New Tax Responsibilities for FBA Sellers

Remember last year when Amazon sent out the letters informing FBA sellers that they might have to split and ship their inventory to multiple warehouses? Well, fast forward  to a year later and we are starting to see some of the fallout from this decision. Merchant-services vendor Outright is warning FBA sellers that they have a potential tax responsibility in any state where Amazon is storing their merchandise.

 

Yep, that’s right. Laura Messerschmitt, Outright’s vice president of marketing is saying that if your stuff is in another state, you have to collect taxes in (or rather for) that state. As an example, if you have items in a warehouse in Kentucky and you sell an item to a resident in Kentucky, you are suppose to collect sales taxes for the state of Kentucky. The reason for this is because you have a business presence in that state and according to the tax law, this means you have a tax nexus or “connection” to the state.

 

 

Unfortunately, Amazon hasn’t really informed it’s FBA sellers of this potential tax problem. In fact,  Amazon spokesman, Ty Rogers side-stepped the entire issue by pointing to Amazon’s policy of not counseling its sellers on their tax responsibilities. He defends this position by pointing sellers in the direction of Amazon’s service agreement, which states in part:

F-14 Tax Matters

You understand and acknowledge that storing Units at fulfillment centers may create tax nexus for you in any country, state, province, or other localities in which your Units are stored, and you will be solely responsible for any taxes owed as a result of such storage. If any Foreign Shipment Taxes or Your Taxes are assessed against us as a result of performing services for you in connection with the FBA Program or otherwise pursuant to these FBA Service terms, you will be responsible for such Foreign Shipment Taxes and Your Taxes and you will indemnify and hold Amazon harmless from such Foreign Shipment Taxes and Your Taxes as provided in Section F-10 of these FBA Service terms

Although the debate over national sales tax legislation is again in the news, for now the recommendation seems to be that you talk to a tax adviser about your responsibilities for paying the tax. Meanwhile, Outright has put a list of Amazon’s Fulfillment Centers on their website so that sellers can provide the information to tax authorities and register in the relevant states. It is my suggestion, however, that you print the information out and take it to your CPA or accountant and let them tell you the best way to handle this problem until it all gets sorted out.

I’ll be writing to explain what Nexus is and how it affects you as an Amazon FBA seller soon.

 

About our Guest Blogger
This guest post is by Kat Simpson. Kat is a trusted eCommerce author, speaker, educator, and entrepreneur. Kat Simpson has been a successful eCommerce merchant for over 10 years; is an eBay Education Specialist and Gold Level PowerSeller, as well as a successful Amazon merchant. Currently Kat is the hosts the popular weekly eCommerce Podcast That Kat Radio.

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