Case Overview
An online wholesale seller received retroactive sales-tax assessments (2018 forward), plus interest and penalties, from three states (NJ home base, NY, PA), based on Wayfair economic nexus.
Legal Issues
After South Dakota v. Wayfair (2018), sellers exceeding an economic nexus threshold (typically $100K revenue or 200 transactions) must register and collect. However, (1) each state’s effective date, (2) marketplace facilitator laws, and (3) Voluntary Disclosure Agreement (VDA) negotiations leave meaningful room to reduce exposure.
Song Law Firm’s Strategy
- Verified each state’s economic-nexus effective date — NY: 2019-06-21; PA: 2019-07-01 (defeating 2018 retroactive claims)
- Excluded Amazon FBA sales under marketplace facilitator law — Amazon collected and remitted starting 2019-06
- Negotiated Voluntary Disclosure Agreements (VDAs) with all three states — penalty waiver, interest reduction, three-year lookback cap
- Confirmed NJ jurisdiction was based on physical presence (office), not economic nexus — registered and brought current
Outcome
Total assessment reduced by 78%. NJ paid at normal rate after physical-presence acknowledgment; NY and PA closed via VDA with capped lookback and waived penalties. Advised the client to auto-separate marketplace facilitator revenue going forward.
Practice Takeaways
- Economic nexus has state-specific effective dates — 2018 retroactive claims are usually invalid
- Amazon/eBay/Etsy revenue is separated under marketplace facilitator laws (rolled out across states 2019–2021)
- VDAs typically cap lookback at three years and waive penalties — a strong voluntary-disclosure incentive
This case is an illustrative composite reconstructed from anonymized facts across multiple matters. Individual outcomes depend on facts and applicable jurisdiction; please consult a qualified attorney. NJ RPC 7.1. Prior results do not guarantee similar outcomes.
Contact Song Law Firm
- Phone: 201-461-0031
- Email: mail@songlawfirm.com
- Web: songlawfirm.com
- Offices: NJ · NY · GA · TX · MA
