It is quite often that our office is contacted by Canadian online sellers with US customers contributing to the majority of their sales. This article will be of interest to them and you.
The Multistate Tax Commission National Nexus Program is offering a special limited-time voluntary disclosure initiative, in which the following states are participating: Alabama, Arkansas, Colorado, Connecticut, Florida, Idaho, Iowa, Kansas, Kentucky, Louisiana, Nebraska, New Jersey, Oklahoma, South Dakota, Texas, Utah, Vermont and Wisconsin.
This helps the taxpayer who is seeking relief from any past due sales/use tax, including interest and penalties, and if applicable, income/franchise tax liability, including interest and penalties, in connection with its online retail sales activity in the state, except for sales/use tax collected but not remitted, with the taxpayer agreeing to register as a seller or retailer with the state and timely collect, report and remit sales/use tax and file returns on all taxable retail sales to customers in the state prospectively as of the effective date (not later than December 1, 2017—taxpayers are encouraged to commence collection and remittance of sales/use tax prior to that date) of the voluntary disclosure agreement. If subject to income/franchise tax, the taxpayer further agrees to timely file income/franchise returns and pay such taxes due, commencing with the tax year including the effective date (not later than December 1, 2017) of the voluntary disclosure agreement. If the taxpayer has any collected sales/use tax not remitted (such as an Amazon FBA seller where Amazon merely colledted the sales tax), then the taxpayer agrees to remit such tax to the state, including penalties and interest.
Note: Tax nexus exists in the states where a business has a presence. While online sellers often analyze where they have physical offices/call centers, notably many states include other factors, such as affiliates in that state and the location of Fulfillment by Amazon warehouses as those warehouses often constitute nexus for the FBA sellers.
Amazon has a program to collect sales tax for sellers but it doesn't remit and report said tax to the states. Further, if the seller doesn't correctly mark in its Amazon settings the default product tax code box, Amazon won’t even collect the state sales tax.
The States listed above will consider applications for voluntary disclosure received by Multi-state Tax Commission (MTC) staff during the time period August 17, 2017 through October 17, 2017 from taxpayers who are new state registrations that timely apply online and who are online marketplace sellers using a marketplace provider/facilitator (such as Amazon FBA program ) to facilitate retail sales into the state and has no physical presence nexus in the state, except for the online marketplace seller’s inventory stored in a third-party fulfillment center located in the state or through other nexus-creating activities of the marketplace provider/facilitator on behalf of the online marketplace seller in the state