Multistate: Update on Wayfair-Related Developments

The Michigan Department of Treasury recently issued a Notice and FAQs addressing the sales and use tax obligations of marketplace facilitators. Recall, effective January 1, 2020, a marketplace facilitator that meets statutory economic nexus thresholds is required to collect and remit sales and use tax on all taxable sales made directly by the facilitator or facilitated on behalf of a marketplace seller. The bills requiring marketplace facilitators to collect and remit were signed on December 12, 2019. Importantly, the Department’s notice provides that the Department will, upon request, waive failure to file or deficiency penalties for tax due on sales facilitated by a marketplace facilitator for returns due on or before April 20, 2020. There will be no penalty relief for direct sales made by marketplace facilitators.  The notice also clarifies that the marketplace facilitator is considered the taxpayer and has all the rights and obligations of other persons making retail sales. This includes the ability to claim early payment discounts, the need to maintain exemption certificates, and the need to ensure access to all relevant data. In the FAQs, the Department clarifies that the economic nexus thresholds are based on gross sales, including all taxable, nontaxable, and exempt sales. The FAQs also provide information on filing requirements, early payment discounts, a marketplace seller’s obligations, and refund processing.

In other state Wayfair-related news, multiple bills have been pre-filed in Missouri and Florida that would adopt sales and use tax economic nexus and marketplace facilitator provisions. Please stay tuned to TWIST for future Wayfair-related updates.