HOW DO I HANDLE SALES TAX AS AN AMAZON SELLER?
NOTE; This information is a guide only and should not be considered legal Tax advice.
If you are a FBA seller, you need to collect sales tax in states where they have sales tax nexus. Nexus is a legalized way of saying that your business has a significant enough connection to a state that you should collect sales tax from buyers in that state. Your company could get hit with a sales tax bill that your company isn’t prepared for. Look at it this way…in a state’s mind, you as the merchant are using their roads and other infrastructure to run your business so you should be helping them out by collecting sales tax from your buyers and sending it back to the state. If you are an Amazon FBA seller, you may have sales tax nexus in states where Amazon has a fulfillment center.
WHERE TO FIND YOUR SALES TAX NEXUS
If you’re an Amazon FBA seller, you’ll have a sales tax nexus in every state where you have inventory in an Amazon warehouse or fulfillment center. To see where your inventory has been stored for any amount of time, log in to Seller Central, click “Reports” and then “Fulfillment.” Here, you’ll be able to view your event Amazon inventory detail report, choose the time period that interests you and download the information. Once the report is downloaded, look at the column labeled “fulfillment-center-id” to see a list of Amazon fulfillment centers where your inventory is stored.
SETTING UP AMAZON TAX CALCULATION SERVICES
Amazon sales tax differs not only by state but also differs by city and country, and determining how much you owe in sales tax can be complicated. Luckily, if you have an Amazon Professional Seller account, which costs $39.99 a month, Amazon will begin collecting sales tax on your behalf, even keeping up with whether a state is an origin or destination-based. However, Amazon will charge a fee of 2.9% per transaction in order to collect sales tax. To set up Amazon tax calculation services, log in to Seller Central and select “Tax Settings” from the “Settings” drop-down menu.
WHEN AMAZON SALES TAX ISN’T CHARGED
Sales tax is not collected on qualifying items only during sales tax holidays. During these periods, purchases of qualifying goods from customers within qualifying states will be exempt from state and sometimes local sales taxes. There are two main types of sales tax holidays and these occur annually in many states. For example, during back-to-school sales tax holidays, school supplies, clothing, computers, and other educational items may be exempt from sales tax. States that often experience severe weather, such as hurricanes, may also have a period when emergency-prepared items, including generators, batteries, flashlights, and hurricane shutters, are also exempt from sales tax.
ENSURE YOUR SALES TAX SETTINGS ARE CORRECT
Not a daunting process but it’s clear that there are a lot of factors involved in Amazon sales tax, which can make the process of collecting and remitting sales tax seem daunting. While Amazon will collect sales tax on your behalf, you’re responsible for properly establishing your sales tax settings, registering with the states your business has a presence in, and reporting and filing sales tax. If you have questions about sales tax, contact your state’s taxing authority or accounting professional.
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