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rated:
I searched all over and could not find this. I know how to charge sales tax on my Amazon sales. What I am asking is whether folks here go through the hassle or not and if anyone knows what Amazon reports. I'm in California and selling both myself and FBA. Started a few months ago and volume will probably trip a 1099 this year. Thats not a problem, I'm prepared to pay income tax. I just can't believe how complex the tax issue is with AZ and that everyone who sells has gone through the pain of setting up and reporting every state.

Please don't respond with ethical comments or tax law, not interested.

If I missed an existing discussion, I apologize and if someone could point me in the right direction that would be appreciated. Also, PMs welcome for those who don't want to post.

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I heard on some podcasts that PA is one of the more aggressive states about pursuing this, and Amazon has a fulfillment ... (more)

dbond79 (May. 02, 2014 @ 5:53p) |

For what it's worth, a few years ago (in 2011, before Amazon started charging sales tax in CA), I was reading through CA... (more)

cheezedawg (May. 02, 2014 @ 7:28p) |

Maybe my local county office didn't want to deal with me selling surplused PC equipment and cell phones.  (as in I upgra... (more)

RedWolfe01 (May. 04, 2014 @ 5:01a) |


rated:
I am wholely confused by this statement.
you sell via Amazon, they charge sales Tax.
On your state board form there is a line on Sales Where Tax is pre paid (or something like that) and you fill in the amount Amazon took.
That's about it. If they audit you you can show the Amazon sales.

done.

what made it confusing is that you said 'AZ' and to anyone who pays sales tax, that means Arizona.

rated:
Why would you need to report every state? You only need to charge sales tax on shipments delivered to California (since your nexus is in California). What is so complicated about this?

rated:
slc39 said:   Why would you need to report every state? You only need to charge sales tax on shipments delivered to California (since your nexus is in California). What is so complicated about this?
  This. It's up to consumers to report use tax for out of state purchases.

rated:
Amazon does not charge tax, you tell it what to charge. As far as nexus, since I send to them, I'm now responsible for taxes in other states (wherever their fullfilment center is).

rated:
In the past, when I've purchased items fulfilled by Amazon, they didn't collect tax even though Amazon is supposed to. I'm pretty sure, even if they fulfill the order, you're still only responsible for the state in which you operate. Unless you have reference to something different.

rated:
supersnoop00 said:   In the past, when I've purchased items fulfilled by Amazon, they didn't collect tax even though Amazon is supposed to. I'm pretty sure, even if they fulfill the order, you're still only responsible for the state in which you operate. Unless you have reference to something different.
What supersnoopoo said.

I know you said you're not interested in tax law, but you're wrong about assuming that just because you're Fulfilled by Amazon (FBA), you have the same nexus as Amazon. FBA merchants ARE not Amazon, please don't get this confused. FBA merchants are separate entities, and thus determination of tax nexus is based on the FBA merchant, NOT Amazon's nexus. You're still only responsible for California, but not anywhere else. I'd recommend asking a tax lawyer for a quick consult; it would save you a lot of headache because you're doing something you really don't have to. (Though I applaud you for your conscientiousness).

rated:
slc39 said:   
supersnoop00 said:   In the past, when I've purchased items fulfilled by Amazon, they didn't collect tax even though Amazon is supposed to. I'm pretty sure, even if they fulfill the order, you're still only responsible for the state in which you operate. Unless you have reference to something different.
What supersnoopoo said.

I know you said you're not interested in tax law, but you're wrong about assuming that just because you're Fulfilled by Amazon (FBA), you have the same nexus as Amazon. FBA merchants ARE not Amazon, please don't get this confused. FBA merchants are separate entities, and thus determination of tax nexus is based on the FBA merchant, NOT Amazon's nexus. You're still only responsible for California, but not anywhere else. I'd recommend asking a tax lawyer for a quick consult; it would save you a lot of headache because you're doing something you really don't have to. (Though I applaud you for your conscientiousness).

  I do not have all of the facts to appropriately opine here, but this is not necessarily true.  If the seller maintains inventory in Amazon's warehouses in other states, then, more likely than not, the seller does have nexus in those states.   You are correct in that the nexus status of the appropriate Amazon warehouse entity or entities does not have a bearing on the seller's nexus, but the ownership of tangible personal property within a taxing jurisdiction will almost always lead to nexus for sales tax purposes and, often, state income tax and/or franchise/capital tax purposes.   Again, however, one would need access to all of the facts to more accurately determine nexus for the OP.

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myhotrs said:   I'm in California and selling both myself and FBA. Started a few months ago and volume will probably trip a 1099 this year.
 

  Didnt know it was legal to sell yourself --- online or otherwise.

rated:
fwuser12 said:   
myhotrs said:   I'm in California and selling both myself and FBA. Started a few months ago and volume will probably trip a 1099 this year.
  Didnt know it was legal to sell yourself --- online or otherwise.

  Good point, he'd have to be in NV to do that.

rated:
You need to collect and remit sales tax anywhere that you have sales tax nexus. Arizona is a real bitch because it has a bunch of different rates and rules.

rated:
valueinvestor said:   You need to collect and remit sales tax anywhere that you have sales tax nexus. Arizona is a real bitch because it has a bunch of different rates and rules.
  
He didn't mean AZ as in "Arizona" but as in "Amazon".  I think.

=====
Just wanted to write "supersnoopoo" here, because it looks like fun to type.

Well, not as fun as it looked.  But satisfying.
=====

Wouldn't the Amazon seller instructions, discussion forum, and help telephone line have detailed info about this kind of thing?

rated:
They do, what I was looking for was unofficial, people's actual experience. Something like "technically yes, you need to file sales taxes with the 20 states that collect for online sales, but no one actually bothers" or something like that. Everywhere you look, it'll be the description of tax laws which I know, but not actual experiences people have.

rated:
myhotrs said:   They do, what I was looking for was unofficial, people's actual experience. Something like "technically yes, you need to file sales taxes with the 20 states that collect for online sales, but no one actually bothers" or something like that. Everywhere you look, it'll be the description of tax laws which I know, but not actual experiences people have.
  Well why didn't you say so.

If you are selling FBA and Amazon warehouses your product in that state that it is shipped to.  You 'should' owe tax.
If it is YOUR state you NEED to pay tax as you can be traced fairly quick.

If it not your state, then the odds of them finding you goes down under 1%.

there, is that what you want to know?

rated:
Thanks forbin4040, thats exactly the sort of info I was hoping to get!!

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Xnarg1 said:   Didnt know it was legal to sell yourself --- online or otherwise.
Good point, he'd have to be in NV to do that

Not legal in NV either

rated:
slc39 said:   Why would you need to report every state? You only need to charge sales tax on shipments delivered to California (since your nexus is in California). What is so complicated about this?
  I'm a little late to this thread. So if I get a Michigan resale license so that I can buy at a bigbox store and not pay sales tax, and sell the stuff using Amazon FBA, I only charge sales tax on shipments sent to MI and then remit those sales tax I collected to state of MI?

rated:
rufflesinc said:   
slc39 said:   Why would you need to report every state? You only need to charge sales tax on shipments delivered to California (since your nexus is in California). What is so complicated about this?
  I'm a little late to this thread. So if I get a Michigan resale license so that I can buy at a bigbox store and not pay sales tax, and sell the stuff using Amazon FBA, I only charge sales tax on shipments sent to MI and then remit those sales tax I collected to state of MI?

  Off the top of my head this sounds right, but there could be specific rules in MI that I'm not aware of.

rated:
rufflesinc, here is what I've leaned so far. If you're shipping the stuff to the buyer, only pay MI sales taxes on sales to MI (not too hard for the tax man to find you). If you are using Fullfilled by Amazon, it gets really complicated and you need to keep track of where you ship your goods and pay sales tax to those states also. However, no one seems to actually do this as its very unlikely AZ will find you.

I must say that I not a tax expert and have only done this this year and haven't filed taxes yet.

rated:
FBA doesn't change the seller, you are just paying an intermediary to drop ship. So there should be no reason that Amazon's locations append to you. That one Amazon would likely actually fight -- they would lose a lot more business than charging tax directly has cost them. Sellers do NOT want to deal with taxing jurisdictions, it would totally kill their business. Unless Amazon move it totally to a middleman setup where they legally buy it and resell it collecting taxes to pay themselves. (they could certainly do that as a reseller certificate holder) That puts them 100% on the hook to service the sale though and deal with any issues.

I just don't see them working that as a business model.

rated:
RedWolfe01 said:   FBA doesn't change the seller, you are just paying an intermediary to drop ship. So there should be no reason that Amazon's locations append to you. That one Amazon would likely actually fight -- they would lose a lot more business than charging tax directly has cost them. 
 

 Right, FBA doesn't change the seller which is exactly why Amazon's warehouse locations DO matter to anyone utilizing the program.  If you store your inventory at various Amazon warehouses, then, in general, you do have nexus for sales tax purposes as well as income and franchise tax purposes.  Unless you get lucky and all of your inventory is located in the state you live, you would be required to collect tax on shipments to those states in which you hold inventory if they administer a sales tax unless a specific state exemption applies under law.

Now, certainly the vast majority of small businesses completely ignore it and, as mentioned, there can be jurisdiction specific exemptions, but that is the basic law, in general.

rated:
wdsaltman95 said:   
 
Now, certainly the vast majority of small businesses completely ignore it 

  GOOD ENOUGH FOR ME

rated:
Had anyoned used TaxJar? It is supposed to automate tax stuff for online sellers including FBA. $9.99 per month for up to 1k transactions. I'm tempted ... $10 is nothing if it actually takes care of all this crap.

rated:
So those saying that FBA does not change the seller, that may be true, but a 5 second google search will show you the error of your ways. Again, largely academic at this point, but technically true:
http://www.taxrates.com/blog/2014/03/11/when-fba-sellers-must-co... 
https://sellercentral.amazon.com/forums/message.jspa?messageID=2397499
http://www.ecommercebytes.com/cab/abn/y13/m09/i17/s03 
http://www.amazonsalestax.com/fba-sales-tax-nexus.html 

Shipping to an Amazon warehouse creates a Nexus, so if you ship to AZ, you now need to pay sales taxes if any of those items sell to someone in AZ. A huge mess and impossible to administer. Add to that the fact that Amazon sometimes moves your stuff without asking and its just crazy. Luckily, no one cares.

rated:
myhotrs said:   So those saying that FBA does not change the seller, that may be true, but a 5 second google search will show you the error of your ways. Again, largely academic at this point, but technically true:
http://www.taxrates.com/blog/2014/03/11/when-fba-sellers-must-co... 
https://sellercentral.amazon.com/forums/message.jspa?messageID=2397499 
http://www.ecommercebytes.com/cab/abn/y13/m09/i17/s03 
http://www.amazonsalestax.com/fba-sales-tax-nexus.html 

Shipping to an Amazon warehouse creates a Nexus, so if you ship to AZ, you now need to pay sales taxes if any of those items sell to someone in AZ. A huge mess and impossible to administer. Add to that the fact that Amazon sometimes moves your stuff without asking and its just crazy. Luckily, no one cares.

  
When I ship with UPS/FedEx/USPS or sell on Craigslist they are in every state too.   I read those links and I still don't see where they have been tried in court --  they are all opinions and in at least one of them from someone glad to help you in paying.  Or use MBE to pack and ship, for that matter.

Now the service fees that Amazon charges ME should be taxed.  

I disagree with your interpretation of Nexus, too.  If you did have to pay taxes based on Amazon's nexus then you are in the same situation as they are -- every state they have operations.  Fortunately using them (or Paypal) to handle payments and shipping (paypal DOES provide labels) is not considered that you have become them for taxing purposes.  Its all or nothing (and you still have to collect for your own state if you are a reseller - not if you bought retail).  In Texas I do not have to charge sales tax if I am reselling my own property -- only if I used a resellers certificate to buy it tax free myself.  

NOBODY would use FBA otherwise.  Like I said earlier, Amazon will fight for your rights as a seller a LOT harder than they will for you as a buyer.  As soon as I have to deal with potential tax audits and issues with 50+ jurisdictions that party is over.  They know it too. 
 


 

rated:
If you're really interested in this and have access to this article, Michael Gordon published a note in the North Carolina Journal of Law and Technology that looks at this issue a little bit. Of course, that was from 2010 or 2011, but it should provide more information than a blog and similar websites.

rated:
RedWolfe01 said:   
myhotrs said:   So those saying that FBA does not change the seller, that may be true, but a 5 second google search will show you the error of your ways. Again, largely academic at this point, but technically true:
http://www.taxrates.com/blog/2014/03/11/when-fba-sellers-must-co... 
https://sellercentral.amazon.com/forums/message.jspa?messageID=2397499 
http://www.ecommercebytes.com/cab/abn/y13/m09/i17/s03 
http://www.amazonsalestax.com/fba-sales-tax-nexus.html 

Shipping to an Amazon warehouse creates a Nexus, so if you ship to AZ, you now need to pay sales taxes if any of those items sell to someone in AZ. A huge mess and impossible to administer. Add to that the fact that Amazon sometimes moves your stuff without asking and its just crazy. Luckily, no one cares.

  
When I ship with UPS/FedEx/USPS or sell on Craigslist they are in every state too.   I read those links and I still don't see where they have been tried in court --  they are all opinions and in at least one of them from someone glad to help you in paying.  Or use MBE to pack and ship, for that matter.

Now the service fees that Amazon charges ME should be taxed.  

I disagree with your interpretation of Nexus, too.  If you did have to pay taxes based on Amazon's nexus then you are in the same situation as they are -- every state they have operations.  Fortunately using them (or Paypal) to handle payments and shipping (paypal DOES provide labels) is not considered that you have become them for taxing purposes.  Its all or nothing (and you still have to collect for your own state if you are a reseller - not if you bought retail).  In Texas I do not have to charge sales tax if I am reselling my own property -- only if I used a resellers certificate to buy it tax free myself.  

NOBODY would use FBA otherwise.  Like I said earlier, Amazon will fight for your rights as a seller a LOT harder than they will for you as a buyer.  As soon as I have to deal with potential tax audits and issues with 50+ jurisdictions that party is over.  They know it too. 
 

  You are completely wrong on a number of points, and you should stop posting if you don't know the actual answer.

1.If you have sales tax nexus because you have inventory in a state, that doesn't mean you automatically have nexus in every state because your warehouse company has nexus in every state.

2. Everyone who is selling inventory is "just selling their own property". They still have to charge sales tax. You may be getting confused about a casual sale exemption, but again, your opinions are just not correct.

3. Your comments about UPS and other common carriers are completely irrelevant, because they are not warehousing product, and most sales tax laws explicitly state that shipments out of your state by common carrier do not create nexus.

rated:
RedWolfe01 said:   
I disagree with your interpretation of Nexus, too.  If you did have to pay taxes based on Amazon's nexus then you are in the same situation as they are -- every state they have operations.  Fortunately using them (or Paypal) to handle payments and shipping (paypal DOES provide labels) is not considered that you have become them for taxing purposes.  Its all or nothing (and you still have to collect for your own state if you are a reseller - not if you bought retail). In Texas I do not have to charge sales tax if I am reselling my own property -- only if I used a resellers certificate to buy it tax free myself.  


 

  Sorry Redwolf but you are violating Texas Sales Tax Law
I see NO mention of needed a Resellers Certificate.  You already said you sell on Amazon and you stated you sell presonal property.  This means to me (And most likely Texas) that you are doing business.

From Texas State Board
http://www.window.state.tx.us/taxinfo/sales/faq_permit.html#perm...

1. Who is required to hold a Texas sales and use tax permit?You must obtain a Texas sales and use tax permit if you are engaged in business in Texas and you:

  • sell tangible personal property in Texas;
  • lease tangible personal property in Texas; or
  • sell taxable services in Texas.

Please see Rule 3.286 and publication 96-259 Taxable Services (PDF, 1.2MB) for more information.The requirement to obtain a Texas sales and use tax permit applies to individuals as well as corporations, firms, partnerships, and all other legal entities.2. What is tangible personal property?The statutory definition for "tangible personal property" is "personal property that can be seen, weighed, measured, felt, or touched or that is perceptible to the senses."  

rated:
I heard on some podcasts that PA is one of the more aggressive states about pursuing this, and Amazon has a fulfillment center there.

Having states beginning pursuing sellers of all sizes for this, coupled with the fact that:

  1. When submitting inventory for FBA a seller is typically instructed to disburse it to 3 or more centers in different states (unless you specifically opt out of this), and...
  2. Once the inventory is received by Amazon, they supposedly are known to periodically send it around to yet more centers in yet more states, and...

...what you have is a big mess.

rated:
For what it's worth, a few years ago (in 2011, before Amazon started charging sales tax in CA), I was reading through CA tax code and FBA sales met every requirement of a consignment sale under the law. In that case, the CA law was clear that the burden to collect sales tax was on the consignee (Amazon), not the Amazon seller. I actually took this to the CA Board of Equalization to ask them how this should work because Amazon had no nexus in CA (again, this pre-dates them charging sales tax here) so Amazon wouldn't collect the tax. In that case, it would be impossible for me to collect it, and even if I did, a buyer in CA would still think they are obligated to pay use tax and CA would collect a double payment for the sale.  So I argued that I didn't need to collect or pay any tax on Amazon FBA sales. 

They researched it and came back with this response agreeing with me (qualified several times as not being legal advice):
CA BOE said: To answer your question, all goods sold by Amazon under the FBA program are sales made by Amazon acting in the capacity of a consignee. Amazon has possession of the goods and can cause title to pass to a third person without any further action from you as the owner. Amazon would be considered the retailer and would be responsible for collecting any applicable sales tax. Your sales through FBA would be considered either sales for resale by you to them or consignment sales through them. Accordingly when you prepare your sales tax return you would list these sales either under the deduction entitled “Sales to Other Retailers for the Purposes of Resale”, or in the case of consignment sales you would claim the deduction under “Other” deductions and state that the deduction is for “Consignment Sales.” However, if you were to make sales directly to California consumers, you would be responsible to collect the sales tax. In addition, any sales you make through Amazon where you ship the goods directly to a California Consumer (not under the FBA program) would make you responsible for collecting the sales tax. This is regardless of the fact that Amazon collects the money on your behalf. I would also note that Amazon generally does not allow retailers to collect tax from their customers. Of course, as the retailer, you still incur the sales tax liability on sales made to California consumers even if you are unable to collect sales tax reimbursement. Since Amazon.com does not provide a method in which for you to collect sales tax reimbursement, you are paying the sales tax out of your own pocket.
 


 

rated:
forbin4040 said:   
RedWolfe01 said:   
I disagree with your interpretation of Nexus, too.  If you did have to pay taxes based on Amazon's nexus then you are in the same situation as they are -- every state they have operations.  Fortunately using them (or Paypal) to handle payments and shipping (paypal DOES provide labels) is not considered that you have become them for taxing purposes.  Its all or nothing (and you still have to collect for your own state if you are a reseller - not if you bought retail). In Texas I do not have to charge sales tax if I am reselling my own property -- only if I used a resellers certificate to buy it tax free myself.  

 

  Sorry Redwolf but you are violating Texas Sales Tax Law
I see NO mention of needed a Resellers Certificate.  You already said you sell on Amazon and you stated you sell presonal property.  This means to me (And most likely Texas) that you are doing business.

From Texas State Board
http://www.window.state.tx.us/taxinfo/sales/faq_permit.html#perm... 

1. Who is required to hold a Texas sales and use tax permit?You must obtain a Texas sales and use tax permit if you are engaged in business in Texas and you:

  • sell tangible personal property in Texas;
  • lease tangible personal property in Texas; or
  • sell taxable services in Texas.

Please see Rule 3.286 and publication 96-259 Taxable Services (PDF, 1.2MB) for more information.The requirement to obtain a Texas sales and use tax permit applies to individuals as well as corporations, firms, partnerships, and all other legal entities.2. What is tangible personal property?The statutory definition for "tangible personal property" is "personal property that can be seen, weighed, measured, felt, or touched or that is perceptible to the senses."  

  
Maybe my local county office didn't want to deal with me selling surplused PC equipment and cell phones.  (as in I upgraded my personal PC or phone, not bought for resale)   As it was explained to me, as long as they had collected retail tax on it when sold new they didn't care about it being sold used.  The only reason for a sales/use (aka Exemption) permit is to NOT pay taxes on items you are intending to resale  For used items it doesn't apply, otherwise I could buy everything tax free and as long as I sold it "someday" and thats not how it works.  If I was running a used merchandise storefront they might feel differently, I suppose.   The statute says specifically "engaged in Business" and I think thats where the county tax office differs from your position.  They don't consider it "Business."   To be fair to you, I was dealing with a small county (Gregg) and I haven't asked in Dallas where I live now.

And I DO expect to have to pay TX sales tax for sales via Amazon, if it comes up -- for obvious reasons buyers don't buy from FBA sellers in their own state very often.  I was actually referring to locally through Craiglist, I have no intention of getting a sales/use (exemption) certificate unless I decided to start haunting auctions and buying lots for resale.  (which is why I started looking into Amazon, too many fakers/BSers/spammers/scammers on CL)    Rereading my prior post I see it wasn't clear that I was referring to local p2p sales.

And yes, I do know that using MBE or Paypal as an example is silly.  So is the idea that if I ship or drop off items at a location in MY state that I am suddenly nexused if outside of my control its sent to another state.  The only way that would be concievable is if I am considered part of Amazon.  Its outside my control, just like I can't control the route FedEx uses. 

ITs a scale thing, I sell a few items a year currently and so far most of that was CL.   Considered getting serious about de-junking via Amazon just to get rid of my huge book library that sits in boxes.  I don't think I ever stated I HAD used Amazon yet, just that I have been doing a lot of research.  What printers and labels as well as polybags, ect. 

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