1. Michigan enacts Good Jobs for Michigan incentive program

2. California extends partial sales and use tax exemption for manufacturing and research and development equipment

3. Finishing SALT: Inside SALT’s Monthly Recap

4. Strategies for Managing State Debt

5. State Rundown 8/2: Legislative Tax Debates Wind Down as Ballot Initiative Efforts Ramp Up

6. Where States Get Their Money

7. Marketplace Seller Past Taxes Potentially Pardoned Under Plan

8. Board of Tax Appeals Decision a Real CATastrophe for Georgia-Based Wholesaler

9. California Appellate Court – Stock in a company that was integral to taxpayer’s business may be converted to nonbusiness investment prior to its sale

10. Texas Comptroller Revises Its Policy on Business Loss Carryforwards

11. New York City Tax on Rents Causing Trouble

12. Delaware Department of Finance Issues a Revised Proposed Reporting and Examination Manual

13. Minnesota Supreme Court - Disregarded foreign entity included in domestic owner’s combined group for pre-2013 years

14. CORPORATE CLOSE-UP: WHEN IS OWNERSHIP OF A SUBSIDIARY’S STOCK INTEGRAL TO A TAXPAYER’S TRADE OR BUSINESS?

15. Rhode Island Adds Requirements for Remote Retailers

16. Rhode Island Authorizes Tax Amnesty Program

17. Oregon Repeals Functional Test for Apportioned Income

18. Oklahoma Tax Amnesty Rules Issued

19. Ohio’s Commercial Activity Tax Applies to Forward Contracts

20. August 04, 2017 Illinois Appellate Court Issues Decision on Temporary Storage Exemption

21. Eversheds Sutherland SALT Shaker: July 2017 Digest

22. Finishing SALT: Inside SALT’s Monthly Recap

23. MTC Offers 16 State Marketplace Seller Amnesty Initiative

24. Pennsylvania Letter Ruling Holds Information Retrieval Products (online research services) Subject to Sales Tax

25. Rhode Island Issues Sales Tax Notice to "Retail Facilitators"

26. Check out Rhode Island's Site for Various Sales Tax Notices to Remote/Online Retailers/ Facilitators/Referrers, etc.

27. State sourcing income rules and considerations for hedge and private equity funds

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LS to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a fixed-fee or subscription basis. Contact me at strahle@leveragesalt.com.

30 State Tax & Business Developments You May Want to Know - August 2, 2017

The following are state tax and business developments I have curated since July 27th, and posted in the LEVERAGE SALT LinkedIn group:

1. If you are not using checklists, what are you waiting for?

2. New York Petitioner asks whether its "Cloud Collaboration Service" is subject to sales tax and whether it owes any sales or use tax on its purchase of hardware and software.

3. YOUR SOURCE FOR ILLINOIS INCOME TAX GENERAL INFORMATION LETTER RULINGS

4. YOUR SOURCE FOR ILLINOIS SALES TAX GENERAL INFORMATION LETTER RULINGS

5. YOUR SOURCE FOR TENNESSEE TAX RULINGS

6. Comments on Today’s Joint Statement on Tax Reform

7. Testimony: The Role of Congress in State Taxation

8. Hawaii Hikes Income Taxes to Pay for Earned Income Credit

9. Governor Signed 2017–2019 Washington State Operating Budget and Compromise Legislation

10. MTC Nexus Committee Considering Voluntary Disclosure Proposal for Online Sellers with Inventory

11. New Hampshire Releases Reference Guide for Changes to Business Profits Tax and Business Enterprise Tax

12. DC Emergency Legislation Codifies Unincorporated Business & Franchise Tax Rate Reductions

13. Subcommittee within House Judiciary Committee Discusses Proposed Legislation that Would Codify a Physical Presence Nexus Standard

14. Colorado DOR Issues Proposed Amended Remote Seller Notice and Reporting Regulation

15. Virginia Department of Taxation Rulings Reflect New Law Requiring Remote Sellers with In-State Inventory to Register and Collect Tax on In-State Sales

16. New Hampshire DOR Administration Holds Proposed Merger Involving LLCs is Not Exempt from Transfer Tax

17. Washington DOR Explains How Credit Card Processors Measure Gross Income from Processing Credit Card Transactions for Business and Occupation Tax Purposes

18. California FTB Issues Guidance on Eligibility for OSTC when Filing a Composite Return in a Reverse Credit State

19. Director’s Update on Nexus Law Developments since December 13, 2016

20. Nexus Program Director’s Update on Significant Nexus Law Developments Since March 9, 2017

21. Consideration and possible action on Report (including draft agreement form) from closed session teleconference meetings held on April 18, May 16, June 20, and July 18, 2017 regarding time-limited vol

22. National Nexus Program (NNP) Director’s Report for FY 2017

23. Implications of Federal Partnership Audit Rules for State and Local Taxation

24. SALT Alert! 2017-14: Washington State: Sales and Use Tax Economic Nexus/Use Tax Notice Bill Enacted

25. California: Additional Guidance on California Competes Tax Credit and Market-Based Sourcing

26. INDIVIDUAL INCOME TAX INSIGHTS: DOMICILE IS IN THE DETAILS

27. CORPORATE CLOSE-UP: FEDERAL TAX REFORM PROPOSALS MAKE STATES LOOK IN THE MIRROR

28. Unfair Apportionment: Consider the Alternatives

29. Procedural State Tax Issues: Part I Finding the Best Forum

30. Procedural State Tax Issues: Part II Coordinating Multistate Litigation

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LS to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a subscription basis. Contact me at strahle@leveragesalt.com.

20 State Tax & Business Developments You May Want to Know - July 27, 2017

The following are state tax and business developments I have curated since July 25th, and posted in the LEVERAGE SALT LinkedIn group:

1. UPCOMING WEBINAR: Indirect tax and the Internet of Things: Where could convergence impact your organization?

2. New bill would stymie state taxation of online sales

3. California Supreme Court Increases the Cost of M&A Deals in Expansive Real Estate Transfer Tax Decision

4. Pa. Senate could revisit budget Wednesday

5. Georgia Senators Reviewing Corporate, Personal Tax Breaks

6. Is your firm filled with open-minded people?

7. Vanilla. Tastes good, but it’s a bad way to market.

8. Oregon Passes First-in-Nation Statewide "Predictive Scheduling" Law

9. Key Property Tax Appeal Dates: July, August, and September Deadlines

10. States Clear Path for Truck Platooning: First Step to Fully Autonomous Vehicles

11. The Middle Market Reports Solid Growth in Q2 2017

12. The New Age of Cyber Crime

13. Circle of Outsiders

14. 2017 WORLD'S MOST COMPETITIVE CITIES

15. Texas - Economic Development Guide

16. COST Issues Letter of Amicus Curiae in North Ardmore v. County of Los Angeles (Real Estate Transfer Tax

17. THE STATE OF FEDERALISM TODAY

18. State Legislatures Magazine - check out this site (interesting)

19. State Rundown 7/27: State Legislative Debates Winding Down but Tax Talk Continues

20. Trump Administration, Republican Congressional leaders release statement on tax reform goals

The above represents 'general curating' of state tax developments into one spot. If you still feel overwhelmed by the volume of state tax developments, please consider my 'custom curating' service. Meaning, clients hire LS to daily curate state tax developments relating to a specific industry, state(s), tax type and issue. You can make it as granular as you prefer. This allows you to reduce information overload, and only get the information you need to help your clients or company. This service is provided on a subscription basis. Contact me at strahle@leveragesalt.com.