Will Amazon OnSite Affect Amazon Sellers’ Sales Tax?

by Jennifer Dunn

Amazon OnSite

Bloomberg recently reported that Amazon is expanding their Amazon OnSite program, in which Amazon 3rd party sellers can get all the benefits of selling via Amazon Prime while still housing their inventory in their own facilities. This program, which was formerly referred to as Amazon Flex, aims to help more 3rd party seller fulfill orders quickly while also alleviating overcrowding in Amazon Fulfillment Centers.

In other words, sellers with large warehouse operations will now have access to lower delivery costs, logistics software and other Amazon-caliber delivery mechanisms without having to first send your inventory into one of the fulfillment centers Amazon owns and operates.

What does Amazon OnSite mean for sales tax?

We’ve had some questions about Amazon OnSite and sales tax, and they appear to come from a misconception.

The misconception is that now that Amazon will be offering logistics services to 3rd party sellers, that your inventory may be sent to any one of these 3rd party sellers’ warehouses. And in that case, you may find yourself with inventory stored in any U.S. state. And in that case, that would mean that you as an Amazon 3rd party seller might have sales tax nexus in new states, or even every U.S. states with a sales tax. Yikes!

Fortunately, this does not seem to be the case. Just to allay any fears, I wanted to point out that any Amazon FBA or 3rd party seller who uses the Amazon OnSite program will  be storing only their own inventory. In our understanding after reading up on the OnSite program, Amazon will not be sending other 3rd party sellers’ inventory to a warehouse owned and operated by a 3rd party seller. If you are an FBA seller, your inventory will continue to be sent and trans-shipped among the facilities in Amazon’s current fulfillment center network.

This means that, as long as we are understanding the Amazon OnSite program correctly, this will not create any new sales tax nexus for Amazon FBA sellers.  Whew!

Further, if you are an Amazon 3rd party seller who chooses to participate in the Amazon OnSite program, your sales tax nexus situation should remain the same. Any retailer who operates a business in a state has home state sales tax nexus, so merely introducing Amazon logistics and other OnSite program features into your business would not generally affect the fact that you are already required to collect sales tax from buyers in your home state. As always, if you have questions about sales tax in your business, we recommend speaking with a vetted sales tax expert.

Of course, this is a developing story and Amazon has been known to alter their plans. If you have questions or something to say about Amazon OnSite and sales tax, start the conversation on the comments!

Start your 30 day free trial of TaxJar. No credit card required.

DELAYED QUERY : /Manual Filing : 0a443434f9fde70a5cd26a7297167406 Manual Filing?filterByFormula=OR({State} = "")