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Does My Amazon FBA Inventory in Arizona Trigger Nexus?

  • Jul 1, 2016 | Laura McCamy

As an FBA seller with products stored in an Amazon fulfillment center in Arizona, do you need to collect and remit taxes on sales to customers in the state?

Arizona’s Department of Revenue doesn’t specifically mention the storage of products in a warehouse as a trigger for sales tax nexus. However, Arizona’s definition of nexus does include owning “real or personal property” in the state, which is likely to cover your Amazon FBA Inventory in Arizona.

Amazon has at least four fulfillment centers in Arizona. If you use Amazon FBA, be sure and keep an eye on your Inventory Detail Report to see if the centers near Phoenix and Goodyear appear.

Now the bad news: Arizona does not make the business of filing sales tax returns easy for sellers. If you have Amazon FBA inventory in Arizona, you may have to register to collect sales tax (called a transaction privilege tax or TPT in Arizona) with both the state and individual cities.

In most states, while sales taxes are often levied by the state and different local taxing districts, including cities, all collection happens at the state level. In Arizona, several cities administer their own sales taxes. This means that sellers register with and pay sales taxes directly to these cities. Happily, Goodyear is now a program city, so the Arizona administers the taxes for that location at the state level. Unhappily, Phoenix is still handling its own TPT filings.

A representative from the Arizona Department of Revenue confirms that your Arizona sales tax rate will be determined by the Arizona location from which your products are shipped. So if your products show up in the Goodyear warehouse, you only need to register with the state to collect AZ sales tax. If Amazon FBA ships your goods out of a Phoenix fulfillment center, you will need to register with both the state and the City of Phoenix.

Arizona is working on cleaning up its act and simplifying the TPT. The original schedule for moving all tax collection to the state level was January 1, 2016, but a number of cities (including Phoenix) will not be incorporated into the AZ sales tax system until some unspecified time after the end of 2016.

If you find yourself physically in the Phoenix area, you might want to stop by for an Amazon fulfillment center tour. You can wave to your merchandise as you go by.

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.
Avalara Author
Laura McCamy
Avalara Author Laura McCamy