Amazon FBA—Third-Party Sellers Responsible for Sales Tax

December 20, 2012—Mo money, mo problems. Although Amazon implemented their split-shipment policy for Fulfillment by Amazon over a year ago, the biggest impact this upcoming year will be on third-party sellers learning to deal with sales tax repercussions. Because the products are being housed in fulfillment centers in various states, this constitutes a physical presence which means you, the seller, has to collect sales taxes for those individual states.

For example: A seller in Oklahoma uses FBA service and ships their items to Amazon’s facilities in Kentucky and Arizona. Although they live in Oklahoma, their products are being housed in states that require sales tax to be collected and remitted on purchases made by shoppers in those states. The sales-tax obligation encompasses all purchases by customers in those states, whether on Amazon, eBay, Etsy or any other selling channel.

The merchant accounting service Outright is trying to raise awareness among marketplace sellers that they are responsible for sales-tax in any state where Amazon warehouses their merchandise. “Because these shipments get split you end up having inventory in multiple states,” said Laura Messerschmitt, Outright’s vice president of marketing. “Once you have a nexus in that state, you have to collect sales taxes in that state.”

To help sellers understand the confusing sales-tax liabilities, Outright.com has provided tax services to small businesses and even posted a list of Amazon’s current and planned facilities, including the addresses, so sellers can provide their information to tax authorities.

An Amazon spokesperson said the company does not counsel sellers on their responsibilities to collect sales taxes, whether their situation involves FBA or not. In Amazon’s seller agreement it states: “You understand and acknowledge that storing Units at fulfillment centers may create tax nexus for you in any country, state, province, or other localities in which your Units are stored, and you will be solely responsible for any taxes owed as a result of such storage.”

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