As we wait for the courts to settle the online sales tax debate, states like Massachusetts are continuing to go after third-party resellers, specifically those that sell on Amazon, in an attempt to track down the sales tax revenue they’ve been missing.
In September, Massachusetts sued Amazon for data about its third-party sellers with inventory in the state. A judge ruled in Massachusetts’ favor and, finally, in late January Amazon notified its sellers they would turn over the information, including:
- Each marketplace seller’s contact information, including name, address, federal tax ID number, and phone number
- Estimated value of each marketplace seller’s inventory in Amazon’s Massachusetts fulfillment centers, based on the seller’s selling prices in late 2016 and 2017
Third-Party Sellers and State Sales Tax Collection
As you can imagine, many Amazon sellers are concerned the state will use these details to come after them for back taxes, penalties and interest. However, as this article in SalesTaxSupport.com explains, most will likely have little exposure. “While this may not create huge exposure for most sellers, it should serve as a major wake up call. Will Massachusetts share this information with other states or, even worse, will other states follow Massachusetts’ lead and sue Amazon themselves? …it is only a matter of time before other states get their hand on information like this. In some of these states, like California, the potential for exposure may be much higher.”
While some states (specifically Washington, Minnesota, and Rhode Island) passed legislation requiring that vendors like Amazon collect the sales tax for their third-party sellers, it wouldn’t be surprising if more states follow Massachusetts’ approach of holding these independent sellers accountable.
Next Steps for Third-Party Sellers
We recommend that, regardless of where you’re selling, you take the time to learn what states – beyond Massachusetts, Washington or Minnesota – may be claiming you owe them in regards to sales tax. Please contact us if you’d like help; we’re happy to answer questions regarding the online sales tax debate, nexus and any other multi-state tax issues you may have concerns about.
Miles Consulting Group, Inc. is a professional service firm in San Jose, California specializing in multi-state tax solutions. Our firm addresses state and local tax issues for our clients, including general state tax consulting, nexus reviews, tax credit and tax incentive maximization, income tax and sales/use tax planning and other special projects. To learn more, contact us today at www.MilesConsultingGroup.com.