Amazon Sales Tax 101

Does Inventory Give FBA Sellers Sales Tax Nexus in Other States?

by Mark Faggiano

Amazon FBA Inventory Sales Tax Nexus

Amazon FBA sellers ask our support team lots of great questions every day. Here’s one example of a question we get asked a lot:

I’m an FBA seller. Does my inventory in warehouses mean I have nexus in other states?

The short answer is YES.

Every state (with one notable exception) that Amazon sends your inventory to via FBA considers that inventory to be nexus. We’ll show you proof later in the post.

What the heck is nexus? Here’s an entire post that talks about it. Basically, what nexus means is a presence in a state that requires your business to comply with that state’s sales tax laws. So if you have inventory warehoused in Kentucky, then Kentucky says you’re required to comply with sales tax law in that state.

C’mon! Let’s see some evidence.

We did our homework on this. Here’s what Kansas, for example, says about your inventory and sales tax (Hint: it counts as nexus).

kansas sales tax nexus

Here’s a list of what constitutes sales tax nexus in every state, including links to state laws. Every state (with the exception of New York) that has an Amazon warehouse for use by FBA says the same thing: if you have inventory here, then you also have nexus. If you have any doubt, go check out any of the states’ websites or find a sales tax professional and they’ll tell you the same.

I’ve never heard of this. Is this the new sales tax law?

No. To answer the question, inventory being considered nexus is relatively new. The reality is that states are broke. And they need more people to pay them taxes. So they’re looking at every way possible to use their laws to increase their taxpayer base. Easing the definition of nexus to include FBA sellers (as well as anyone else warehousing inventory) is just an example. If inventory counts as nexus that means more taxpayers. More taxpayers should mean more money. Insert your own joke here about how the states then go on to spend that money.

By the way, here’s more about how Amazon collects sales tax since that’s a very common question.

Questions? Feedback? Let’s chat in the comment section below. To learn more about TaxJar and get started, visit

  • Adam

    We don’t ship to all of the FBA centers. Do we have a nexus in a state if we do not ship product to the FBA center in a particular state?

    Our concern is that we are exposed to nexus issues just by sending product to one center which exposes us to nexus concerns in all of the states where Amazon has a FBA warehouse.

    • The short answer is yes. It’s possible that Amazon sends inventory to states other than the ones you’ve shipped to. It’s up to you to decide to comply with just the states you ship to or all of the potential states.

      • Yeah, but the problem with that is this … there is no simple way to make that happen on Amazon. You can either define a product on Amazon as taxable, or not … (ie. A_GEN_TAX or A_GEN_NO_TAX), right? So, if I put it as “A_GEN_TAX” … it’s gonna charge sales tax to ANY CUSTOMER that a tax rate is defined.

        So yes — if a Kansas customer bought it it would charge them sales tax — but, let’s say you also have tax rules setup in Amazon for Califonia … and a CA customer purchased that same item, that was shipped from a KS FBA center … that CA customer would get charged CA tax as well … even though it wasn’t required.

        Am I wrong here? I hope so — but don’t think so.
        That’s the problem I’ve found w/ trying to do that. If you assign “A_GEN_TAX” to an item … you wind up charging state sales tax to customers in many cases where it’s not necessary.

        Please show me I’m wrong, or how NOT to make that happen. I currently have GA (our ONLY state where we have a physical presence), and then CA and TN defined in Amazon. CA and TN are defined only because of my dropshipping distributor’s warehouse, or a FBA warehouse.

        So, for example, my Distributor A has California nexcess. As a result, I have to collect CA tax. So, I put “A_GEN_TAX” on that product, so that when a CA customer purchases it, tax is collected. The same would happen in a GA customer purchased it. However, that particular item is dropshipped from a Distributor A who has absolutely NO tax nexus in TN; however, because I had to setup TN in Amazon (along with CA and GA), a TN customer would pay TN tax on an item that was dropshipped from a distributor who has no TN basis.

        That’s where it gets really screwed up. I’m not aware of a way you can code a particular SKU so that it only charges sales tax on a state-by-state basis in Amazon.

  • My blood pressure rises just reading this. 😉 Here’s my question … say, I sent 20 computers to Amazon FBA warehouse in TN. I now have “nexus” in TN, correct? But .. here’s the real question — do I now have to collect TN sales tax on 100% of my orders to ALL TN customers, no matter what, or do I only collect TN sales tax for those 10 computers?

    Is it all or none? If I have 10,000 orders going to TN customers (we are in GA) … do I now charge all 10,000 of those TN customers the TN sales tax … even though only 10 items were ever actually shipped to/stored in a TN warehouse?

    • Great question: “in general” the states would say that once nexus is created and you’ve registered your business with the state you are forever supposed to collect sales tax on any computer sent from that warehouse in TN to a customer with an address in TN.

      You can actually get a formal nexus ruling from the state of TN if you wanted to get something in writing about that exact case. Hopefully that would eliminate any guessing on your part.

      • Mark –
        OK – but it’s still ONLY for items shipped from that warehouse, then — not ANY order that is now shipped to TN, from anywhere? (ie. we ship a computer directly from our warehouse in GA to a TN customer … do we charge them tax too, since we have “nexus”?

        • Think about it this way….GA says you’re not required to collect sales tax on items sent from GA to another state. Just because you have nexus in that other state doesn’t change that law.

      • Bruce Fulford

        If there is a nexus, do I also have to “foreign qualify” my business name in each state?

  • George

    Amazon doesn’t tell you what FC an item is shipped from, so if I have computers in FC in PA, TN, and WA, and one of them is shipped to WA, but it was shipped out of the PA Center, what happens then?

    • taxjar


    • You’re right, they don’t make it easy to know where your inventory is.

      According to the letter of the law, the states with warehouses will say you have nexus with them once your computers are stored in their state.

      It’s up to you to decide if you need to comply with a state where an item quickly passes through or if you should just comply with states that more consistently have your inventory in a warehouse.

      • George

        if you were ever audited though, you would then have to show the auditor what products were shipped to what FC? And… how to do you account for the internal FC transfers Amazon does? And, what about co-mingled inventory you may “share” with other sellers? Seems like there is no black and white here which gets a bit murky during an audit.

  • lisa

    Please help me understand. So I have a product warehoused in a Kansas Amazon warehouse. If a customer that lives in Kansas buys from me and it happens to ship from that warehouse, I’m responsible for paying sales tax to the state of Kansas?

    If so, as far as I know, there is no way to set-up my back-end to charge that customer sales tax because I have no way of knowing that Amazon will actually ship from that warehouse until after it happens correct?? So wouldn’t it make sense for the collection and paying of sales tax to come from the Amazon side? They know where it’s going to ship from and they know where the customer is, so why wouldn’t sales tax be tacked on at the time of purchase, collected by Amazon and submitted to the appropriate state?

  • Hi Lisa-

    If you have nexus in KS, then you are required to collect sales tax on any item shipped to KS from any warehouse.

    And yes, if you are using Amazon then the easiest way to collect sales tax is to use their tax collection service.

  • Kayca

    This is all so confusing! Help me understand! I live in Tenn and send my of my fba to the warehouses in TN. BUT I have sold $4800 in gross sales in TN so therefore I don’t meet the requirement to collect. So do I collect anyway or do I wait until I get to that point. For the 6 months with fba I sold around $500 in gross sales in TN.

  • I think the threshold is $400 ( so it appears you are over that and are required to collect in TN.

  • Fred – not sure if this answers your question, but the way AMZN is setup is that the origin doesn’t matter. If you’re collecting in 5 states then AMZN will collect sales tax to items shipped to any of those 5 regardless of what warehouse it originates.

    • Mark, that’s what I thought, which is why it’s stupid. (not you, of course, hahaha – the LAW). essentially, theoretically, we could have ONE product stored in TN FBA warehouse … that we never sell to a single customer who lives in TN — but 200,000 other products that are shipped from GA or from our office, or anywhere else for that matter, to customers in TN, will pay TN sales tax when for all that I understand, they shouldn’t have to.

      All because it’s “all or none” … EVERY taxable item that goes to a TN customer is taxable regardless of origin, simply because one stupid SKU in a warehouse in Chattanooga requires us to claim “TN state nexcess”

      Now we can see what all these STATES are pushing and lobbying for the internet sales tax.

  • Judy Carolyn Kopittke

    Help! For a business registered in Mass. I sell to customers in Arizona, this is one of the 19 states Amazon collects taxes for, but when I went to the Arizona Revenue site, it says if I do not have a physical presence I don’t need to collect taxes?? How many states do I need to register in?

  • Here are the states with AMZN warehouses:

  • Kim

    Here is an additional question. In Texas, I believe it is based on shipping location. Normally, if I had a at-home business in Texas, that would create a nexus for sales tax purposes. But if I use Amazon for 100% of my fulfillment and if they never use a Texas warehouse, would I still have to have a Texas sale tax permit. If theoretically, Amazon always has me send my merchandise to Arizona or another state, wouldn’t I only have a nexus in that other state?

    Thanks again.

    • Without knowing all of the circumstances involved, I can say that if your business is based in TX then you have nexus in TX, even if you take your inventory and send it elsewhere.

      • Matt Williams

        However if you Do not sell anything to anyone in Texas then you have no Texas Sales Tax obligation.

    • Matt Williams

      Yes when you make a Sale to a person in Texas, You would be required to collect Texas Sales Tax, Assuming Texas has sales Tax.

  • Umair

    I just list my product with Amazon and do all the shipping using outside shipping services. Do i need to collect sales tax just because i list it on Amazon website? Does this expose me to any nexus thing?

    • If you house the inventory yourself (and Amazon does not) then simply listing on Amazon doesn’t give you nexus. Once that inventory is stored by any other party outside of your state then you are acquiring nexus in that state.

    • Matt Williams

      You must pay Sales Tax to your State for Sales within that state if your state collects Sales Tax.. Call your State Franchise Board.

  • Scott Smith

    Isn’t it fair to say that sellers who are abiding by all the nexus states and filing the way they are supposed to are probably losing sales to sellers who are not charging the tax?

    • Matt Williams

      You are loosing sales to Merchants that are based in States with no sales tax yes..

  • John

    I realize that this discussion is primarily about having nexus in a state other than where you live that houses inventory that is shipped from there after being sold on your site. I have two short questions, however. (1) If you live in MS and all of the shipping comes from your home state, do you have to collect sales tax from buyers who live in other states? If so, do you collect the MS sales tax or the sales tax from where they live? (2) Do you have to collect sales tax on referral services? For example, I have a client who pays me for a service that I outsource to someone else. I pay and order the service from the outsourced affiliate and then send it to my client.

    • Without knowing anything about your business, in general you collect sales tax in states that you have nexus. Nexus means a connection with a state that’s significant enough for you to be required to comply with that state’s sales tax laws. The most common causes for nexus are employees, salespeople, physical storefronts, warehouses or offices, and inventory.

      Taxability of services varies by state. Your best bet it to contact your state to ask:

      • kc

        what is “significant enough” mean?

        • The short answer is it depends on the state for their exact definition of nexus. But as I mentioned, the most common causes for nexus are employees, salespeople, physical storefronts, warehouses or offices, and inventory.

          • Matt Williams

            Yes Maybe inventory. But we dont knowingly palce inventory in Sates that want to do this.. does but merchants do not.. This is a Battle that will be fought. But Frankly Taxjar shoudl be on the Side of one National Sales Tax..

  • lb

    If I sell mf. do I pay taxes. If product is at my own location. Im confused. I want to do fba but registering with every state is out of budget for me. I formed an llc in my state that doesnt even charge sales tax but now I have to repeat the process over so many times. Is there a list of free business registration forms or a pricing guideline to each state that does cost. Ive saved up 5k. to start this business and I know that’s not a lot but it’s just starting to seem unreasonable now.

    • Yes, you still have to comply with sales tax law if you are MF. The difference if you are MF then you probably don’t have nexus in multiple states like you would if you were FBA. Here’s info on how to register in Amazon’s FBA states

    • Matt Williams

      Yes when you fulfill your items from your location you are obligated to pay your sates Sales Tax.. So move to Oregon . WE have no Sales Tax 🙂 .

  • FBA sounds like a nightmare. Once you sign up, the day you ship your items to those warehouses, you have now made a nexus in that state forever. You will forever have to collect sales tax in that state for all sales going to that state, including from your own warehouse from your own website, irrelevant to Amazon or the FBA. FBA is not worth it if you don’t have the money/time to dump into software to calculate all of these sales taxes. And then you lose sales from those who are cheating their state government by not paying sales tax when they are supposed to. The whole trouble to this is that it isn’t tax free, but the people think it is. So as soon as you start charging sales tax when others don’t, you lose sales. It’s a mess.

    I am 100% against the Federal Government coming in and saying that we have to collect sales taxes for all states and file to each and every one of them separately. I cannot accept that. Even with how big we’ve gotten, we cannot possibly comply with it without hiring a full-time accountant. Then we are at even more of a disability than brick and mortar stores. Not only do we need to cover individual shipping costs, we need to do the work of 50 different stores worth of work for taxes? Each brick and mortar store has their own accountant to do sales tax locally. That’s pretty easy. But when you have one store collecting sales taxes for every city, state and county in the country… no… it’s going to have errors. It’s going to take too much time. And the little guys just can’t do it. If they want to make this federal law, sales taxes by the state should be banned and in place we put a tax across the board which is handled federally. One rate, no matter where it goes, one place to file to, and then the federal government can do its own work in deciding what state gets what out of it. I don’t mind reporting yearly gross sales to each state so the federal government can evenly distribute to each state, but there’s no way I can handle individual tax rates for all of these areas and pay each and every one and deal with audits from all of them. One state, county and city is enough for me. If they pass it the way I think they will, I think brick and mortar stores should also be forced to verify where someone comes from and make them pay sales taxes based on where the customer lives too. You still have the problem of people driving from MA to NH to get purchases with no sales tax.

    All of this because Amazon decided to make this bogus 2-day free shipping garbage. Their company loses so much money promoting that. And it’s the only reason that people prefer FBA over seller fulfilled. I can beat Amazon’s prices selling directly anyway. There’s a lot of work in following their FBA crap. But it all comes down to making the customers happy with “Free Shipping” which is not a real thing except in Amazon’s case of welfare shipping across the board. One day the prices will go up and we’ll regret giving into the giant.

    I also disagree that putting inventory into Amazon’s warehouse justifies me working within a nexus. I am simply selling my inventory to Amazon. They sell it on their website, they collect the payment, they ship it. All that happens is I pay a fee for their service and then they pay me after. Amazon should be responsible for the tax, not me. All I am doing is setting the price. Can they just let me sell inventory to them and they can handle it from there? Oh wait, they don’t want to lose money if the product doesn’t sale.

    • Matt Williams

      You do not sell your inventory to Amazon Houses your inventory and charges you to sell it on there network.. Now we have no controller over where it goes and what FBA location they ship it to.. And no, you have no Nexus unless your Based in that State. Yes that might mew a auditor question.. But Lets make it clear you do not sell your inventory to

  • Matt Williams

    Sorry but this info is Bogus.. First off WE dont know where the Invetory is as FBA but it where ever.. and 2nd That doesnot make a NExus.. But because you sell a produt that benifits from this you say it is.. You are misleading folks.. it not as simpl as if you have inventory in FBA .. MAny things gointo a NExus.. and you are not able to determn that..

    • Obviously, I disagree with you saying that I am misleading people. And the states would disagree as well. If you look at the laws, you can see where they specify that inventory is enough to create nexus. We’ve included reference to those laws in our blog posts.

    • Dasha

      Matt, these guys are out to make a buck. Unless you have employees or corporate space in the state, just ignore. Completely ridiculous. Good luck!

  • Hi Dasha, Unfortunately that isn’t true, and sales tax nexus is a lot more complicated than that. In our state posts we reference each state’s Department of Revenue and where they explicitly state that storing goods in a warehouse creates nexus. You can find the list under any state you’d like to learn about here:

    It’s up to you as a business owner whether you choose to comply with your business or not. You could choose not to comply and never get caught out, or you could end up subject to a sales tax audit. TaxJar makes life easier for people with sales tax nexus who choose to comply.

    • Matt Williams

      Taxjar you are Wrong.. Nexus is not a factor of just having your inventory in a FBA location. First the Sate would need to prove that we as merchants placed our inventory in that state. 2nd can not even show you where my inventory items are.. If we recall our inventory items i usually get back other merchents inventory because Amazon Commingles all inventory.. So the Auditor from that Sate will have to show that its is our inventory in that State.

  • Hi Matt,

    According to our research and the sales tax experts who advise us, storage in an FBA facility in most states does constitute sales tax nexus. Also, here are two places where Amazon shows you where they have shipped your inventory:


    It’s definitely up to you how you choose to read each state’s law re: nexus, but we recommend erring on the side of caution, the explicitly stated laws about what constitutes nexus, and your accounting pro.

  • Joe

    Note also that once a company registers with a state because Nexus is established, the company is also required (in most cases) to comply with all other state tax obligations, including proportioned income taxes, any franchise and property taxes, and all the forms and filings that are implied by all of these obligations. It’s behind a paywall, but see Bloomberg BNA’s state tax survey for more information:

  • WakeForestFan

    I have recently sent my first shipment for Amazon FBA to California. Any help on answering questions when registering for a California sales tax number? Not sure how to fill it out. Stuck on some questions…I answered YES to doing business on the internet and for the web address, I entered Amazon’s. For the business location, I entered the Amazon warehouse I am sending my first shipment to. It’s asking for a supplier…I have no clue…Amazon at their Seattle address? It won’t let me to the next screen until I answer the supplier question. I don’t know if any of these questions were answered correctly. Thanks!

  • Sue Worthington

    What about the small seller exemption? If you make under $1,000,000 in annual sales you are exempt form out of state taxes.

  • I tried to post this but I didn’t see it when I came back to the blog, so I will post it again, assuming it didn’t go through the first time:

    I just registered for Amazon FBA and have been very active in the MST
    Facebook Group. I plan on signing up with Tax Jar this week as the more I
    read, the more I fear the nuances of tax law and the liabilities
    imposed upon e-commerce sellers. I found this blog from a link but for
    future reference, to participate in this blog, I would assume I go to Please correct me if I’m wrong.

    At present, I
    was about to start processing my first order for FBA shipment then got
    completely stymied about how to set up for Amazon to collect my taxes
    for me. I know they charge 2.9% of the sale and that’s fine but when I
    called seller Central today, I was told that I have to enter the state
    registration codes for each state I plan to sell in. The problem is when
    I go to the link with that form, it’s as obfuscating as it gets. It
    shows 50 states and requests registration codes. Only a tax pro can
    navigate the link for Amazon Tax methodology which brings me to the page
    in question:

    the catch–The amazon rep told me that amazon won’t collect taxes for
    me unless I supply the registration codes on the above page for each
    state I plan to do business in. If I send merchandise out to Amazon and
    it sells right away, I won’t know where it has sold until after the
    sale. There’s no point in registering with every nexus state until I
    make a sale in that state because I may never make sales in many nexus
    states yet if I register in all of them, I will have to file and report
    in each. So here are my questions:

    1) Where do I get the
    registration codes for each state? I would assume I could go to each
    state individually but there should be a file somewhere with all those
    codes on it.

    2) the rep told me that putting registration codes
    into the Amazon Tax Jurisdiction page above is not the same as
    registering with those states. I hope that’s the case but am not sure.

    If I send out merchandise FBA and it sells right away, and I haven’t as
    yet instructed Amazon to collect sales tax in the FBA states in the
    above list, “orphan sales–sales where Amazon didn’t collect the
    tax–could have been made and then I’m not only liable for the tax,
    there’s no breakdown of the jurisdictions involved in those states for
    those sales and I would have to attempt to hunt all this down and
    resolve it after the fact. Is that correct?

    Thus, I’m not
    sending anything to Amazon until I have a clear picture of how to
    navigate this morass. This whole tax thing appears to be the Hurricane
    Sandy of e-commerce so I’ll be signing up with Tax Jar so I will
    understand how to navigate here and will be able to spend my time
    building the business instead of playing defense.

    Thanks in advance for any advice,
    Mark Blinderman

    • Hi Mike,

      Thanks for your comment. I don’t see your other one – so sorry about that!

      That said, this is a very common problem so we’ve put together a sales tax guide for Amazon FBA sellers. It will answer all of your questions and help you with tax codes, too.

      Please check it out here:

      Let us know if you have any questions!

  • Hi Sue,

    That would be if the Marketplace Fairness Act passes, which it hasn’t. But also, unfortunately, that would only apply to states where you don’t have any nexus. If the MFA passes you’ll be required to collect sales tax in EVERY state if you make more than $1,000,000 annually but even if you don’t you’ll still be required to collect sales tax in states where you have nexus.

    Here’s a lot more about the MFA and why it’s bad for all sellers.

    We think sales tax simplification is the answer instead.

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  • Qubits Toy Co.

    South Carolina sends tax bills of $500+ and then Tennessee sends tax bills exceeding $600 – my actual sales in those states is less than 1/10 that amount, The paperwork and trouble that is created from registering with states is as varied as the states leadership itself. Some Amazon Warehouses in several states have only 1 or two units standing by, we are a startup. This whole thing is nuts and we are promptly withdrawing from FBA. However, wait,.. you can’t sell toys during Q4 unless you are FBA. Sheez

  • SalesTaxNewbie

    Here’s the scenario. A smaller retail company is purchased by a much larger one and triggers nexus. The smaller company will still operate independently. However, due to this transaction customers of the smaller retail company are now able to return merchandise to any of the larger company’s locations throughout the United States.

    Any ideas/options for returning the sales tax on returned merch to the smaller company?

    • This is a tough one. We’re actually working on a blog post from a CPA about refunds and returns. That said, this isn’t a common situation so I think your best bet would be to contact a sales tax expert. Here’s a vetted list: I hope this at least points you in the right direction!

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