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Tax Law

Marketplace Monday: The MTC’s “Top 12” Marketplace Collection Tax Issues

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, Colorado, the Uniformity Committee approved a new project to reconvene the Marketplace Facilitator Work Group, to address any follow-up issues arising from the recent enactment of marketplace collection laws in approximately 36 states. The follow-up issues primarily focused on implementation and compliance problems with marketplace collection tax laws. The Work Group sent a survey to Uniformity member states on July 11, 2019 requesting that the states identify and rank the “top 12” issues by priority, from a list of 19 issues provided. The purpose of the survey and study was to develop recommendations to be considered by the Committee at its next meet in San Antonio in November.

The Committee presented the results of the survey at the annual meeting. The Committee indicated that 22 states participated in the study and prioritized the issues as follows:

  1. Definition of marketplace facilitator/provider
  2. Whether marketplace facilitators should have the same rights as a retailer
  3. Recordkeeping, audit exposure and liability protection for marketplace facilitators and remote sellers
  4. Marketplace seller-marketplace facilitator/provider information requirements
  5. Collection responsibility determination between marketplace facilitator and marketplace seller
  6. Marketplace seller economic nexus threshold calculation
  7. Remote Seller sales/use tax economic nexus threshold issues
  8. Development of certification requirements for marketplace facilitators
  9. State information sharing to assist in noncompliance by marketplace facilitators
  10. Whether states should publish clear guidance on taxability and exemptions to assist marketplace facilitators
  11. Return simplification for marketplace facilitators and sellers
  12. Enforcement considerations for foreign sellers

There were seven issues that did not make the “top 12” issues list. These issues include class action lawsuit protection, retroactivity, local sales/use taxes, assessment and notices, registration, security protocols and overall information on implementation.

Based on the survey results, the Work Group will develop recommendations to present back to the Committee. The Committee decided that based on the recommendations, a white paper will be prepared in time for the 2020 state legislative sessions. It was decided that the Committee would not have adequate time before the 2020 legislative sessions to draft and approve a model statute.

The Committee also noted that the National Conference of State Legislatures (NCSL) SALT Task Force met in Nashville, Tennessee on August 4th and August 5th. The Task Force is currently working on considering proposed model statutory provisions to address some of these issues. The Committee indicated that the Work Group efforts ideally would dovetail with the work of the Task Force.

Why this is important: States will likely consider legislative amendments to their marketplace collection laws in the 2020 legislative sessions. The Work Group and Task Force efforts will be influential in legislative revisions proposed by states. To the extent that there are specific concerns or challenges with marketplace collection laws, it will be important to monitor and provide feedback to the Work Group and Task Force.

Next Monday: Treatment of Marketplace Facilitator (Retailer or Not a Retailer)