Oklahoma Online Marketplace Sales Tax Heads to Governor

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By Paul Stinson

A bill requiring Amazon-type marketplaces to collect and remit sales tax for third-party vendors is moving to Oklahoma Gov. Mary Fallin’s (R) desk.

If signed into law, marketplace providers—such as Amazon.com Inc., eBay Inc. and Etsy Inc.—would collect tax on third-party transactions facilitated through their platforms. The Senate approved the measure ( H.B. 1019XX) by a 42-2 vote on April 6.

Michael McNutt, the governor’s press secretary, told Bloomberg Tax on the eve of the Senate vote that Fallin would “review the measure with her staff.”

The governor “generally” withholds comment on pending legislation until the final version reaches her office, McNutt said in an April 5 email.

$20.5 Million

The measure requires select remote retailers and marketplace facilitators or referrers to collect and remit sales and use tax on items sold in Oklahoma—or comply with notice and reporting requirements established in statute and any required by the state tax authority.

Sellers, facilitators, or referrers with aggregate in-state sales of at least $10,000 would be subject to the law.

The bill outlines 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.

Estimated to generate $20.5 million annually, according to an April 4 bill summary, the legislation is one of multiple revenue and education funding measures picked up by Oklahoma lawmakers against the backdrop of a statewide teacher strike over teacher pay and education funding that began April 2.

Supreme Court Case

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 state, 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.”

To contact the reporter on this story: Paul Stinson in Austin, Texas, at pstinson@bloomberglaw.com

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

For More Information

Text of H.B. 1019XX is at http://src.bna.com/xFz.

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