Amazon Releasing Marketplace Seller Data to Rhode Island

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By Ryan Prete

Rhode Island will soon have access to the contact information of Amazon’s marketplace vendors conducting in-state business.

According to a Feb. 13 memo from the “Amazon Services Team,” the e-commerce giant will share by Feb. 15 the name and address of vendors selling into the Ocean State.

The transfer of information is required under a recently enacted state statute. Rhode Island’s law went into effect in August 2017 and included a marketplace provider provision that requires Amazon.com Inc.-type marketplace providers to collect sales tax on third-party marketplace transactions, among other provisions. Marketplace facilitators also have reporting obligations related to third-party transactions facilitated through their platforms. It is one of only four states that places such duties on Amazon-type providers for third-party sales.

Scott Peterson, vice president of U.S. Tax Policy and Government Relations for Avalara Inc., told Bloomberg Tax that vendors selling into Rhode Island should expect a letter from the state’s Department of Revenue acknowledging their presence. Because Amazon isn’t sharing the estimated value of sellers’ inventory, Peterson said the DOR “may also ask every seller how much they currently make in sales into the state.”

Peterson said if sellers surpass the economic nexus threshold in Rhode Island—$100,000 or 200 or more transactions—then they should expect to start collecting and remitting Rhode Island’s sales tax.

More Marketplace States?

Rhode Island is among the states intently watching the U.S. Supreme Court as it considers whether to undo its 1992 Quill Corp. v. North Dakota decision, which prohibits states from imposing sales and use tax collection obligations on vendors lacking an in-state physical presence. The high court granted review in South Dakota v. Wayfair, in which South Dakota is arguing the decades-old decision is outdated in the growing e-commerce economy.

However, states aren’t waiting for the Supreme Court’s decision to go after marketplace sales.

Since Jan. 1, Hawaii, New Mexico, and New York have each introduced multiple proposals to capture tax on marketplace sales. Peterson said he anticipates even more states to join the trend this year.

“We’re early in the year, and we already have three new states pushing for marketplace provisions. We should expect more to come,” he said.

Other States Next

In January, Massachusetts became the first state to obtain third-party seller information through litigation, after a September 2017 court order from Massachusetts Superior Court Judge Linda E. Gates directed Amazon Technologies Inc. to turn over the third-party vendor information to the state’s DOR.

Alongside contact information, Massachusetts also will receive the estimated value of each seller’s inventory, calculated based on the seller’s selling prices in late 2016 and in 2017, according to Amazon’s January memo.

Amazon is currently collecting sales taxes on direct Amazon sales in all 45 states that have a sales tax, but generally not on sales facilitated on behalf of third-party vendors. However, Amazon has agreed to collect and remit Washington state sales tax on third-party marketplace sales.

Washington and Minnesota joined Rhode Island as the first states to enact marketplace provider legislation, also doing so in 2017. But those states haven’t yet gathered seller information. Peterson said this could be because the states believe they still have time, and because the laws are still relatively new.

Washington’s law went into effect Jan. 1, and Minnesota’s law doesn’t take effect until Jan. 1, 2019. Pennsylvania also enacted a law to capture taxes on third-party marketplace transactions, which takes effect March 1.

To contact the reporter on this story: Ryan Prete in Washington at rprete@bloombergtax.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

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