Voluntary Disclosure

The new world of sales and use taxation is responding to developments in Internet Commerce, Click-thru-Nexus, Marketplace Fairness Act, SCOTUS, SEC, FIN 48, ASC 450, the list goes on. These are just a few of the compelling components commanding a significant shift in the notions of nexus. Long established nexus standards set forth in 1992 (Quill v. North Dakota, 504U.S. 298) are being aggressively challenged by a multitude of jurisdictions. Amazon’s public battle with the state of New York, beginning in 2008, was denied certiorari by the Supreme Court of the United States on November 27, 2013. Presently, over half the states have passed or introduced legislation (Amazon Laws) expanding the definition of nexus beyond previously understood bounds. As a result, these renewed interpretations place the business community in a precariously responsive position while state discovery units ramp up their outreach programs targeting unregistered out of state businesses.

The consequences of waiting to be discovered by a jurisdiction can be severe resulting in inordinately long look-back periods from 8 to 10 years or longer, heavy penalties, substantial interest with corporate officers and responsible parties carrying personal liability…uncomfortable. In short, engaging in Voluntary Disclosure Agreements (where available) can result in significant mitigation of currently outstanding liabilities most usually limiting the look-back period to 3 to 4 years (compared with 8 to 10) and waiving penalties in most circumstances. In any event, the act of approaching the jurisdiction before they approach your organization results in a significant reduction of potential out of pocket liability while alleviating the nagging feeling of an impending worst case scenario.

We are actively versed and currently managing the specific benefits of the voluntary disclosure programs across the United States along with current amnesties. With a brief discussion and high level understanding of your product mix and customer base, Fidelity will help you scope the benefits of these programs and quantify the optimal strategy to resolution.