Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...
By Paul Stinson
Oklahoma Gov. Mary Fallin (R) approved a measure requiring Amazon-type marketplaces to collect and remit sales tax for third-party vendors as part of a broader effort to appease educators seeking a pay raise and restoration to school funding.
Fallin’s April 10 signature of H.B. 1019XX followed her approval of a $403.5 million revenue bill that couldn’t stave off a teacher walkout that began April 2.
Marketplace providers—such as Amazon.com Inc., eBay Inc. and Etsy Inc.—will collect tax on third-party transactions facilitated through their platforms, effective immediately. If they choose not to collect, they must comply with notice and reporting requirements established in statute and any required by the state tax authority.
Remote sellers and marketplace facilitators or referrers with aggregate in-state sales of at least $10,000 are subject to the law.
The measure will boost income tax collections by $19.6 million and $20.5 million for FY 2019 and FY 2020 respectively—according to an April 4 bill summary—as the state continues to search for avenues to cover teacher pay raises and restore education funding.
The new law outlines the notice and reporting requirements and establishes noncompliance penalties—calculated as the lesser of $20,000 or 20 percent of total in-state sales during the previous 12 months.
Meanwhile, the U.S. Supreme Court has scheduled April 17 oral argument in South Dakota v. Wayfair—a direct challenge to the 1992 decision in Quill Corp v. North Dakota that prohibits states from imposing sales tax collection obligations on vendors lacking an in-state physical presence.
States are increasingly considering regimes requiring marketplace providers to collect tax on third-party marketplace transactions. Washington, Minnesota, Pennsylvania, and Rhode Island enacted marketplace-provider regimes in 2017. Amazon has announced its agreement to collect in Washington and Pennsylvania.
In South Carolina, Amazon Services LLC is challenging a June 2017 assessment of nearly $12.5 million in uncollected taxes, penalties, and interest from third-party marketplace sales.
Liz Malm, director of strategic government relations and economist at the consulting firm MultiState Associates Inc., has told Bloomberg Tax that marketplace-provider legislation could spike once the Supreme Court reaches a decision in the South Dakota case. Assuming the court sides with South Dakota, Malm said she would expect marketplace-provider legislation to “be the biggest trend of 2019.”
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Text of H.B. 1019XX is at http://src.bna.com/xPl.
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