Tax Group Won’t Mull Amnesty Program Redo Until After ‘Wayfair’

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By Ryan Prete

The Multistate Tax Commission’s Executive Committee will wait to potentially launch a second round of its Online Marketplace Seller Voluntary Disclosure Program until the U.S. Supreme Court rules on a pivotal digital tax case.

The MTC’s Executive Committee agreed April 26 to wait to discuss offering a second window until the high court issues a decision in South Dakota v. Wayfair—a direct challenge to the 1992 decision in Quill Corp. v. North Dakota prohibiting states from imposing sales tax collection obligations on vendors lacking an in-state physical presence.

Practitioners widely expect a decision by late June.

Christy Vandevender, nexus committee chair, said the Nexus Committee will instead discuss a second application period during the MTC’s 51st Annual Meeting in Boston, which runs from July 23-26.

The issue was handed over to the Executive Committee April 24 after member states showed a lack of interest in a pre- Wayfair ruling application period.

Richard Cram, director of the MTC’s National Nexus Program, told Bloomberg Tax that states are currently “fatigued” by the first round of applications and subsequent approval process.

$51.1 Million

The Online Marketplace Seller Voluntary Disclosure Initiative was originally established to allow third-party marketplace sellers using platforms like Amazon.com Inc. to collect and remit sales and use taxes in participating states. Application were accepted from Aug. 17 to Nov. 1, 2017.

The program reeled in 852 applications from third-party marketplace sellers. Cram said only about half of those sellers went on to formally sign agreements to voluntarily collect and remit sales and use taxes, but that a handful of large sellers significantly boosted estimated revenue.

The MTC is estimated to bring in an additional $51.1 million in annual sales and use tax revenue to participating states, according to a report dated April 24.

Four of the states that participated in the online voluntary disclosure program last year—Colorado, Massachusetts, Minnesota, and Wisconsin—required lookback periods, meaning taxpayers were liable for payment of past taxes owed. The other participants—20 states and Washington, D.C.— waived back tax liability.

States also weren’t interested in an April 24 proposal presented by a former Missouri tax administrator, Janette M. Lohman, a partner at Thompson Coburn LLP in St. Louis, who called for a new voluntary disclosure program for taxpayers that have “questionable” nexus on a “prospective only” basis.

Virginia and Nevada

The Executive Committee also unanimously granted Virginia associate membership, which is now contingent on the Virginia Department of Revenue Chair requesting the admission.

According to the MTC, “associate members are states that participate in Commission meetings and otherwise consult and cooperate with the Commission and its other member states or, as project members, participate in Commission programs or projects.”

Only Virginia and Nevada aren’t in some way associated with the MTC.

Greg Matson, MTC executive director, said the commission is actively working to include Nevada as an associate member as well.

Strategic Planning Committee

Matson said during the Strategic Planning Committee meeting that they want to involve noncompact states in more commission-related business.

He said he is hopeful that sovereignty members will soon have an expanded role in the Strategic Planning Committee.

Sovereignty members are states that support the purposes of the Multistate Tax Compact through participation in and financial support of the commission’s activities. However, they haven’t enacted the compact into state law and therefore are barred from voting on commission-wide matters, according to the MTC.

The committee is also looking to change it’s name to reflect a more “exciting” and “interactive” connotation, according to Nancy Prosser, strategic planning committee chair.

Prosser said these potential changes will be further discussed during the MTC’s annual meeting.

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

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

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