2023 UPDATE - Do Amazon Sellers Need to Worry About Sales Tax?

TL;DR

Amazon sellers do not have significant sales tax liabilities, with most obligations handled by Amazon.

Transcript

hello this is kashin and today I want to talk about Amazon sellers and sales tax if you are selling on Amazon do you really need to worry about sales tax or not what are your obligations if you need to worry about sales tax but before I dive in please subscribe to our Channel and hit the Bell sign so every time we publish a video you will get notif... Read More

Key Insights

• 🚕 Amazon serves as a Marketplace facilitator, managing sales tax obligations for sellers.
• 👪 Sellers may have reporting liabilities in their home state but can claim deductions for marketplace sales.
• 🏪 Inventory stored in FBA warehouses may or may not create physical presence for sales tax purposes.
• 🫵 Most states view FBA inventory as temporary, resulting in minimal or zero sales tax exposure.
• 🚕 Pennsylvania and Wisconsin are actively pursuing FBA sellers for income tax liabilities.
• 🚕 Sellers with inventory in these states should assess income tax liability with professional advice.
• 💰 Amazon sellers with over two million dollars in revenue can seek help with sales tax and e-commerce accounting.

Questions & Answers

Q: How does Amazon handle sales tax for its sellers?

Amazon acts as a Marketplace facilitator by calculating, reporting, and remitting sales tax on behalf of sellers, reducing their tax liabilities.

Q: Do Amazon sellers have to worry about sales tax in every state?

Sellers may have reporting obligations in their home state, but Amazon's handling of sales tax results in minimal to zero tax exposure in most states.

Q: Is inventory stored in FBA warehouses considered physical presence in all states?

Half of the states consider FBA inventory as physical presence, while others do not, leading to varying sales tax obligations for sellers.

Q: What should sellers do if their inventory is stored in states like Pennsylvania and Wisconsin?

Sellers with inventory in these states should consult with income tax accountants as they may have income tax liabilities, although sales tax exposure remains minimal.

Summary & Key Takeaways

• Amazon as a Marketplace facilitator calculates, reports, and remits sales tax on behalf of sellers, simplifying the process.

• Sellers may have reporting liabilities in their home state but can claim deductions for sales through the marketplace, resulting in zero tax liability.

• FBA warehouse inventory may not create physical presence in all states, leading to minimal or zero sales tax exposure.