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3 sales tax tips for Amazon sellers

  • Mar 22, 2017 | Laura McCamy

Selling on Amazon can open you up to some sticky sales tax issues. Here are three sales tax tips for Amazon sellers to get you out of a jam when you file your sales tax returns.

1. It’s all about nexus

On Amazon, you reach customers all over the U.S. You need to collect and remit sales tax when you ship an order to a state where you have nexus. You get nexus through a physical presence in a state (e.g., an office, stock in an Amazon FBA warehouse, an employee).

You can also get nexus through an affiliate relationship. In California, just selling your products on Amazon might give you affiliate nexus. Amazon has sales tax nexus in California because it has warehouses in the state, so you might too (but only if your California sales totaled at least $10,000 in the last year).

2. There’s no penalty for collecting sales tax

Sales tax is due on every internet sale. Sometimes you, the retailer, are required to collect it, and sometimes your customer should pay use tax. Most consumers do not pay the use taxes they owe on their internet purchases.

If you’re unsure whether you have sales tax nexus in a state, you might just want to register to collect sales taxes. Failing to collect and remit sales taxes that you owe can lead to penalties and interest. No state will ever complain if you collect the sales tax due from its residents.

3. Get the latest sales tax tips from the pros

Did you know that Amazon has started charging sales taxes in 12 new states this year (13 come April 1)? Why is a bit of a mystery; it could be the company has sales tax nexus through affiliatesor because it’s opening new warehouses. Amazon likes to keep its warehouse locations quiet (though you can find a list here).

Fortunately, it is possible to stay on top of your Amazon sales tax obligations and file all your sales tax returns on time without growing an extra arm or hiring an octopus. Let sales tax automation software like Avalara TrustFile give you a hand (or two or three).

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