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The Scoop on Indiana's Special Tax Amnesty Program

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The battle between state revenue departments and eCommerce sellers is escalating. The U.S. Supreme Court is even involved and will decide on a landmark case by the end of June 2018.

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Most online retailers want to be in compliance.  However,  the tax laws are confusing, the registration process is tedious and the threat of bankrupting your business due to past due taxes, penalties and interest is overwhelming.  Given the opportunity, many sellers should jump at the chance to get into compliance as painlessly as possible. 
 
In the fall of 2017, the Online Marketplace Seller Voluntary Disclosure Initiative was offered by the Multistate Tax Commission.  Many states participated in this historical amnesty which forgave past tax liabilities, which was unprecedented.  Most amnesty programs only forgive penalties, and occasionally interest - never tax.  This amnesty program resulted in many out-of-state online sellers registering and starting to collect and remit sales tax to the state.  Indiana was not one of the states that participated, but seemed to be inspired by the MTC's success.   
 
Who Qualifies?
This program benefits out-of-state retailers who have inventory in a third-party Indiana warehouse and sell to Indiana customers. Amazon operates several fulfillment centers in Indiana so Amazon FBA sellers likely have inventory in the state.  
 
Who Does Not Qualify?
Out-of-state sellers who meet one or more of these factors cannot participate in this voluntary disclosure program:
  • Has filed sales or income tax returns in Indiana
  • Already applied for an Indiana sales tax permit
  • Received a sales or income tax notice from the state
  • Has been audited by the Indiana Department of Revenue
Benefits of Participating:
 
1)    Reduced look back period for sales tax and state income tax
The state will only "look back" to January 1, 2017 for past due taxes. The standard "look back" period in Indiana is 3 years.
2)   Waived penalties
The state will not charge penalties or interest for unpaid taxes during the look back period. Normally the state adds       past due fees and interest for unpaid taxes.
3)    In Compliance
This program is an opportunity to comply with the Indiana state law while minimizing tax liability as much as possible
 
The Bottom Line
Absolutely take advantage of this program if you have the opportunity.  This is a great way to reduce your tax exposure and liability.  Just remember, once you register for sales tax, you will be responsible for filing returns going forward.
 
More Program Details
The deadline to apply to participate in this voluntary disclosure program is December 31, 2018. Participants will be required moving forward to remit sales and income tax to the state. 
 
For a list of these qualifications as well as more details about the voluntary disclosure agreement, visit the Indiana Department of Revenue's website.
 
Final Thoughts
Indiana is one of several states extending the olive branch to out-of-state online sellers with a sales and income tax amnesty program.  The good news is Indiana is willing to work with these sellers to offer compliance terms that benefit both sides. 
 
For more information about how Cherry Bekaert can help online sellers with sales and income tax compliance, visit our website
 

 

 

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Lauren Stinson, CMI
Written by Lauren Stinson, CMI

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