In which states does Amazon have warehouses?
- New Jersey
- New York
- South Carolina
There are also Amazon fulfillment centers in New Hampshire and Delaware but since those states don’t have a sales tax we don’t have to deal with them.
What is nexus?
Nexus is a fancy word that accountants and lawyers use that basically means your business has a presence in a state that the state considers significant enough for them to require you to register your business with the state, collect sales tax, and remit that sales tax to the state when they tell you to. Read more about sales tax nexus.
Does my FBA inventory being stored in a warehouse give my business nexus in other states?
Yes. Every state that has an FBA warehouse says that your inventory counts as nexus. Each of those states say in their laws that you are required to register your business in those states, collect sales tax, and remit it to the state.
Wait, so I’m supposed to collect sales tax in every state with an FBA warehouse? Really?
Yes. That’s what the states with warehouses say to do.
How am I supposed to tell where my inventory is?
Amazon doesn’t make this easy. You can tell if you download your Inventory Even Detail report. But you’d literally have to download it every day to be able to track your inventory’s movement from warehouse to warehouse. You can also use a paid service like Wherestock.com.
If I have nexus in a state, do I need to register with the state before collecting sales tax?
Yes. All of the states say that registration must occur before you actually collect sales tax. Collecting sales tax without a license is generally considered illegal.
Do I have to collect sales tax in every state?
Not every single state. But, if you have nexus in a state you are obligated to collect sales tax on items shipped to an address in the same state (regardless of where it originated).
Will Amazon collect sales tax for me? How much does it cost?
Yes. Amazon has a tax collection service for Professional Sellers. Amazon charges 2.9% of the sales tax you collect as their fee. So, for example, if you collect $10 in sales tax Amazon will charge you an additional $0.29 as their fee.
Why can’t I see sales tax settings in Seller Central?
If you login to Seller Central and can’t see “Tax Settings” under “Settings” then you most likely need to upgrade your account from individual to a professional account.
Are sales tax rates the same in every state?
No. Each state handles sales tax differently. From the way they qualify a taxable versus a non-taxable item, to the way they set rates, to the date your sales tax returns are due. Each state should be treated separately.
How do I determine how much sales tax to charge?
That depends on the state. Some states are origin-based and some are destination based.
- Origin-based states require you to charge one sales tax rate for all order shipped to addresses in your state. That rate is based on where your business is located.
- Destination-based states require you to charge a variable sales rate tax based on where items are shipped.
This only applies to the home state where you are based. Most states are destination-based for remote sellers. Read more about origin and destination sales tax collection here.
What’s the easiest way to get the sales and tax data that the states require to file sales tax returns?
The easiest way to get the automated reports you need to file returns to the state is through TaxJar. Or have TaxJar AutoFile your sales tax returns for you! Try a free 30-day trial today.
What happens if the Marketplace Fairness Act passes? Does all of this go away?
No. As it’s written right now the legislation says that existing nexus relationships (like the ones you have through FBA) will remain intact. Further, the Supreme Court of the United States just further broadened states’ ability to require online sellers to collect sales tax. Read more about “economic nexus” here.