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,...
The South Carolina Department of Revenue is accepting retail sales tax applications from Amazon’s third-party marketplace sellers.
According to a Feb. 23 notice, suppliers selling goods on Amazon.com to South Carolina purchasers have requested guidance on potential tax liability due to pending litigation over who is responsible for collecting sales taxes on those transactions. The DOR said it’s now accepting applications so retailers can collect and remit the applicable taxes that are due until a legal dispute between the department and Amazon is resolved.
Richard Handel, a tax law professor at the University of South Carolina and former general counsel for the DOR, told Bloomberg Tax that third-party vendors should evaluate their contracts and weigh their risks before deciding whether to collect the taxes at issue.
Amazon Services LLC is challenging a June 2017 assessment of nearly $12.5 million in uncollected taxes, penalties, and interest from third-party sales. An administrative law judge recently rejected the DOR’s request for an injunction requiring the Amazon subsidiary to immediately collect and remit those taxes as the court considers the merits of the case.
Handel said he wasn’t sure the department would receive much of a response to the new notice, as some marketplace sellers might have already registered or are participating in a state voluntary disclosure program.
“In order to determine whether to register, I would think a seller would have to evaluate their contract with Amazon,” he said. If Amazon ultimately loses, sellers should try to determine whether the online retailer will hold them harmless or demand payment from sales until it recoups taxes the company had to pay on the vendors’ sales, he said.
If they are at risk, “they would then have to evaluate whether they can afford to lose and how many sales they’d lose if customers were charged sales taxes,” he told Bloomberg Tax.
Third-party sellers can register online using the DOR’s 24/7 online tax service portal, MyDORWAY, or file by paper using form SCDOR-111. The department said in its notice that third-party suppliers who have already registered as a retailer may keep their current license.
Amazon began collecting sales tax for South Carolina last year, after a five year “safe harbor” on such assessments expired.
However, according to the DOR, the company owes millions of dollars in uncollected taxes from third-party sales. Amazon argues that the department is improperly trying to shift the responsibility of collecting taxes onto the company.
“The SCDOR maintains that Amazon Services, LLC is the retailer responsible for collecting and remitting Sales and Use Tax on all goods sold on Amazon.com,” Bonnie Swingle, department spokeswoman, told Bloomberg Tax. “At this time, we do not have further comment,” she said in an e-mail.
The future of marketplace-provider laws requiring Amazon-type platforms to collect tax on its third-party sales hinges on a monumental U.S. Supreme Court case, according to tax professionals.
Liz Malm, director of strategic government relations and economist at the consulting firm MultiState Associates Inc, told Bloomberg Tax that marketplace-provider legislation could spike once the U.S. Supreme Court reaches a decision in South Dakota v. Wayfair. That case will reconsider the 1992 precedent laid down in Quill Corp. v. North Dakotaprohibiting states from imposing tax collection obligations on vendors without a physical presence in-state.
Assuming the court sides with South Dakota, Malm said she would expect marketplace-provider legislation to “be the biggest trend of 2019.”
This year, New York and Hawaii have introduced legislation containing marketplace provider provisions. New Mexico also considered similar proposals, but the bills died in session.
Pennsylvania, Rhode Island, Washington, and Minnesota were the first states to enact marketplace-provider provisions, doing so in 2017.
With assistance from Ryan Prete in Washington
To contact the reporter on this story: Andrew M. Ballard in Raleigh, N.C. at firstname.lastname@example.org
To contact the editor responsible for this story: Ryan C. Tuck at email@example.com
Text of the notice is at http://src.bna.com/wCi.
Copyright © 2018 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)