Sales Tax Amnesty for Online Marketplace Sellers
Online marketplace sellers have a huge opportunity for sales tax amnesty in several states, which will save sales tax plus penalties, plus interest!
This is especially important for Amazon FBA (fulfilment by Amazon) sellers who have stock in up to 25 different states with Amazon FBA locations.
Your stock located in an FBA warehouse creates nexus for sales tax in each state. Most Amazon FBA sellers were under the impression that you only have to collect and remit in your home state.
Foreign sellers felt they were covered by a US Federal Tax treaty and collecting and remitting US sales tax was not required. Both groups were incorrect.
The Multistate Taxation Commission has negotiated with the 23 states (and D.C.) listed below to waive sales tax + penalties + interest (in most cases) in exchange for Online Marketplace sellers coming forward between August 17th and October 17th and agreeing to collect and remit sales tax moving forward from December 1st.
This is a huge opportunity in several states that are FBA states for Amazon third party FBA sellers.
The Multistate Tax Commission National Nexus Program is offering a special limited-time voluntary disclosure initiative (described below), in which the following states are participating:
12 FBA Amnesty States:
- Colorado 
- Massachusetts 
- Minnesota 
- North Carolina
- New Jersey*
- Wisconsin* 
11 Amnesty Non-FBA States (and D.C.): You will only need Amnesty if you have used another third party shipping company to ship products in these states. If one of these states is your home state you are not able to file for Amnesty. It is likely if you sell only on Amazon FBA, you will NOT be filing for Amnesty in any of these states listed below.
- District of Columbia
- Nebraska 
- South Dakota 
Note: See footnotes for Wisconsin and Colorado. Wisconsin will require payment of back tax liability and interest for the following look back periods: for sale/use tax, commencing January 1, 2015; for income/franchise tax, including tax years 2015 and 2016. The look back period will be limited to prior years during which the marketplace seller had nexus. Colorado will provide back tax liability relief for sales/use tax, but will require payment of back tax liability and interest for a 4-year look back period for income/franchise tax. 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 look back period. Colorado notes that it already has a small seller income tax nexus exception for sales less than $500,000 into the state.
 D.C.’s standard look back period is 3 years for sales/use and income/franchise tax. D.C. will consider granting shorter or no look back period for applications received under this initiative.
 Massachusetts requires compliance with its standard 3-year look back period; this look back period in a particular case may be less than 3 years, depending on when vendor nexus was created
 Minnesota’s customary look back period is 3 years for sales/use tax and 4 years (3 look-back years and 1 current year) for income/franchise tax. Minnesota will grant shorter look back periods to the time when the marketplace seller created nexus.
 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 look back period commencing January 1, 2015, for sales/use tax, and including the prior tax years of 2015 and 2016 for income/franchise tax.
There are several important points for you to consider in order to move forward with this Amnesty program, which would be filed through MTC.gov.
First, you need to determine if you are eligible for the Amnesty program. Here are the basic eligibilities:
- The taxpayer has not yet registered with the state taxing authority, filed returns, nor applied for a sales tax permit…
- The only nexus in a state is using a third party fulfillment center (not a home state, or state with an office or team).
- The taxpayer files for Amnesty during the August 17- October 17th time frame.
- The taxpayer applies for a sales tax permit on or before December 31st after the Amnesty agreement has been accepted by the state.
- The taxpayer agrees to file sales tax from December 1st on.
In order to take advantage of this Amnesty Program, there are several key questions and factors to consider:
- In which states do you qualify for Amnesty?
- Determining how to calculate your tax liability in each state is easy: your state sales subject to sales tax multiplied by the state sales tax rate.
- How to determine your income and franchise tax liability in each state which may also be part of Amnesty?
- What is your time frame and timing to apply for sales tax permits (which are required after filing Amnesty)?
- What happens if you don’t apply for a sales tax permit by the December 1st deadline?
- What options do foreign FBA sellers need to consider in order to meet the time frames when many states require your application to be mailed to a state?
- What other services will a foreign seller require to make this a streamlined process (especially when it comes to applying for sales tax permits)?
- How do you handle other states you are behind on that are NOT a part of the Amnesty program?
The great news is that becoming a member of Sales Tax System will help provide resources for these questions and more, plus special member pricing to file for Amnesty in these states so you may focus on gearing up for your holiday sales and promoting your Amazon FBA business. Go here to learn more about becoming a member of Sales Tax System and the investment to get started.
Go here to learn more about our Amnesty VDA Services.