Updated on October 10th, 2016 after the opening of a second Joliet, IL fulfillment centerr:
Now there are two Amazon facilities in Joliet, Il. MDW4 and MDW2 are both located at 250 Emerald Dr., Joliet, IL 60433. MDW2 is the distribution center, and – in our understanding – doesn’t ship items to customers and therefore does not create nexus. MDW4 is a fulfillment center, does ship items to customers, and thus does create sales tax nexus. The below blog post talks about why MDW2 does not create nexus.
So many people have asked us about the Joliet, IL Amazon facility that I thought it would be a good idea to write a quick blog post about it. The big question has been: does my inventory in the Joliet, IL Amazon facility create sales tax nexus or not?
The short answer is: we really don’t think so.
But read the longer answer before you rush off!
If you go over and read the letter of the law on what each state has to say about sales tax nexus, you’ll notice that states consider products for sale in the state to create sales tax nexus. For example, if your items are stored in the Spartanburg, SC Amazon fulfillment center waiting to be sold to a customer, that creates sales tax nexus for you in South Carolina.
But if your items are in transit – maybe they’re getting prepped at a prep service in Oklahoma – and are not for sale yet then that does not create sales tax nexus in a state. Your items getting prepped in Oklahoma aren’t for sale in Oklahoma, and therefore they won’t cause you to have Oklahoma sales tax nexus.
This is similar to the reasoning behind the fact that Amazon sort centers don’t create nexus. While they are Amazon facilities, and your inventory may end up in them at some point, we at TaxJar and our sales tax expert advisors don’t think Amazon sort centers create sales tax nexus.
Thought it took awhile to pinpoint, due to our crowdsourced efforts, we have determined that the currently open Amazon facility in Joliet, Illinois is a distribution center. So while you may ship items into the Joliet facility, your items are then shipped out again to a different Amazon fulfillment center where only then will they be sold to the end user.
For this reason, we at TaxJar have concluded that, to the best of our knowledge, shipping items to the Joliet, IL fulfillment center does not create sales tax nexus in Illinois for Amazon FBA sellers. If you were getting ready to register for an Illinois sales tax permit based on the fact that you are shipping items to the Joliet, Illinois Amazon facility, double check your Inventory Event Detail Report to determine whether your items are actually staying in Joliet or being redistributed to other states.
That said, Amazon has announced that they will be building a fulfillment center in Joliet. When this happens, FBA may very well create sales tax nexus for many sellers in Illinois. But – and again this is just our best guess after talking to many FBA sellers – for now we think that the Illinois Amazon facility is only a distribution center and therefore doesn’t create sales tax nexus at this time.
(Important Note: At the time of this writing there was only one Amazon facility in Illinois and it was being used as a redistribution center that didn’t create nexus. Amazon moves fast, so before concluding that you don’t have Illinois nexus, double check your Inventory Event Detail report and our list of currently open Amazon fulfillment centers.)