Tax Amnesty Program Pulled in Multi-Million Dollar Sellers

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By Ryan Prete

Six retailers with a back tax liability of over $2 million each were among the hundreds of third-party marketplace sellers that applied for the Multistate Tax Commission’s tax amnesty program, according to the director of the MTC’s National Nexus program.

Richard Cram also reported Nov. 15 during the MTC’s Winter Committee Meetings in New Orleans that 200 of the 852 applicants had a four-year back tax liability of over $100,000. He said that third-party sellers on marketplace platforms such as Amazon.com Inc, eBay Inc., and Etsy Inc. were required to provide a four-year back tax liability figure when registering for the program.

“When the program first launched, I thought I would’ve been tickled to death to just get 400 applicants,” Cram said during the Nexus Committee meeting, discussing the volume of sellers that flooded the MTC with applications, especially in the registration period’s final days.

“On the last day of the registration period, we received 196 applications,” Cram said. The single-day total was more than double the amount of applications received by the initiative’s halfway mark in September.

Cram said he would have more information on all sellers’ back tax liabilities in the coming weeks.

The states most often identified in seller applications were Texas and Florida, according to Cram. New Jersey, Tennessee, Kentucky, and North Carolina were also identified in several applications.

“All participating states should see some representation of volume,” Cram said.

Program’s Future Uncertain

Cram said that many of the sellers ignored the four states with lookback periods—Massachusetts, Minnesota, Colorado, and Wisconsin—when registering, and shared concerns that a significant amount of sellers could terminate their application when discovering they may owe money to the jurisdictions.

“In the coming weeks, we will see who of the sellers owing lookback taxes will stick around and how many will follow through and begin collecting and remitting,” he said.

Cram isn’t sure if the program will be offered again. He told Bloomberg Tax that the possibility “hasn’t been discussed at this point. We wanted to make sure we survived this round first.”

One of the program’s biggest challenges has been manpower, an issue present throughout the registration period from Aug. 17 to Nov. 1, according to Cram.

“Getting each seller’s application processed and an agreement drafted for state approval will take some time,” he said. “But we still hope to have a significant amount of sellers collecting and remitting by the original set date of December 1.”

To contact the reporter on this story: Ryan Prete in New Orleans at rprete@bna.com

To contact the editor responsible for this story: Cheryl Saenz at csaenz@bna.com

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