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This entry was published on 2014-09-22
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Seller and third party liability
* § 1178. Seller and third party liability. (a) (1) A certified
service provider is the agent of a seller, with whom the certified
service provider has contracted, for the collection and remittance of
sales and use taxes. As the seller's agent, the certified service
provider is liable for sales and use tax due each member state on all
sales transactions it processes for the seller except as set out in this

(2) A seller that contracts with a certified service provider is not
liable to the state for sales or use tax due on transactions processed
by the certified service provider unless the seller misrepresented the
type of items it sells or committed fraud. In the absence of probable
cause to believe that the seller has committed fraud or made a material
misrepresentation, the seller is not subject to audit on the
transactions processed by the certified service provider. A seller is
subject to audit for transactions not processed by the certified service
provider. The member states acting jointly may perform a system check of
the seller and review the seller's procedures to determine if the
certified service provider's system is functioning properly and the
extent to which the seller's transactions are being processed by the
certified service provider.

(b) A person that provides a certified automated system is responsible
for the proper functioning of that system and is liable to the state for
underpayments of tax attributable to errors in the functioning of the
certified automated system. A seller that uses a certified automated
system remains responsible and is liable to the state for reporting and
remitting tax.

(c) A seller that has a proprietary system for determining the amount
of tax due on transactions and has signed an agreement establishing a
performance standard for that system is liable for the failure of the
system to meet the performance standard.

* NB Not effective per letter by DOT received August 30, 2006