Ever since the decisive Supreme Court ruling on the requirements of online businesses regarding sales tax, Wayfair v. South Dakota, states across the nation have been enacting new sales tax laws, while the businesses they affect have been left scrambling to keep up.
In light of this, to help encourage retailers to move into compliance, several states have adopted amnesty periods to help businesses become current with the new tax code, without the accruing of penalties.
In Indiana, for instance, since May 2nd the Indiana Department of Revenue (DOR) has offered a Voluntary Disclosure Initiative (VDI) for online retailers until December 31st of this year. Through this VDI, out-of-state sellers are offered a Voluntary Disclosure Agreement (VDA) on their tax requirements, while qualifying businesses are given a look-back period of:
• The full calendar year of 2017, and the current period for state sales and use tax purposes; and
• The fiscal or calendar year of 2017 for state income tax purposes.
In New Jersey, a potential amnesty of 100% of penalty fees and 50% interest has been passed on July 1st, 2018. In this new legislation, the New Jersey Division of Taxation must come up with an amnesty program of at least 90 days, ending no later than January 15th of next year, that applies to most state tax liabilities between February 1st, 2009 – September 1st, 2017.
Alabama also had their own amnesty period that ended on September 30th, waiving interest and penalties for all taxes besides property tax, motor vehicle, and motor fuel – while also applying to those before the first of 2017.
In Connecticut, their amnesty waiver of 100% of penalties and 50% interest is set to conclude on November 30th of this year, while applying to all taxes except state corporate income and sales and use tax, due on or before December 31st, 2016.
Finally, South Carolina is set to develop an amnesty period of their own – though the dates are as of yet a mystery. What has been released, however, is that amnesty will be granted to those who:
• Ask for an amnesty form, file all delinquent tax returns, and pay all taxes due in full;
• File an amended tax return to correct any mistakes and pay all taxes due; or
Voluntarily pay all tax liabilities due within an extended amnesty period, as set by the DOR.
With so many states adopting amnesty laws and more on the way, many are left wondering what is required of them after the Wayfair ruling.
If you’re an online retailer and suspect you have nexus, talk with your tax professional to determine whether taking advantage of an amnesty period or a VDA would be more beneficial to your business.