Do Amazon Sellers Need To Register To Collect Sales Tax?
- May 19, 2016 | Suzanne Kearns
Because the sales tax rules for online purchases change so frequently, many Amazon sellers wonder if they should collect sales tax when they make sales through the site. After all, it wasn’t that long ago that no online purchases were taxed. But as more and more states try to make up for budget deficits, state laws are changing that expand the definition of nexus.
What Is Nexus?
If an ecommerce seller has nexus in a state, they are required to collect and remit sales tax to that state. Nexus is commonly defined as a physical presence in the state, and things such as an office, store, employee, or warehouse can trigger nexus. But the laws are evolving, and now some states consider things like solicitations, paying commissions to a state resident, or working with affiliates as nexus triggers.
Amazon Sellers and Sales Tax
So, how does all this affect Amazon sellers? The short of it is that Amazon sellers are required to collect sales tax in states where they have nexus just like any other online seller. And because you are likely sell to customers who live in many states, you’ll need to determine in which of those states you have nexus. All online sellers have nexus in the state in which their business is located, but some have triggers in other states as well. You can learn about each state’s nexus requirements by looking at our Sales and Use Tax Guides, which lists each state’s nexus rules.
Sales Tax and Amazon FBA Sellers
Things change a little if you operate as an Amazon FBA seller. Amazon uses warehouses across the country to store FBA seller’s inventory, which is a trigger for nexus, so if your inventory is stored in an Amazon warehouse, you’ll have nexus in that state. For example, if you sell to customers in California and your goods are stored in that warehouse, you have nexus in the state. Take a look at our state-by-state guide that lists all the Amazon warehouses.
Fortunately, you only have to register to collect sales tax in states where your inventory is stored -- not in every state that Amazon has a warehouse in.
How Do I Find My Amazon Inventory?
Your first step is to determine where Amazon is storing your inventory, and then register to collect sales tax in those states. To do this, you should go to your Pro Seller Amazon account and look under "Reports" for the Inventory Event Detail Report. You’ll have the option of selecting the dates you want to view. If you’re determining nexus, you’ll want to start at the date of your first sale. Then download the report and look at the Fulfillment Center ID column. There, you’ll find the codes for each warehouse where your products have been stored. You have nexus in each one of these states.
Amazon uses airport codes to name their warehouse ID’s, so use this list of U.S. airport codes to help you identify in which states your products have been stored. For instance, if you see that your inventory has been stored in a warehouse labeled as SAT, the lists shows that code is for the San Antonio, Texas, airport, which means you have nexus in Texas.
Register Your Business Where You Have Nexus
Once you’ve determined in which states you have nexus, you’ll need to register in each one of them and begin collecting and remitting sales tax. Go back to our Sales and Use Tax Guides to find out how to register your business in each these states.
Selling on Amazon has a great many benefits, but as an Amazon seller, you’ll have to live by the same sales tax-collection rules that other online business owners do. If you sell via the Amazon FBA program, maintaining sales tax compliance means understanding the states in which you have nexus and getting registered to collect sales tax.