Amazon recently announced that they would build their first New York fulfillment center on Staten Island. While Amazon already has many New York city metro area fulfillment centers (including in Connecticut, New Jersey and Pennsylvania), this is the first time they are building a fulfillment center in New York state.
The fulfillment center will reportedly be 855,000 square feet and employ 2,250 workers. There’s no word yet on when the new facility is slated to open.
What does New York’s Fulfillment Center mean for Amazon FBA Sellers?
As an FBA seller, you are probably familiar with the fact that storing inventory in a fulfillment center usually creates sales tax nexus for online sellers. …Except in the state of New York!
New York is very specific that only “vendors” have New York state sales tax nexus.
As stated in New York Advisory Opinion No. TSB-A-12(1)C, (2/9/12): “To be required to collect sales an use tax, a seller must qualify as a vendor, which is defined in (New York) Tax Law Section 1101(b)(8).” Section 1101(b)(8) outlines a variety of activities that, if performed in New York, create nexus for an out-of-state seller. However Section 1101(b)(8)(v) specifically excludes from the definition of a vendor “a person who is not otherwise a vendor who purchases fulfillment services carried on in New York by a person other than an affiliated person”
As used in this definition, the following activities constitute “fulfillment” services: (New York Section 1101(b)(18))
Any of the following services performed by an entity on its premises on behalf of a purchaser:
(i) The acceptance of orders electronically or by mail, telephone, telefax or internet;
(ii) Responses to consumer correspondence and inquiries electronically or by mail, telephone, telefax or internet;
iii) Billing and collection activities; or
iv) The shipment of orders from an inventory of products offered for sale by the purchaser.
While it’s always a good idea to check with your preferred sales tax pro, this language appears to say that if you are only using a 3rd party fulfillment service in the state of New York, then that service does not create sales tax nexus. Hooray!
Do you have questions or something to say about New York’s first Amazon fulfillment center? Start the conversation in the comments or over at our Sales Tax for eCommerce Sellers Facebook group!