Online Amnesty Program Aims To Boost Tax Rolls

By Elaine S. Povich
Stateline.org

WWR Article Summary (tl;dr) Under the amnesty deal, online sellers who sign up by Oct. 17 are expected to make a “good faith estimate” of the back taxes they owe in any of the 24 participating states. Then, state tax collection agencies will negotiate with the sellers over whether they need to pay any back taxes, and whether penalties will be assessed.

Stateline.org

More than half the states with sales taxes are using a temporary amnesty program to corral scofflaw online businesses into their tax systems, just in time to reap sales taxes from the upcoming holiday shopping season.

In the complicated world of online sales, small businesses often use a “marketplace facilitator,” like Amazon’s Marketplace service, to promote goods and fill orders.

But the complexity also means that they often don’t pay their sales taxes, costing the states as much as $2 billion a year through Amazon Marketplace sales alone.

Overall, states estimate they could collect $26 billion more a year in sales taxes on products sold remotely, online and via mail order.

Several states, led by South Dakota in 2016, have passed laws requiring sales tax to be paid by all online sellers when they sell to an in-state buyer.

But those laws are being challenged in the courts and are likely to end up in the U.S. Supreme Court, which is being asked to overturn a 1992 law requiring a business to have a brick-and-mortar location in a state to be subject to that state’s sales tax.

Under the amnesty deal, online sellers who sign up by Oct. 17 are expected to make a “good faith estimate” of the back taxes they owe in any of the 24 participating states. Then, state tax collection agencies will negotiate with the sellers over whether they need to pay any back taxes, and whether penalties will be assessed.

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