Multistate Tax Commission Amends Voluntary Disclosure Application to Reflect Pivotal U.S. Supreme Court Decision
As a direct result of the U.S. Supreme Court’s decision in South Dakota v. Wayfair, the Multistate Tax Commission’s (MTC) Nexus Committee has amended its voluntary disclosure application (VDA) to require additional information.
The MTC’s voluntary disclosure program forgives certain past tax liabilities (including interest and penalties) of sellers in exchange for the seller agreeing to prospectively collect and remit sales tax.
This change is in direct response to the Court overturning the Quill physical presence nexus standard for the imposition of sales and use taxes.
The MTC has modified their VDA program – in light of Wayfair – such that applicants wishing to participate in the program are now required to report their sales volume and number of sales within a state during the past year.
Post-Wayfair, a state may now impose its sales and use taxes on remote sellers based on the seller’s transactions and/or sales dollar volume in jurisdictions because physical presence is no longer required to impose tax. For example, South Dakota’s sales tax economic nexus provision sets forth a requirement that retailers collect and remit South Dakota sales tax if the seller has 200 transactions or $100,000 of in-state sales.
What Does CohnReznick Think?The Multistate Voluntary Disclosure Program provides a means for a taxpayer with potential past tax liability to more effectively remediate these past liabilities, i.e., by means of a uniform procedure coordinated through the National Nexus Program of the Multistate Tax Commission. As businesses attempt to identify their nexus footprint post-Wayfair, it is anticipated that some taxpayers will conclude that they had nexus for prior years by virtue of traditional standards (e.g., in-state employees, agents, etc.).
ContactFor more information, please contact Corey Rosenthal, Principal, State and Local Tax Services, at 646-625-5729 or firstname.lastname@example.org.
Subject matter expertise
JD, Principal, Practice Leader, State and Local Tax (SALT) Services
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