We’re working to stop the MTC and States from putting Amazon’s tax burden on 3P sellers.

Campaign Updates

October 11: The MTC has extended the amnesty application period to November 1, 2017 with sellers being given 30 days after notice of a signed agreement to register with the state (extended from the December 1 registration deadline).

October 11: MTC to hold emergency nexus committee meeting on Wednesday, October 11, 2:30 p.m. Eastern Daylight Time 

October 10: The Great Debate- Join the Sales Tax Amnesty Program with Junglescout and Catching Clouds

October 6: MTC Could Extend Amnesty Deadlines for Marketplace Sellers

September 26: Courthouse News reports: Massachusetts revenue officials sent Amazon their first records demand on Aug. 31, 2017, seeking information about all the third-party companies that do business through Amazon that have stored products in Massachusetts since 2012.
Giving Amazon three weeks to comply, the state also demanded federal identification numbers of in-state third-party vendors.

September 21: We had a quick chat with Web Retailer on FBA & Sales Tax: Stop the Amnesty?

September 19: Webinar with Proseller Talk on Why You Shouldn't Partake In The MTC Tax Amnesty and What You Should Do Instead

September 14: Webinar with Sellerlabs on Making Sense of the Upcoming Sales Tax Amnesty: A Diversity of Opinions. We'll be joined by one of the country's best state tax attorneys, Jordan Goodman.

September 14: Paul will be speaking at Retail Global

September 11: Big update on what's been happening behind the scenes

September 7: We were featured in Taxanalysts News Analysis: Amnesty Exposes Rift Among Amazon Marketplace Sellers

August 30: Article on Sellerlabs by Chris McCabe: Sales Tax Amnesty—What Do I Need to Know?

August 24: Paul's article published: Who is affected by the MTC Online Marketplace Seller Voluntary Disclosure Initiative?

August 22nd: Big thank you to Junglescout for speaking with us about the Amazon Sales Tax Amnesty & Why You Should Think Twice

August 16: Paul quoted in CNBC in response to Trump's tweet about Amazon damaging tax paying retailers. CNBC reports, "Some states are now arguing that Amazon should be responsible for collecting tax on behalf of its third-party sellers because the company controls a huge part of the sales process, including payment processing and customer support."

August 15: As the Multistate Tax Commission (“MTC”) is putting the burden on 3rd party sellers to collect and pay sales tax to states in which they have FBA inventory, South Carolina is alleging that the burden should be on Amazon.

August 12: Paul's article published about the Online Marketplace Seller Voluntary Disclosure Initiative

Paul Rafelson 

Paul is the former State Tax Counsel of General Electric Company where he was responsible for state income and franchise tax audits, appeals and litigation. Prior to GE, Paul held similar roles at Wal-Mart Stores, Inc. in Bentonville, AR and at Microsoft Corporation in Redmond, WA. Paul is also an adjunct professor at Pace Law School in White Plains, NY, where he teaches State and Local Tax Law.

Paul received his J.D. and M.B.A. from Villanova University in 2005, and his B.B.A. in accounting from the University of Massachusetts, Amherst in 2001. Paul is a licensed attorney in Florida and New Jersey.

October 11: The MTC has extended the amnesty application period to November 1, 2017 with sellers being given 30 days after notice of a signed agreement to register with the state (extended from the December 1 registration deadline).

October 11: MTC to hold emergency nexus committee meeting on Wednesday, October 11, 2:30 p.m. Eastern Daylight Time 

October 10: The Great Debate- Join the Sales Tax Amnesty Program with Junglescout and Catching Clouds

October 6: MTC Could Extend Amnesty Deadlines for Marketplace Sellers

September 26: Courthouse News reports: Massachusetts revenue officials sent Amazon their first records demand on Aug. 31, 2017, seeking information about all the third-party companies that do business through Amazon that have stored products in Massachusetts since 2012.

Giving Amazon three weeks to comply, the state also demanded federal identification numbers of in-state third-party vendors.

September 21: We had a quick chat with Web Retailer on FBA & Sales Tax: Stop the Amnesty?

September 19: Webinar with Proseller Talk on Why You Shouldn't Partake In The MTC Tax Amnesty and What You Should Do Instead

September 14: Webinar with Sellerlabs on Making Sense of the Upcoming Sales Tax Amnesty: A Diversity of Opinions. We'll be joined by one of the country's best state tax attorneys, Jordan Goodman.

September 14: Paul will be speaking at Retail Global

September 11: Big update on what's been happening behind the scenes

September 7: We were featured in Taxanalysts News Analysis: Amnesty Exposes Rift Among Amazon Marketplace Sellers

August 30: Article on Sellerlabs by Chris McCabe: Sales Tax Amnesty—What Do I Need to Know?

August 24: Paul's article published: Who is affected by the MTC Online Marketplace Seller Voluntary Disclosure Initiative?

August 22nd: Big thank you to Junglescout for speaking with us about the Amazon Sales Tax Amnesty & Why You Should Think Twice

August 16: Paul quoted in CNBC in response to Trump's tweet about Amazon damaging tax paying retailers. CNBC reports, "Some states are now arguing that Amazon should be responsible for collecting tax on behalf of its third-party sellers because the company controls a huge part of the sales process, including payment processing and customer support."

August 15: As the Multistate Tax Commission (“MTC”) is putting the burden on 3rd party sellers to collect and pay sales tax to states in which they have FBA inventory, South Carolina is alleging that the burden should be on Amazon.

August 12: Paul's article published about the Online Marketplace Seller Voluntary Disclosure Initiative

Paul Rafelson 

Paul is the former State Tax Counsel of General Electric Company where he was responsible for state income and franchise tax audits, appeals and litigation. Prior to GE, Paul held similar roles at Wal-Mart Stores, Inc. in Bentonville, AR and at Microsoft Corporation in Redmond, WA. Paul is also an adjunct professor at Pace Law School in White Plains, NY, where he teaches State and Local Tax Law

Paul received his J.D. and M.B.A. from Villanova University in 2005, and his B.B.A. in accounting from the University of Massachusetts, Amherst in 2001. Paul is a licensed attorney in Florida and New Jersey.

Open Letter to the MTC and States

Open Letter to the MTC & The States Participating in the MTC’s Online Marketplace Seller Voluntary Disclosure Initiative

This letter is sent to you on behalf of many of the small businesses that collectively make up a substantial portion of the Amazon marketplace third party community (“Marketplace Community”), who are requesting that their voice to be heard, and concerns addressed with respect to the MTC’s Online Marketplace Voluntary Disclosure Initiative (“Amnesty”).

Stop the Clock

First and foremost the Marketplace Community respectfully requests that the MTC Immediately Stop the Amnesty Clock, removing the fear and paranoia that has swept the Marketplace Community, and take time to address the Marketplace Community’s specific concerns.

The Marketplace Community Objects to the MTC’s Factual Conclusions Driving This Initiative

The Marketplace Community respectfully disagrees with the MTC’s attempt to place the Sales & Use Tax (“S&U”) collection burden on the domestic and international Marketplace Community, most of whom are small businesses.

The Marketplace Community disagrees with the MTC’s position that Amazon sellers are required to collect sales tax simply because they participate in the Fulfillment by Amazon program (“FBA”). Such activities alone do not exceed the constitutional threshold of requiring Physical Presence, as established in the Quill case, nor does such activity establish a Substantial Nexus with the state as required in the Complete Auto case.

Notwithstanding the above, the Marketplace Community believes the relevance of this legal distinction is Moot, as established state tax law requires the retailer/vendor to collect S&U. Therefore, the burden to collect and remit S&U falls squarely on the person that “makes” the sale, and in the case of FBA transactions that person is Amazon.

Third-Party Product Providers are Not Retailers

For reasons unknown to the Marketplace Community, the jurisdictions participating in Amnesty program are turning a blind eye to the well established factual and legal reality that Amazon is the Vendor/Retailer, not the Marketplace Community. For example, Florida law defines a retailer as follows:

"Retailer" means and includes every person engaged in the business of making sales at retail or for distribution, or use, or consumption, or storage to be used or consumed in this state.

The MTC’s position that Amazon is not a retailer in a FBA transaction is absurd when considering that, with respect to Marketplace Community transactions, Amazon does all of the following retail sales activity:

  1. Interfaces with the customers;
  2. Controls the customer shopping experience and customer interactions;
  3. Facilitates all aspects of the retail sale process;
  4. Maintains the retail website from which customers can buy goods offered by the Marketplace Community;
  5. Displays and advertises the Marketplace Community’s product listings;
  6. Controls what can and cannot be said in the product listing;
  7. Controls what can and cannot be sold by the Marketplace Community;
  8. Accepts payments through its payment processor, which includes the use of Amazon.com branded retail gift cards which may be redeemed for retail purchases of inventory supplied by Amazon or inventory supplied by the Marketplace Community;
  9. Manages every aspect of inventory logistics for Marketplace Community members who participate in FBA;
  10. Packages and delivers the Marketplace Community member’s product to the buyer;
  11. Processes all Marketplace Community returns;
  12. Retains sole authority in determining whether a return is due to the fault of the buyer or seller;
  13. Requires the Marketplace Community member to absorb expenses associated with returned merchandise, even when damaged by the buyer;
  14. Requires the Marketplace Community member to absorb the cost of damaged merchandise in the Amazon facilities, even if it’s Amazon’s negligence which caused the damage;
  15. Guarantees the Amazon experience by ensuring satisfaction with respect to the products, vigorously siding with the buyer, and forcing Marketplace Community members to absorb costs associated with Amazon’s assurance of a positive customer experience, even if the need arises from actions of the buyer, or Amazon itself;
  16. Disciplines members of the Marketplace Community for violations of its retail policies;
  17. Provides little to no recourse for members of the Marketplace Community to complain or object to decisions made by Amazon that are detrimental to the Marketplace Community members.

Based on these facts, it’s difficult to see what’s left for the Marketplace Community members to do that could be considered retailing, when all of the “retail” activity is borne by Amazon. Certainly, the fact that the Marketplace Community members are free to set their own price is not relevant. Afterall, product manufacturers often require retailers to maintain a set price, that does not make them retailers.

The MTC’s position also raises consistency concerns in terms of who the retailer is based on whether a product is purchased from Amazon directly, or through a Marketplace Community member. Under the MTC’s view, Amazon is a retailer if a buyer buys something by clicking on one link that is Amazon direct, but suddenly not a retailer if a buyer buys that very same item using a third-party FBA link, even though the buyer may not even know the difference in terms of who they are buying from, and Amazon’s role with respect to how it services the customer in both instances is identical.

Even Under the MTC’s View the Marketplace Community are Consignors of Inventory, Not Retailers

While the MTC maintains the position that FBA inventory is owned by the Marketplace Community even after it is immersed into the FBA vortex of warehouses and distribution centers, the MTC nonetheless chooses to ignore that such an arrangement is evidence of a consignment relationship, whereby Amazon is the Consignee, and the Marketplace Community the Consignors. Again using Florida law as an example, such an arrangement would require Amazon to collect the tax, not the Marketplace Community. Specifically, Florida law states that:

Where merchandise is delivered to a dealer on a consignment basis, the tax shall be collected and remitted by the consignee, not the consignor.

Therefore, even accepting the MTC’s position that the Marketplace Community owns inventory that is in an FBA warehouse, Amazon, as consignee, is the party that is legally responsible for collection and remittance of S&U.

The MTC’s Position Is Not Shared Across the Majority of States

The Marketplace Community also wishes to point out the inconsistency that still exists among the states. The states are nowhere near agreement with respect to who should be responsible for collecting S&U. For example, a recent and highly publicised South Carolina case filed against Amazon supports the Marketplace Community’s position that Amazon is responsible for collecting and remitting S&U, not the Marketplace Community. As the MTC is also aware, Minnesota and Washington have recently passed laws placing the collection burden on the marketplace providers. With only 18 states supporting the MTC’s view, why is the MTC so convinced that taxing the Marketplace Community and not Amazon is the appropriate means for states to collect S&U on these transactions?

As part of initiating a dialogue to work with the MTC in order to address the marketplace S&U issue, the Marketplace Community requests an explanation from the MTC explaining why they support a S&U regime that unduly burdens the millions of predominantly small businesses that make up the Marketplace Community, especially when the law, the facts and the common sense path of least resistance clearly support placing the burden on Amazon.

Stop The Amnesty Clock

The two month amnesty clock has set off a sense of fear, panic and uncertainty within the Marketplace Community. The Marketplace Community is a collective of mostly small businesses that lack the tax sophistication of the large corporate taxpayers, that the MTC and the states are accustomed to working with. The small businesses within the Marketplace Community don’t have the luxury of having armies of tax lawyers and accountants to warn them that the law was coming, and lobby to make changes.

For these reasons, the MTC must immediately Stop the Amnesty Clock, and give the small businesses of the Marketplace Community an opportunity to have a seat at the table to express their concerns to the MTC and to the states.

Sincerely,

The Members of the Marketplace Community

If you don’t want to collect sales and income tax in 24+ states, join us.

Learn More

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Have a question? Contact Paul.

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