States including Texas, Massachusetts and California recently issued guidance for remote sellers and marketplace facilitators, which includes information on registration and reporting requirements.
The Texas Comptroller recently issued guidance for remote sellers and marketplace facilitators, which includes information on registration and reporting requirements. In determining whether a seller or marketplace facilitator has exceeded the $500,000 economic nexus threshold, the guidance confirms that remote sellers should include taxable sales of tangible personal property and services, sales for resale, and sales to exempt entities. Separately stated handling, transportation, installation, and similar fees collected are also included in determining whether the thresholds are met. The guidance explains that remote sellers must collect and remit local taxes in Texas. However, remote sellers (not marketplace facilitators) may elect to use a single local tax rate by notifying the Comptroller of the election. The single local tax rate is computed annually and is set at 1.75 percent for the 2019 calendar year. If any purchaser paid a higher local tax rate as a result of the single local tax rate election, the purchaser may file for a refund with the Comptroller.
The Maine Revenue Services has also issued FAQs for marketplace facilitators that address registration, reporting and filing requirements. The FAQs provide that “Maine sales,” for purposes of the economic nexus thresholds include both taxable and exempt sales. In addition, a marketplace facilitator should account for its own sales and sales facilitated and delivered into Maine on behalf of others. Marketplace facilitators, per the FAQs, are required to provide marketplace sellers with a written statement identifying the sales for which the facilitator will collect and remit tax.
In Massachusetts, the Department of Revenue has adopted an emergency regulation addressing the sales and use tax obligations of remote sellers and marketplace facilitators. The regulation discusses, among other things, the procedures by which a marketplace facilitator can seek a waiver from its collection obligation. The regulation also provides guidance on registration, return and payment requirements.
Finally, the California Department of Tax and Fee Administration (CDTFA) has issued a proposed regulation and accompanying issue paper that addresses marketplace sales. The proposed regulation contains examples of transactions in which a company would be considered “facilitat[ing]” a sale for purposes of the marketplace law, including a few examples addressing the “carve-out” from the marketplace rules for entities that merely advertise goods for sale and refer purchasers to a seller. The proposed regulation also addresses the election available to a delivery network company to be considered a marketplace. An interested Parties meeting on the proposed regulation will be held on October 15, 2019. CDTFA Staff are accepting comments from businesses and practitioners on the proposed regulation. Please stay tuned to TWIST for future updates on remote seller and marketplace provider legislation.