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SALT TALK: Online Marketplace Seller Voluntary Disclosure Initiative – Here Today, Gone Tomorrow

Wayne Berkowitz CPA, J.D., LL.M. 09.11.2017 | SALT TALK

In my August 28, 2017 blog, I discuss the Online Marketplace Seller Voluntary Disclosure Initiative (“Initiative”) and explain how the Multistate Tax Commission Initiative (“MTC”) is unique in that not only will penalties be waived, but in many cases so will any back tax liability. The program is extremely generous and an excellent opportunity for the right business. However, who is the right business?  That is a difficult decision requiring careful analysis.

The initiative is available only through October 17, 2017.  In the words of the MTC:

Under the special time-limited initiative described above, for taxpayers meeting the above criteria, the states identified above (unless otherwise indicated) will agree to waive sales/use and income/franchise back tax liability, including penalties and interest, for prior tax periods, without regard to any lookback period, provided the taxpayer registers as a seller or retailer to collect, report and remit sales/use tax and commences to file sales/use tax returns and remit sales/use tax as of the effective date (not later than December 1, 2017) set forth in the voluntary disclosure agreement . . .” (emphasis added.)

October 17 is coming up fast and an army of tax practitioners are going to be marketing this program as the next best thing.  And maybe they are right, maybe they aren’t.  While I praise the MTC for this excellent effort to ease the burden of marketplace sellers and simultaneously insure that the state tax coffers stay properly full, why act like a TV pitch-person and put the pressure on such a complicated decision?

By taking advantage of the initiative, marketplace sellers are committing themselves to future collection of sales tax, whether or not they in fact should be collecting and remitting in a particular jurisdiction.  Just looking at the divorce rate, one can conclude that making a lifetime commitment should be a decision made through careful analysis and shouldn’t be subject to the pressure of a one-time offer[1].

The initiative may be right for you!  We can help you decide.  Just don’t make the decision on the pretext of this one-time, too good to be true offer. You can reach me at wberkowitz@berdonllp.com or contact your Berdon advisor.

Wayne K. Berkowitz, a tax partner and head of the State and Local Tax Group at Berdon LLP, advises on the unique requirements of governments and municipalities across the nation.

[1] In the case of marriage, I’m not really sure what this one time offer would be?  Any ideas? Let me know.

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