Multistate: More Marketplace Facilitator Updates

The Alabama Department of Revenue recently issued guidance (Notice 21-07) on marketplace facilitators and the Simplified Sellers Use Tax or SSUT. Recall, effective January 1, 2019, marketplace facilitators that meet the $250,000 of sales economic nexus threshold can elect to comply with notice and reporting requirements or collect sales and use tax on facilitated sales.  Rather than collect tax at the precise local rates, marketplace facilitators are required to collect the eight percent SSUT, remit it to the Department that, in turn, distributes one half of the proceeds to local governments based on population. Collection and remittance of the SSUT relieves the marketplace facilitator, the marketplace seller, and the purchaser from any additional state or local sales and use taxes on transactions made through the marketplace.  The recently issued guidance confirms that the SSUT rate applies even when the marketplace seller is a brick and mortar business. Specifically, the Notice provides that “restaurants, grocery stores, beverage stores, other retail businesses and individuals selling products through a marketplace facilitator platform are considered a marketplace seller.”

In other news, the Missouri Department of Revenue issued a Letter Ruling 81-51 addressing the obligations of a vendor that makes sales through a marketplace facilitator. Recall, Missouri’s statute requiring marketplace facilitators to collect and remit becomes effective January 1, 2023. The vendor requested guidance on the proper reporting of sales made through a marketplace facilitator that collected sales and use tax from the customer and remitted it to the state under the facilitator’s tax account. The letter ruling confirmed that in this instance, the taxpayer was still the vendor of the product and was required to remit the applicable taxes to the state until the marketplace facilitator law becomes effective. Seemingly recognizing that the marketplace facilitator likely handled all payments made by customers, the Department noted that it was permissible for the vendor to delegate its responsibility to collect tax from the customer to the marketplace facilitator.  However, the vendor’s use tax returns must be accompanied by a remittance of the full amount of the tax required to be collected by the vendor during the period covered by the return.  The vendor could not delegate remittance responsibility because such delegation would cause its own returns to be incomplete.

Finally, in other marketplace facilitator news, the New Mexico Department of Taxation & Revenue has issued FYI-206, which addresses the obligations of marketplace facilitators and sellers and how the new destination sourcing rules apply to such sales. Please contact Sarah McGahan with questions on these developments.