One of the most popular questions our support teams gets goes something like this:
“I only have sales tax nexus in a FBA State X because I sell through FBA and Amazon stores my products in an Amazon Fulfillment Center. So when registering for a sales tax permit in State X, what address do I use?”
Sellers have told again and again about running into problems when attempting to address this issue. For example:
- An FBA seller would try to register for a sales tax permit online, using their permanent business address, but the state’s online system wouldn’t accept an out-of-state address
- An FBA seller would register and just pick an Amazon Fulfillment Center address, but that has resulted in at least one seller receiving a letter wanting more clarification about their business activities in that state, and specifically at the Amazon Fulfillment Center address
“Generally, [when registering for a sales tax permit] use the business address of the home state. This is an area that is not usually outlined in jurisdiction law or regulations, so you have to go to another source to find the answer — Public Law 87-272 (link opens in a .pdf). It’s important to understand the nature of the relationship between Amazon and the FBA seller who is contracting with them to provide fulfillment services, and not renting or leasing any of their warehouses. The storage of inventory is not under the FBA seller’s control.
There is a long laundry list of activities that qualify as ‘doing business,’ but the protected activity is the solicitation of sales and ancillary activities of the sale in a state. Generally, if the seller does anything else than these, they are “doing business.” Delivering the product to the customer is ancillary to the sale, and is protected. Otherwise, a company would be ‘doing business’ in a state every time they shipped FedEx, UPS, or USPS. By definition, the FBA seller is NOT “doing business” in any state in which Amazon decides to store inventory because it is necessary to complete the sale (or solicitation).
For some registrations, an address within the state is required, but it is a function of the registration application and not because of law. In these cases, use the Amazon warehouse address and then contact the taxing jurisdiction to have that changed to ‘out of state’ or you can file a paper registration form where applicable.
Additionally, the above reasoning also applies to why FBA sellers are ‘generally’ not subject to income tax in states IF their sole activity in that state is through storing inventory through a third party.”
As for “doing business,” according to Stout:
“The FBA seller is not ‘doing business’ in another state as defined by PL 86-272. However, for sales tax purposes you don’t need to be ‘doing business’ in that state in order for nexus to apply to sales tax. You only have to have your inventory stored in the state. Normally, this would be done by warehouses you might own or lease.”
Important to note: As with anything sales tax, there are a few exceptions to this rule. If you are registering for a sales tax permit in Illinois, you will likely be required to register every location from which you sell. This includes your own locations (home, office, warehouse, etc.) and any Amazon fulfillment centers from where you ship items. You can read more about how to register for a sales tax permit in Illinois here.
Colorado as well has its own unique rules. Regardless if you live in the state or not, if you’re conducting business in the state and have nexus (economic or physical), you’re now considered to be an in-state seller and must register for a sales tax permit in Colorado.
When registering for a sales tax permit in Colorado, the state also requests that you use one of the FBA warehouse locations as your in-state address. While we typically recommend not using FBA addresses for registration, Colorado is an exception.
What Address Do FBA Sellers Use to Register for a Sales Tax Permit?
Long story short:
- Use your principal business address (whether that’s a home or an office or warehouse that you rent)
- One notable exception is Illinois, which you can read more about here
- If the state’s sales tax permit registration system doesn’t allow you to enter an out-of-state address, either mail or fax a paper sales tax registration form contact the state’s department of revenue (or equivalent taxing authority) to change your registration to “out of state.” To make this easy, we’ve put together a handy list of how to get a human to talk to you on the phone about sales tax at every state’s department of revenue.
Questions on registering for out-of-state sales tax permits as an FBA seller? Get the conversation started in the comments!