The Amazon Tax Exemption Program (ATEP) allows Amazon buyers to more easily buy items from other Amazon sellers tax free with a resale certificate or exemption certificate.
If you sell on the Amazon platform, you may have recently received an email stating that you are now enrolled in ATEP. Here’s an example of the email:
Effective May 23, 2017, your Tax Calculation Service will be automatically enrolled in Amazon’s Tax Exemption Program (ATEP). This program reduces the need for sellers to issue tax-only refunds, and facilitates the transfer of tax exemption documents between customers and sellers.
ATEP enrollment will be automatic and provided at no extra cost. To update your tax settings, including ATEP, visit the Tax Calculation Settings page.
How ATEP Works: https://sellercentral.amazon.c
Get Tax-Exemption Certificates: https://sellercentral.amazon.c
Confused about what this means? No worries. This article will explain what using the Amazon ATEP program means for you and your business.
What is Amazon’s ATEP Program?
In some cases, some entities – like schools, government entities or non-profits – are exempt from having to pay sales tax when making purchases. When an organization is tax exempt, they have to show an exemption certificate at the point of sale in order to avoid having to pay sales tax.
Before Amazon introduced ATEP, if a tax exempt organization needed to buy something on Amazon tax free, they would generally have to ask for a sales tax refund after making the purchase. This is a pain for the tax exempt buyer, who has to keep up with whether or not they were refunded sales tax on a purchase, and for Amazon, who had to handle these transactions and refunds. To make matters more complicated, some tax exempt organizations also bought from 3rd party sellers, which added a further monkey wrench in the works.
With the ATEP program, exempt organizations can buy tax free without having to bother about getting reimbursed sales tax.
What does ATEP mean for Amazon FBA Sellers?
If a tax exempt organization chooses to purchase your products, you may notice that they didn’t pay sales tax. As with everything Amazon, tracking this is up to you. Amazon will provide you with a copy of your customer’s exemption certificate.
Keep in mind that it’s up to you to ensure that your customer’s sales tax exemption is valid. You can use the resources in this link to verify a tax ID in every state.
Why should you verify a resale certificate? Though laws differ, many states consider the seller the responsible party for determining if a tax free sale was legal and valid. Verifying your customer’s exemption certificate will help you ensure that their organization is still tax exempt and that they legally were not required to pay sales tax to you.
Do you have questions or something to say about the ATEP program? Start the conversation in the comments!