We’re always thrilled to see more and more new people joining our Facebook group “Sales Tax for eCommerce Sellers.” And we notice that many of our new users are Amazon FBA sellers who always have similar questions, like:
- “Do I really have to collect sales tax in FBA states?”
- “How do I know when to collect?”
To answer those questions and more, we’ve put together this quick sales tax FAQ about getting started with sales tax on FBA:
What is this “sales tax nexus” everyone keeps talking about?
Get the lowdown on sales tax nexus, and how to determine if you have nexus, in our “Sales Tax Nexus Defined” blog post.
Do I really have to collect sales tax when I sell on FBA?
The shorter answer is yes. Most states consider housing inventory in a warehouse within its borders to constitute “sales tax nexus.” The two key exceptions are Virginia and New York – both of which have specifically passed laws saying that solely using 3rd party fulfillment in a state does not create sales tax nexus.
Read here for more about why and how selling through FBA means you must collect sales tax from buyers in states where your inventory is located.
In which states are the Amazon fulfillment centers located?
Click here for a list of Amazon fulfillment centers.
How do I know where my Amazon inventory is warehoused?
Amazon may not send your products to fulfillment centers in all states. This means you may not have to collect sales tax from customers in every state with an Amazon fulfillment center. You can find out where Amazon is storing your inventory by trying a 30-day free trial of TaxJar. Once you sign up and connect your Amazon account, we”ll show you a brown Amazon badge on each state where your inventory has shipped from the in the past 60 days (once you’re a TaxJar subscriber, we’ll show you that info as far back as you’d like to see!)
You can also pull an Inventory Event Detail report from Amazon to show where your inventory is located on any given day.
How do I register for a sales tax permit?
Okay, so you’ve found that Amazon is keeping your inventory in several states. Now it’s time to register for a sales tax permit. Here’s how to register for a sales tax permit in every Amazon FBA state.
Keep in mind that many states considering it unlawful to collect sales tax without a permit!
When do I register for a sales tax permit?
Online sellers face a catch-22 when it comes to registering for sales tax permits. If you register too early, you pay the registration fees when you didn’t have to, and you may be stuck wasting your time and money periodically filing zero returns.
On the other hand, if you register too late, the state may come after you for sales tax and force you to pay out of your own pocket if you didn’t collect from customers.
This guide will help you determine the ideal time to register for a sales tax permit.
How do I tell Amazon to collect sales tax on buyers in these states?
Amazon doesn’t help you with sales tax. You have to set up sales tax collection in Seller Central yourself. The downloadable guide found here will walk you step-by-step through setting up sales tax collection for Amazon FBA. Or you can check out this video:
We hope this FAQ was enough to get you started understanding and complying with sales tax laws. If you’d like to know more, never fear. You can also download our “Sales Tax 101 Guide for FBA Sellers” that will walk you through all this information and much, much more.
Ready to put a lid on Amazon FBA sales tax?