Tag Archives: voluntary disclosure agreement

AMNESTY PROGRAM DIRECTED AT FBA SELLERS

Could an Amnesty Program erase your tax burden?

There is a new scheduled amnesty program that may help businesses correct overlooked tax obligations if they have been selling products and services in other states. Many companies engage in multi-state sales through an intermediary, like Amazon, eBay and similar organizations called “fulfillment services.” The fulfillment centers place a seller’s inventory in warehouses in multiple states to expedite shipping, but in the process, create nexus for the seller in those states. As such, the sellers have an obligation to collect sales tax and pay income tax. Unfortunately, unpaid taxes may incur penalties and interest. Now there may be a short time window to correct these errors and avoid interest and penalties.

On Monday, July 31, the nexus committee of the Multistate Tax Commission (MTC) approved the MTC to participate in a multistate sales tax amnesty program for third-party sellers whose only nexus with a state is the use of fulfillment services offered by third-party marketplaces.  The MTC is an intergovernmental state tax agency working on behalf of states and taxpayers to facilitate the equitable and efficient administration of state tax laws that apply to multistate and multinational enterprises.

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Understanding Voluntary Disclosure

State taxes can be daunting.  There are so many ways companies can trip into nexus creating activities in multiple states and suddenly find themselves in a compliance nightmare.  I see this situation often in my practice.  Many of my clients are in the technology industry.  Silicon Valley moves at an alarming speed (well, except for Highway 101 – but that’s another story!), and companies move people and product into multiple states just as quickly – sometimes without even realizing the ramifications.  State taxes – including sales tax and income tax are often an afterthought, but then come back and rear their heads when a company is getting its next round of funding or needs a financial statement audit.  It is at this point that people usually take notice of the state tax situation.   Why?  Here’s a scenario: Continue reading