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When FBA Sellers Must Collect Sales Tax

  • Mar 11, 2014 | Gail Cole

 Fulfillment By Amazon gets your products where they need to go. It may also trigger a sales tax obligation.

Amazon.com, the world’s largest online seller, has a pretty cool program designed to help small sellers move their products. Enroll in Fulfillment by Amazon (FBA) and Amazon will “pick, pack, and ship your orders.” This is an invaluable service for many sellers, particularly those looking to grow.

But there’s a catch to the FBA program that many sellers may not realize. When you participate in the FBA program, you may suddenly find yourself with an obligation to collect sales tax in numerous states.

Amazon’s sales tax obligation = your sales tax obligation

Amazon is able to ship your products so efficiently and effectively because it has fulfillment centers in many states. Those fulfillment centers are an undeniable physical presence and trigger nexus, a sales tax collection obligation, in those states. When your goods are housed in Amazon fulfillment centers and then packed and shipped from them, guess what? You have nexus, too!

As of this writing, Amazon has fulfillment centers in the following states:

  • Arizona
  • California
  • Delaware
  • Indiana
  • Kansas
  • Kentucky
  • Nevada
  • New Hampshire
  • Pennsylvania
  • South Carolina
  • Tennessee
  • Texas
  • Virginia
  • Washington

Plans for new fulfillment centers in Connecticut and Florida are already underway.

It can be extremely challenging to comply with state sales tax laws. Sellers with nexus in multiple states need to account for local rates in addition to state sales tax rates. Arizona alone has 18 self-administered local tax jurisdictions on top of more than 70 state-administered jurisdictions.

If growing your business is your goal, getting on top of sales tax is essential. Avalara TrustFile offers a simple solution.

photo credit: LordFerguson via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.