Welcome
Daily Tax Report: State

Verizon Wants Opt-Out of Online Marketplaces Collecting Its Taxes

Aug. 5, 2019, 5:13 PM

States requiring online marketplaces such as Amazon Marketplace and eBay to collect and remit sales taxes on third-party transactions should give big online sellers the option to collect those taxes themselves, according to a Verizon executive.

Verizon is a very big, well-established seller with long-standing, sophisticated systems for collecting taxes and fees on online transactions involving such things as the sale of telecommunications services, said John Cmelak, director of state tax policy for the West Area at Verizon. As such, the company should be able to collect and remit if it chooses to, he said Aug. 5 at the annual meeting of the Multistate Tax Commission in Boise, Idaho.

“We just think we’re better at it than the Amazons and the eBays of the world because of the breadth of taxes we collect,” he said.

Marketplace Requirements

In the wake of the U.S. Supreme Court’s June 2018 ruling in South Dakota v. Wayfair, most of states with a sales tax have approved marketplace facilitator laws—rules requiring online marketplaces to collect and remit taxes on transactions by third-party vendors selling on their platforms. In Wayfair, the Supreme Court scrapped its 1992 physical presence standard affirmed in Quill Corp. v. North Dakota, which limited the ability of states to tax remote sales.

The court suggested strongly that South Dakota’s law requiring remote sellers to collect sales tax if they had more than $100,000 in in-state sales or 200 transactions would pass constitutional muster. Since the ruling, dozens of states have passed versions of South Dakota’s law or enforcing existing economic threshold laws and rules they already have on the books, in addition to marketplace facilitator laws.

Cmelak acknowledged that many states have passed marketplace facilitator laws with no opt-out or waiver option, meaning marketplaces are required to collect and remit taxes for all third-party sellers that exceed the relevant economic thresholds.

Cmelak urged the tax commission, along with state governments, to consider policies allowing for big sellers to seek a waiver of marketplace facilitator filing requirements from state tax commissions.

Ohio’s Example

Verizon would support laws like that of Ohio’s, which allows companies to “go to the tax commission and apply for an opt-out,” Cmelak said.

Ohio Gov. Mike DeWine (R) signed a budget bill (S.B. 166) with the marketplace facilitator requirements July 19.

“We would urge the body to consider an opt out or a waiver of making the marketplace facilitator collect and remit everything on a transaction, because frankly eBay and Amazon and others aren’t very good at collecting things like 911 taxes or universal service fund taxes which also apply to telecommunications services,” Cmelak said.

To contact the reporter on this story: Tripp Baltz in Boise, Idaho, at abaltz@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Patrick Ambrosio at pambrosio@bloombergtax.com

To read more articles log in. To learn more about a subscription click here.