SALT LAKE CITY — A new multistate sales tax amnesty agreement will allow online sellers in several states, including Utah, to collect sales tax in an effort to increase conformity nationwide.
The Multistate Tax Commission, in cooperation with 13 member states, Wednesday announced the launch of a sales tax amnesty program aimed at helping online sellers become compliant with retail sales tax regulations.
The commission's voluntary disclosure agreement is a way for taxpayers with potential sales tax liability to negotiate a settlement during the amnesty period of Aug. 17 to Oct. 17, explained Utah State Tax Commission Chairman John Valentine. Taxpayers that have not been contacted by any of the participating states will be able to apply to start remitting sales tax on relevant future sales without penalty or liability for unpaid, prior accumulated sales tax in those states, he noted.
"What we're doing is encouraging states — and Utah will be one of them — to have affiliates of Amazon (and other online sellers) to come in and not have exposure for prior tax liability they should have collected," he said. "Instead of having exposure for the back tax, if they start collecting under this amnesty program, they'll just have to start collecting tax going forward."
The states participating in this program include Alabama, Arkansas, Colorado, Connecticut, Kansas, Kentucky, Louisiana, Nebraska, New Jersey, Oklahoma, Texas, Utah and Vermont. Eight other states considering participation must decide before the Aug. 17 start date, the release stated.
Some of these additional states may require a limited look-back period for back tax liability, the release stated.
"The program is directed at any online retailer that doesn't have a physical presence in the state, but sells into the state," Valentine said. While sellers will be eligible for amnesty, he noted that buyers will still be responsible for reporting their online retail transactions on their income tax returns.
"The bigger (online purchase) items are the ones we're going to track," he said. "We dislike that aspect of the program and would rather have the vendor collect the tax like they are supposed to rather than have to chase after the customer."
Valentine noted that in the past, collecting sales taxes had been difficult for vendors selling into numerous states because of the variety of tax jurisdictions that were applicable. Today, computer software has made collecting the appropriate sales taxes much easier to do.
The Multistate Tax Commission 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 interstate and international enterprises. Among its responsibilities, the commission is charged with facilitating taxpayer convenience and compliance in the filing of tax returns and other phases of tax administration.
Under the agreement, sellers will have a two-month period to file multistate voluntary disclosure program paperwork with the commission, the release stated. Upon receipt, the commission will direct all necessary paperwork to each participating state for which the seller is seeking amnesty protection.
"It's a different commerce model than we've ever had before," Valentine said. "We are learning as we go."
Visit the Multistate Tax Commison website for full details of the program.