Are you collecting sales tax on your Amazon sales and reporting that tax to the U.S. states where you have nexus?
I just finished a fascinating webinar which addresses a timely and important question: do you need to pay sales tax as an Amazon seller? Watch the full recap here:
Sales Tax Considerations
If you haven’t started collecting sales tax, trust me, you’re not alone. 90% of Amazon sellers selling on the U.S. marketplace haven’t started either. The federal government has partnered with states to figure out how to start getting their money.
On August 17th, a U.S. government organization called the Multistate Tax Committee (MTC) partnered with 24 states to announce an amnesty program for Amazon sellers.
Basically, those 24 states and the MTC are willing to forgive Amazon sellers who haven’t collected sales tax in the past if they agree to start collecting sales tax before October 17th. You can start the grueling process and take advantage of their amnesty offer by filling out their form here.
But before you do…
You should know that collecting sales tax will be a massive headache for your small business and there will be financial costs. More importantly, you may be pleased to hear that there are many professional tax attorneys who think the MTC and those 24 states have it backwards! They think this deal is wrongfully taking advantage of Amazon sellers. They believe Amazon should bear the burden of collecting sales tax, not the sellers.
Why? It comes down to the definition of “Retail Merchant.” According to one interpretation, Amazon FBA sellers don’t qualify as “Retail Merchants” since our goods are sold on Amazon’s marketplace and the orders are fulfilled by Amazon. According to this interpretation, Amazon sellers are more like vendors or suppliers and have no responsibility for collecting sales tax.
I spoke with an experienced tax attorney who absolutely believes Amazon and the MTC are taking advantage of sellers by trying to shift the sales tax burden.
Check out our conversation before you decide to join the amnesty program.
You may even be interested in supporting his movement to shut down the MTCs program. You can join the movement here.
We’ll be back with several updates from Paul and other tax attorneys in advance of the deadline to hear if their effort to shut down the MTC program was successful.
Author: Shane Stinemetz
Jiu Jitsu fighter, Sci-Fi lover and Digital Nomad. After becoming an FBA seller, Shane left the tech scene in Silicon Valley to work on Fetcher and travel around the world.