The explosion of the online marketplace over the past decade has created some confusion regarding the collection of sales tax which has only been exacerbated since Amazon’s launch of its Fulfillment by Amazon (FBA) program. Merchants selling products through the FBA are not always aware of the physical location of their inventory, and therefore, also unaware of possible sales tax obligations. As a result, Amazon retailers have accumulated an estimated $2 million in uncollected sales tax across various taxing jurisdictions. In an attempt to set these vendors back on track, the Multistate Tax Commission (“MTC”) has decided to introduce a sales tax amnesty program aimed to give Amazon retailers new footing as they initiate compliance with any applicable sales tax regulations.
The states currently committed to participate include: Alabama, Arkansas, Colorado, Connecticut, Kansas, Kentucky, Louisiana, Nebraska, New Jersey, Oklahoma, Texas, Utah, and Vermont. There are currently eight additional states considering participation in the program. Any Amazon vendor seeking to participate must file a voluntary disclosure agreement (VDA) with the MTC during the amnesty period of August 17 – October 17, 2017. The amnesty program will allow noncompliant merchants to begin paying sales tax on future sales while forgiving all prior noncompliance.