Where Does Amazon FBA Give me Sales Tax Nexus?
by November 1, 2020
If you sell on Amazon FBA you may have sales tax nexus in states where Amazon has a fulfillment center.
But it’s very important to note that just because you sell on Amazon FBA doesn’t mean that you must register for a sales tax permit and collect sales tax from buyers in every state where an Amazon fulfillment center is located.
As an FBA seller, states require you to register for a sales tax permit and collect sales tax if you have established sales tax nexus according to that state’s definition of nexus. (You can find information about each state and sales tax nexus here.) While every state is slightly different, most states in the United States have ruled that storing goods in a warehouse constitutes sales tax nexus.
And sometimes Amazon only sends your products to Amazon fulfillment centers in certain states. So, you might sell on FBA, but only have sales tax nexus in 5 states because those are the only states where Amazon stores your products.
So as an FBA seller you should keep track of the states where you actually have inventory stored in an Amazon Fulfillment Center.
How to Determine Where Amazon FBA Gives You Sales Tax Nexus
You can determine where Amazon is storing your products in one of these ways:
1.) Pull the Inventory Event Detail report through Amazon Seller Central
2.) Login to your TaxJar account and looking for the brown Amazon badges next to individual states. (For more about using TaxJar’s badge feature, read this post.)
Once you have determined where you have sales tax nexus, the next step is to register for a sales tax permit and begin collecting sales tax from customers in states where you have sales tax nexus. Not sure where to go from there? Check out our Sales Tax 101 for Amazon Sellers white paper for a step-by-step guide to dealing with sales tax as an Amazon FBA seller. Or check out this video tutorial:
Also keep in mind that as your business grows and as Amazon opens fulfillment centers in new states you might find your inventory in new states from time to time. Here’s a list of all of the Amazon Fulfillment Centers in the United States, including rumored and upcoming fulfillment centers.
Do you have questions about where storing items in an Amazon Fulfillment Center gives you sales tax nexus? Start the conversation in the comments!Please note: This blog is for informational purposes only. Be advised that sales tax rules and laws are subject to change at any time. For specific sales tax advice regarding your business, contact a tax advisor.
