Amazon has established itself as a disruptive force in the world of retail. Now, it is disrupting sales tax systems in states across the U.S.
Third party sellers who are not currently structured to account for sales tax collection and payments to the states need to decide whether they will, in fact, do so.
Awesome Dynamic does not advise on whether it is in your best interest to register for the Sales Tax Amnesty Program for online sellers. Some of our clients believe they should, and some do not. We do recognize, however, that many sellers could benefit from understanding their potential tax liabilities in order to make a more informed decision about whether to participate.
For those sellers, Awesome Dynamic is prepared to assist with the setup of a system that can provide the data you need for informed decision making in regard to potential sales tax liabilities, and whether to participate in the Amazon Sales Tax Amnesty Program for online sellers.
Amazon Sales Tax, How Did We Get Here?
Since the first online sale, online sellers and state governments have debated whether online sellers are responsible for collecting and relaying state sales tax on their sales. But as the localities increasingly experience waning sales tax revenues (traditionally collected by the State and disbursed among its local governments) due to declining sales from failing brick and mortar retail operations, states are ramping up their efforts to recover those lost revenues by taxing online sales.
Several states have banded together to form the Multistate Tax Commission, or MTC. The MTC has established a Voluntary Disclosure Agreement Program. The Voluntary Disclosure Agreement Program has put in place a Sales Tax Amnesty Program for online sellers with a filing deadline of October 17 for those online sellers who want to collect and relay sales tax going forward, but don’t want to be held responsible for non-collection of sales taxes in the past. Once you have met the registration deadline for the Sales Tax Amnesty Program for online sellers, you must be set up to file taxes by December 1st (some states may designate a different date). Having met those two key dates, you may be relieved of certain past tax obligations, depending on the laws of each state in the program.
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What to do now in regard to the Sales Tax Amnesty Program for online sellers? Should I register for the Amnesty program? How do I know if I have significant past tax obligations or not? And, if so, in which states?
The hot deadline has accelerated the myriad debates such as what constitutes a “physical presence” in a given state, who is responsible for sales tax on sales of products stored and sold from an Amazon fulfillment center, how to handle the overwhelming detail involved with different tax systems in each state, whether its the seller or reseller who should be responsible, and even whether an online sales tax requirement can legally be enforced, to name a few.
Some 3rd party sellers on Amazon choose to monitor their sales and pay sales taxes, and others, for whatever reasons, do not. Of those who have not collected sales tax revenues up to now, some are thinking the writing is clearly on the wall, and it may be time to take the “amnesty” offer.
Some states are participating in the MTC’s Sales Tax Amnesty Program for online sellers and others, like California and Washington, are not. But that does not mean you would be off the hook for payment of sales taxes to those states - far from it. The possible rationale for non-participation by those states is likely that they believe they have stronger and more aggressive ways to collect online sales taxes from third party sellers than Sales Tax Amnesty Program for online sellers offers.
According to TaxJar, a company which offers technology solutions for eCommerce sellers to manage sales tax:
- Sellers who do not register for the Sales Tax Amnesty Program for online sellers program by October 17 could be on the hook, potentially, for paying past years sales taxes
- Sellers who want to participate in the Sales Tax Amnesty Program for online sellers, should NOT sign up to pay taxes in a state that is participating in the amnesty program directly PRIOR to signing up for the amnesty program, as doing so will disqualify you for the amnesty program benefits
- The best path forward for a seller who has not collected sales taxes to date and feels they may have a potential tax obligation is to meet the October 17 deadline for enrollment in the Sales Tax Amnesty Program for online sellers
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A System for Gathering Information for Making Your Decision is Available
If you are one of the many sellers now wondering how much sales tax obligation you have in each of the states participating in the Amazon Sales Tax Amnesty Program for online sellers, Awesome Dynamic® wants you to know:
- There are systems you can access that will give you an idea of the financial impact of participating in the Sales Tax Amnesty Program for online sellers so that you can make the best decisions for your company
- We can help you set up one such system
We believe TaxJar can help provide the best data for decision making in regard to whether to register for the Amazon Sales Tax Amnesty Program for online sellers based on your current and past sales.
TaxJar offers a program that enables you to retrieve past years of tax obligation data prior to committing to registering for the Sales Tax Amnesty Program for online sellers OR paying the taxes. It essentially reviews your Amazon seller account to help you determine your prior tax liabilities in each location. It will also generate the proper tax forms.
The free trial of TaxJar will provide you data for the past weeks. All paid subscription plans include the information for all of 2017. Reaching back for data beyond 2017 costs a little extra, starting at $25/yr for the basic plan. It goes up from there, based on which plan you choose.
Determining whether or not to register for the Amazon Sales Tax Amnesty Program for online sellers is all about having enough information for decision making in the interest of risk mitigation. TaxJar, when used as shown above, is a great way to understand how much that mitigation is going to cost, as well as a way to make the process of determining your state-by-state obligations and payment process easier in general.
Awesome Dynamic's Amazon experts can answer your questions about Amazon sales tax and other Amazon related questions. Our team is ready to help you make informed decisions for you business!