The shift in tax collection responsibility to marketplace facilitators raises questions on how to address exempt sales and related documentation requirements. States generally require sellers responsible for collecting sales and use tax to maintain that (i) sales or use tax was charged on all taxable sales, and (ii) the tax collected was subsequently reported and
Marketplace collection laws are a departure from traditional state sales tax rules that contemplate a single buyer and seller. The addition of the marketplace facilitator to a transaction, as the party responsible for collecting and remitting sales and use tax, raises the question of who is the “seller” or “retailer” (hereinafter “seller”) in a marketplace
The Multistate Tax Commission (MTC) held its annual meeting in Boise, Idaho August 5, 2019 through August 8, 2019. As part of the meeting, the MTC’s Uniformity Committee (“Committee”), which established the Marketplace Facilitator Work Group (“Work Group”) in 2018, provided an update. By way of background, at its April 25, 2019 meeting in Denver,
Qualification as a “marketplace facilitator” does not by itself give rise to a tax collection obligation. A marketplace facilitator must also have sufficient nexus with a state before it may be obligated to collect the state’s sales and use tax on marketplace sales.
Nexus for marketplaces is generally measured under a similar economic
Marketplace collection laws have shifted our common understanding of those persons that are responsible for collecting sales and use taxes. Historically, sellers have been responsible for collecting sales or use tax on sales they make to purchasers. Marketplace collection laws shift the tax collection responsibility on sales made through a marketplace from the seller to
States have enacted new marketplace facilitator laws designed to impose sales tax obligations on marketplace facilitators related to sales made by third-party sellers. These new sales tax collection obligations on marketplace facilitators create the potential for class-action lawsuits arising out of unintended overcollection of tax.
Today’s Marketplace Monday explores two legislative solutions to overcoming this
