Amazon announced last week that they would build two new fulfillment centers in Edwardsville, Illinois. This would be in addition to the current distribution center in Joliet, Illinois and a planned fulfillment center in that same city. What do these new facilities mean for FBA sellers when it comes to sales tax?
Sales Tax Nexus in Illinois
In our understanding of the Amazon network, the current Amazon distribution center in Joliet, Illinois does not create sales tax nexus for FBA sellers. Sellers send items to the Joliet center and they are distributed to other centers. Because the items are never “for sale” while in Joliet, then items stored in the center don’t create nexus. (You can read a lot more about nexus and the Joliet Amazon distribution facility here.)
However, chances are good that at least one of these three new Illinois facilities will be a fulfillment center where items are stored for sale. In this case, Amazon FBA sellers may soon find themselves with sale tax nexus in Illinois. (Important to Note: Sometimes Amazon calls various facilities “fulfillment centers” even when items only transition through there and thus don’t create nexus for Amazon FBA sellers. Sometimes a building that Amazon or the press refers to as a “fulfillment center” will not house activities that create nexus for FBA sellers.)
Check back to this blog for updates as we learn more about the new facilities in Illinois. In the meantime, here’s what to do once they open.
What to Do if You Have Sales Tax Nexus in Illinois
Once the facilities open, here’s what to do:
1.) Determine if you have inventory stored in Illinois – You can do this by either pulling your “Inventory Event Detail Report” in your Amazon Seller Central account or checking your TaxJar dashboard. If you see a brown badge next to the state of Illinois, then we’ve shown items shipping from a confirmed Illinois Amazon fulfillment center. If you don’t have TaxJar, you can try a 30-day free trial today.
2.) Register for an Illinois Sales Tax Permit – Once you’ve determined that you have nexus in Illinois, your next step is to get registered with the state. Check out our guide on How to Register for a Sales Tax Permit in Illinois. (We also have guides to registering for a sales tax permit in other U.S. states here.)
3.) Setup Sales Tax Collection from Illinois Customers – Once your sales tax permit is in hand, start collecting sales tax from your Amazon customers in Illinois. Here’s a quick guide on how to set up sales tax collection in Amazon Seller Central:
This handy chart will tell you which settings to choose for each state when setting up Amazon sales tax collection. (Click to enlarge).
Do you have questions or something to say? Start the conversation in the comments!