Do you have a business that sells on Amazon? Are you wondering if you need to be collecting sales tax on those sales? The short answer is that Amazon sometimes collects sales tax for you on what is sold through them. I know that’s an annoying answer, and sales tax in general is complicated. If you sell through a website or other marketplaces and channels, Amazon sales tax collection is only a piece of a much larger puzzle. You might think you like puzzles. I’m not a puzzle person myself. But this is one puzzle that we need to put together piece-by-piece.
Amazon: A Marketplace facilitator
Amazon is a Marketplace facilitator. What is that you might wonder? It’s pretty much just a fancy way of describing a marketplace that contracts with and sells a business’s stuff (physical, digital, services). Marketplace facilitator laws transfer responsibility of collecting and remitting sales taxes from businesses selling on marketplaces, to the actual marketplace they sell on. So, Amazon is responsible to calculate, collect, and remit state sales tax in states with marketplace facilitator laws. In states that don’t have marketplace facilitator laws, businesses are responsible to collect and remit sales tax for Amazon sales in that state, according to that state’s nexus and sales tax laws. Yeah, it gets a bit complicated.
Additionally, most states require sales tax collection on the state as well as the local level (counties, cities, special regions, etc.). Very few states have only state-level sales tax. Companies are required to collect all levels of tax that a state administers. The good thing is, Amazon directly calculates all different levels at the point of sale. For example, if I buy a watch from a website, they will charge me Utah state level and county level taxes which total to 7.25%. The customers only see the total, but Amazon breaks it down to various levels. Amazon is not responsible for local taxes in some states, because those states don’t include local taxes in their marketplace facilitator laws. However, that is not the norm.
Click here, for more info on marketplace facilitator laws in each state.
For states that don’t have marketplace facilitator laws, you may need to collect and remit taxes for your Amazon sells. Check the state economic nexus laws here.
What You Should Be Doing
So, is there really anything left that needs to be taken care of in states with marketplace facilitator laws? This depends on your business processes (if you use multiple sales channels in multiple states). Here are some of those moving pieces we talked about:
Keeping Your Sales Tax Permits
Amazon, as well as all other marketplace facilitators, only handle sales taxes on transactions made through their platforms. If you are selling through Amazon as well as through a business website or non-marketplace facilitator channel, then you need to calculate, collect, remit, and file your own taxes on those other sales. This means you need a current sales tax license or permit in that state. If you are ONLY selling through Amazon (or another marketplace facilitator) in a state, then you don’t need to even register with the states, let alone file and remit. The only exception to this is for Washington. In Washington, remote sellers file Business and Occupation (B&O) tax which includes sales tax. So, even if their sales tax liability is zero, that’s only part of the B&O return, and they still need to file that return.
As an Amazon seller, it’s important you stay informed so you can avoid any fines or extra hassle.
Know Which States Have Amazon Marketplace Facilitator Tax Laws
For Amazon sales tax collection, it’s important to know which states Amazon is required to collect sales tax for you in. It is also important to keep in mind that these laws can change. To stay informed about these changes click here.
|States||Effective Date||Marketplace Facilitator Laws|
|Alabama||1/1/2019||Click here for Alabama Amazon Laws|
|Arkansas||7/1/2019||Click here for Arkansas Amazon Laws|
|Connecticut||12/1/2018||Click here for Connecticut Amazon Laws|
|District of Columbia||4/1/2019||Click here for District of Columbia Amazon Laws|
|Idaho||6/1/2019||Click here for Idaho Amazon Laws|
|Indiana||7/1/2019||Click here for Indiana Amazon Laws|
|Iowa||1/1/2019||Click here for Iowa Amazon Laws|
|Kentucky||7/1/2019||Click here for Kentucky Amazon Laws|
|Minnesota||10/1/2019||Click here for Minnesota Amazon Laws|
|Nebraska||4/1/2019||Click here for Nebraska Amazon Laws|
|New Jersey||11/1/2018||Click here for New Jersey Amazon Laws|
|New Mexico||7/1/2019||Click here for New Mexico Amazon Laws|
|New York||6/1/2019||Click here for New York Amazon Laws|
|Ohio||9/1/2019||Click here for Ohio Amazon Laws|
|Oklahoma||7/1/2018||Click here for Oklahoma Amazon Laws|
|Pennsylvania||4/1/2018||Click here for Pennsylvania Amazon Laws|
|Rhode Island||7/1/2019||Click here for Alabama Amazon Laws|
|South Carolina||4/29/2019||Click here for South Carolina Amazon Laws|
|South Dakota||3/1/2019||Click here for South Dakota Amazon Laws|
|Vermont||6/7/2019||Click here for Vermont Amazon Laws|
|Virginia||7/1/2019||Click here for Virginia Amazon Laws|
|Washington||1/1/2018||Click here for Washington Amazon Laws|
|West Virginia||7/1/2019||Click here for West Virginia Amazon Laws|
|Wyoming||7/1/2019||Click here for Wyoming Amazon Laws|
Amazon Sales Tax Collection; What to Remember
Although Amazon does collect and remit sales tax for third–party sellers in many states, there are a few that don’t require it. Even if states do require it, there still may be more that needs to be done on your end. Don’t forget all the most important pieces of this tax puzzle. For instance, you still need to collect and remit sales taxes when selling through other platforms such as through a company website. You also need to be aware that marketplace facilitator laws may change and update to include more states. And if you just don’t feel like you have the time to put this darn puzzle together yourself, then give us a ring. At LedgerGurus we make sales tax puzzles come together, saving you time and money.
For more info about LedgerGurus sales tax help click here.