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Daily Tax Report: State: News Archive > 2017 > September > 09/29/2017 > News > Amnesty Programs: Massachusetts Amazon Case Could Cause ‘Stampede’ for Tax Amnesty
Amnesty Programs
Massachusetts Amazon Case Could Cause ‘Stampede’ for Tax Amnesty By Aaron Nicodemus A Massachusetts judge has ordered Amazon Technologies Inc. to turn over the identities of its thirdparty vendors to the Massachusetts Department of Revenue, a decision that may encourage thirdparty vendors to file for tax amnesty with the Multistate Tax Commission. Mark Nebergall, a Washington-based tax policy attorney with McDermott Will & Emery, said the DOR is looking for the names and federal identification numbers of these companies so the department can then go check if those companies filed tax returns in Massachusetts. Snapshot “We're talking about failure to collect sales tax for stuff that they sold in Massachusetts,” he told Bloomberg BNA Sept. 27. “They want to know who has nexus so they can go after them.” Superior Court Judge Linda E. Giles ordered Amazon Technologies Sept. 25 to produce the names, addresses, and federal identification numbers of its third-party vendors within 20 days (Massachusetts. v. Amazon Tech., Inc., Mass. Super. Ct., No. 17-3065E, order 9/25/17). The DOR had issued a summons to Amazon for information on any third-party vendor “who stores, or who has stored, any tangible personal property in any location in Massachusetts that is, or was, owned or leased by Amazon Retail LLC or any other affiliated entity after January 1, 2012.” The judge made the order on the same day the case was filed.
•?Judge orders Amazon to produce names of third-party vendors •?May prompt third-party vendors to apply for tax amnesty through national program
Amazon is collecting sales taxes on direct Amazon sales in all 45 states that have a sales tax, but generally not on sales facilitated on behalf of third-party vendors. Minnesota and Washington this year became the first states to enact laws requiring Amazon-type providers to collect tax on third-party marketplace transactions. Might Cause ‘Stampede’ This lawsuit might cause a “stampede” of companies seeking to file for amnesty under Massachusetts’ participation in the Multistate Tax Commission's Online Marketplace Seller Voluntary Disclosure Initiative, Nebergall said. “If the sellers think the state is going to find them anyway, they have a stronger incentive to take advantage of the amnesty's terms, which are not as generous for Massachusetts as they seem to be for other states in the program,” he said. The MTC initiative has a 60-day sign-up window that ends Oct. 17. Richard Cram, director of the MTC's National Nexus Program, told Bloomberg BNA Sept. 28 that the program has received 126 applications for amnesty from third-party sellers, with 8 to 10 new applications coming in every day. He said he expects a last-minute surge could push the total above 200. “The lawsuit would raise some concerns among the marketplace seller community,” Cram said. “My guess is they will wait and see if the lawsuit is successful.” Twenty-two other states and the District of Columbia participate in the program, which offers voluntary disclosure relief for sales and use tax, income tax, and franchise tax. Companies are encouraged to agree to collect/remit taxes on their sales facilitated through marketplace platforms. In exchange, states are either wholly or partially forgiving those sellers’ past taxes not collected. Massachusetts, however, requires compliance with its standard 3-year lookback period.
http://taxandaccounting.bna.com/btac/T11200/split_display.adp?fedfid=121485953&vname=tmenot&jd=a0n2j9a6v6&split=0[9/29/2017 8:49:36 AM]
Tax and Accounting Center Amazon has declined to comment on the lawsuit. In court documents, however, the DOR contends that Amazon “indicated they do not intend to produce any of the documents requested.” The DOR asked a judge to force Amazon to produce the documents in 20 days. Kill ‘Quill’ Many marketplace sellers don't collect and remit state sales and use taxes, arguing they aren't required to under the U.S Supreme Court's 1992 ruling in Quill Corp. v. North Dakota, which prohibits states from imposing sales and use tax collection obligations on sellers that don't have an in-state physical presence. Lawsuits are pending in a handful of states to challenge that rule directly. However, sellers may have physical presence nexus with inventory stored in an in-state fulfillment center or warehouse operated by a marketplace provider, according to a MTC memo. Rhode Island enacted a statute impacting marketplace sellers but imposed varying notice and reporting requirements, rather than collection obligations. Even so, Rhode Island projects it will collect over $37 million in new tax revenue in fiscal year 2018. The South Carolina Department of Revenue is attempting to collect from Amazon Services, LLC taxes on third-party sales facilitated through its marketplace platform, alleging the Amazon subsidiary owes almost $12.5 million in uncollected taxes, penalties, and interest. Amazon is challenging the assessment, claiming it's unconstitutional and violates state and federal law. Effect on Amazon Headquarter Bids? Meanwhile, several cities and regions in Massachusetts—including Boston, Worcester, the North Shore, the South Coast, and the town that is home to the New England Patriots’ Gillette Stadium—have indicated they will bid to bring Amazon's HQ2 to their regions. Senate President Stanley Rosenberg (D) has said that perhaps the entire state of Massachusetts should submit a bid, spreading HQ2 throughout the state. Gov. Charlie Baker (R) and the Department of Revenue have downplayed the lawsuit's impact on those bids, calling it a routine part of a strategy to collect taxes owed. “The Department of Revenue filed a motion to enforce a routine summons for information related to certain third-party vendors engaged in business with the defendant. The filings and requests are matters of public record,” Nathalie Dailida, DOR spokesperson, told Bloomberg BNA in an email. “Under state law, DOR may not comment further on any underlying tax matters related to these third-party vendors or any tax filers.” Baker's press secretary, Billy Pitman, said in a statement that “the Baker-Polito Administration is aggressively pursuing the Amazon project by working with local officials from across Massachusetts and our partners in the Legislature to demonstrate why the Commonwealth's nation leading schools and highly skilled workforce are the best fit for Amazon.” To contact the reporter on this story: Aaron Nicodemus in Boston at [email protected] To contact the editor responsible for this story: Jennifer McLoughlin at [email protected]
For More Information Text of the order is at http://src.bna.com/sWd. Text of the summons and the petition to enforce are at http://src.bna.com/sTu.
Related Articles Topics: nexus online sales taxation requests for production sales and use tax state tax tax amnesty programs
Courts: Massachusetts Superior Court
States: Massachusetts
http://taxandaccounting.bna.com/btac/T11200/split_display.adp?fedfid=121485953&vname=tmenot&jd=a0n2j9a6v6&split=0[9/29/2017 8:49:36 AM]
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http://taxandaccounting.bna.com/btac/T11200/split_display.adp?fedfid=121485953&vname=tmenot&jd=a0n2j9a6v6&split=0[9/29/2017 8:49:36 AM]
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Follow us on:
Federal
Daily Tax Report
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Daily Tax Report: State: News Archive Daily Tax Report: State Home
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Daily Tax Report: State: News Archive > 2017 > September > 09/29/2017 > News > Amnesty Programs: Massachusetts Amazon Case Could Cause ‘Stampede’ for Tax Amnesty
Amnesty Programs
Massachusetts Amazon Case Could Cause ‘Stampede’ for Tax Amnesty By Aaron Nicodemus A Massachusetts judge has ordered Amazon Technologies Inc. to turn over the identities of its thirdparty vendors to the Massachusetts Department of Revenue, a decision that may encourage thirdparty vendors to file for tax amnesty with the Multistate Tax Commission. Mark Nebergall, a Washington-based tax policy attorney with McDermott Will & Emery, said the DOR is looking for the names and federal identification numbers of these companies so the department can then go check if those companies filed tax returns in Massachusetts. Snapshot “We're talking about failure to collect sales tax for stuff that they sold in Massachusetts,” he told Bloomberg BNA Sept. 27. “They want to know who has nexus so they can go after them.” Superior Court Judge Linda E. Giles ordered Amazon Technologies Sept. 25 to produce the names, addresses, and federal identification numbers of its third-party vendors within 20 days (Massachusetts. v. Amazon Tech., Inc., Mass. Super. Ct., No. 17-3065E, order 9/25/17). The DOR had issued a summons to Amazon for information on any third-party vendor “who stores, or who has stored, any tangible personal property in any location in Massachusetts that is, or was, owned or leased by Amazon Retail LLC or any other affiliated entity after January 1, 2012.” The judge made the order on the same day the case was filed.
•?Judge orders Amazon to produce names of third-party vendors •?May prompt third-party vendors to apply for tax amnesty through national program
Amazon is collecting sales taxes on direct Amazon sales in all 45 states that have a sales tax, but generally not on sales facilitated on behalf of third-party vendors. Minnesota and Washington this year became the first states to enact laws requiring Amazon-type providers to collect tax on third-party marketplace transactions. Might Cause ‘Stampede’ This lawsuit might cause a “stampede” of companies seeking to file for amnesty under Massachusetts’ participation in the Multistate Tax Commission's Online Marketplace Seller Voluntary Disclosure Initiative, Nebergall said. “If the sellers think the state is going to find them anyway, they have a stronger incentive to take advantage of the amnesty's terms, which are not as generous for Massachusetts as they seem to be for other states in the program,” he said. The MTC initiative has a 60-day sign-up window that ends Oct. 17. Richard Cram, director of the MTC's National Nexus Program, told Bloomberg BNA Sept. 28 that the program has received 126 applications for amnesty from third-party sellers, with 8 to 10 new applications coming in every day. He said he expects a last-minute surge could push the total above 200. “The lawsuit would raise some concerns among the marketplace seller community,” Cram said. “My guess is they will wait and see if the lawsuit is successful.” Twenty-two other states and the District of Columbia participate in the program, which offers voluntary disclosure relief for sales and use tax, income tax, and franchise tax. Companies are encouraged to agree to collect/remit taxes on their sales facilitated through marketplace platforms. In exchange, states are either wholly or partially forgiving those sellers’ past taxes not collected. Massachusetts, however, requires compliance with its standard 3-year lookback period.
http://taxandaccounting.bna.com/btac/T11200/split_display.adp?fedfid=121485953&vname=tmenot&jd=a0n2j9a6v6&split=0[9/29/2017 8:49:36 AM]
Tax and Accounting Center Amazon has declined to comment on the lawsuit. In court documents, however, the DOR contends that Amazon “indicated they do not intend to produce any of the documents requested.” The DOR asked a judge to force Amazon to produce the documents in 20 days. Kill ‘Quill’ Many marketplace sellers don't collect and remit state sales and use taxes, arguing they aren't required to under the U.S Supreme Court's 1992 ruling in Quill Corp. v. North Dakota, which prohibits states from imposing sales and use tax collection obligations on sellers that don't have an in-state physical presence. Lawsuits are pending in a handful of states to challenge that rule directly. However, sellers may have physical presence nexus with inventory stored in an in-state fulfillment center or warehouse operated by a marketplace provider, according to a MTC memo. Rhode Island enacted a statute impacting marketplace sellers but imposed varying notice and reporting requirements, rather than collection obligations. Even so, Rhode Island projects it will collect over $37 million in new tax revenue in fiscal year 2018. The South Carolina Department of Revenue is attempting to collect from Amazon Services, LLC taxes on third-party sales facilitated through its marketplace platform, alleging the Amazon subsidiary owes almost $12.5 million in uncollected taxes, penalties, and interest. Amazon is challenging the assessment, claiming it's unconstitutional and violates state and federal law. Effect on Amazon Headquarter Bids? Meanwhile, several cities and regions in Massachusetts—including Boston, Worcester, the North Shore, the South Coast, and the town that is home to the New England Patriots’ Gillette Stadium—have indicated they will bid to bring Amazon's HQ2 to their regions. Senate President Stanley Rosenberg (D) has said that perhaps the entire state of Massachusetts should submit a bid, spreading HQ2 throughout the state. Gov. Charlie Baker (R) and the Department of Revenue have downplayed the lawsuit's impact on those bids, calling it a routine part of a strategy to collect taxes owed. “The Department of Revenue filed a motion to enforce a routine summons for information related to certain third-party vendors engaged in business with the defendant. The filings and requests are matters of public record,” Nathalie Dailida, DOR spokesperson, told Bloomberg BNA in an email. “Under state law, DOR may not comment further on any underlying tax matters related to these third-party vendors or any tax filers.” Baker's press secretary, Billy Pitman, said in a statement that “the Baker-Polito Administration is aggressively pursuing the Amazon project by working with local officials from across Massachusetts and our partners in the Legislature to demonstrate why the Commonwealth's nation leading schools and highly skilled workforce are the best fit for Amazon.” To contact the reporter on this story: Aaron Nicodemus in Boston at [email protected] To contact the editor responsible for this story: Jennifer McLoughlin at [email protected]
For More Information Text of the order is at http://src.bna.com/sWd. Text of the summons and the petition to enforce are at http://src.bna.com/sTu.
Related Articles Topics: nexus online sales taxation requests for production sales and use tax state tax tax amnesty programs
Courts: Massachusetts Superior Court
States: Massachusetts
http://taxandaccounting.bna.com/btac/T11200/split_display.adp?fedfid=121485953&vname=tmenot&jd=a0n2j9a6v6&split=0[9/29/2017 8:49:36 AM]
Tax and Accounting Center
Home | About | Site Map | Help Contact Us or call 1-800-372-1033 ISSN 1947-3923 Copyright © 2017, The Bureau of National Affairs, Inc. | Copyright FAQs | Internet Privacy Policy | BNA Accessibility Statement | License Reproduction or redistribution, in whole or in part, and in any form, without express written permission, is prohibited except as permitted by the BNA Copyright Policy.
http://taxandaccounting.bna.com/btac/T11200/split_display.adp?fedfid=121485953&vname=tmenot&jd=a0n2j9a6v6&split=0[9/29/2017 8:49:36 AM]
