Collecting and filing sales tax can be confusing for e-commerce businesses, and sometimes the hardest part is knowing where to start. This blog will show you a simple way to find and understand your Amazon Sales Tax Report.
Before we get started, would you like some good news?
Due to marketplace facilitator laws (these are awesome sauce for e-commerce sellers!), Amazon is responsible to collect and remit sales tax for its sellers in most states.
Woohoo! Happy dance!
But, you’re not off scot-free. There are still a few states where you, as the seller, are responsible to collect and remit your Amazon sales. (To see which states you’re responsible for, click here to read our post about nexus laws.)
The Amazon Sales Tax Report shows you in what states Amazon is collecting for you and in what states YOU are responsible to collect and remit sales tax. In addition, it helps you find the actual amount of sales tax you are responsible for in those states. This helps you ensure you’ve collected and remitted the correct amounts.
A Few Quick Notes
Not every online e-commerce channel falls under these laws, so you need to look at sales tax differently depending on what channel you are selling through.
Before we dive in, this is a technical process and this post is very detailed. At the end of all this, our goal is that you are empowered to do this yourself. But if it’s still too much, we’re happy to help you with it. You can click here to learn more about our services.
Finding your Amazon Sales Tax Report
The first step is to go to Amazon Seller Central, click on Reports, and click on Tax Document Library.
Under Sales Tax Reports, you will see documents that are already available, or you can click on Generate a Tax Report.
Let’s assume you choose to generate a report.
When you click on Report Type, it drops down with 3 options. Each has a different purpose and it’s important to know the difference.
So, what IS the difference between the 3 reports?
- Sales Tax Calculation Report – This report shows YOUR sales tax liability. It is YOUR responsibility, as the seller, to report & pay this.
- Marketplace Tax Collection Report – This report shows AMAZON’S sales tax liability. It is AMAZON’S responsibility to report & pay this.
- Combined Sales Tax Report – One place to see it all!
After you choose the report (most likely the Sales Tax Calculation Report), you can choose the reporting date range you want and then click Generate.
Learning to Read Your Amazon Sales Tax Report
This report has many columns (A – BG!) and they can be incredibly confusing, so we’ve broken them down and pointed out the most important ones for you to pay attention to.
Transaction Details (Columns A – F)
The most important info you’ll see are the Order Date, Shipment Date, and Posted Date.
What is the difference?
- Order Date – when the order was placed by the customer
- Shipment Date – when the order was sent by the seller
- Posted Date – when the order was received by the shipping company (these last 2 will be pretty close to each other).
* It doesn’t really matter which one you use for your accounting purposes. Just be sure to be consistent to minimize confusion with your revenue reporting. (For our customers, we usually use Posted Date.)
Marketplace Details (Columns G – N)
The most important columns are Tax Collection Model and Tax Collection Responsible Party (columns M and N). They show you what Amazon reported and what you need to report.
When the filter on column M is Marketplace Facilitator, the responsible party is Amazon. When it is set for Standard, the responsible party is the Seller. This is a transaction YOU need to report.
If you want more detail about this section, watch our YouTube video from 5:32-7:04.
Product & Tax Details (Columns O – Y)
This area gives details about the product selling price and the tax collected. The most important column for you to pay attention to is Total Tax (column X). This is the seller’s sales tax responsibility to remit to the states.
Hint: When you click on the whole column, you’ll see the sum total listed at the very bottom of your screen.)
Again, if you want more information about this section, watch our YouTube video from 7:05 – 7:43. We’ve cued it to right where you need to start watching.
Shipping Details (Columns Z – AN)
The next part is where your inventory shipped from and shipped to. With e-commerce, the sales tax is usually determined by where the item is shipping to, not from. Knowing where the order was sent to then determines the sales tax rate.
Here’s an interesting tidbit: The customer’s zip code gives us the different jurisdictions this address is in – state, city, county, and district – and each of these has its own sales tax percentage. You can see those percentages broken out in Taxed Jurisdiction Tax Rate (column BB) and the Tax Amount Collected by Amazon in column BC. This total matches the total amount listed in Total Tax (column X).
More details in the video from 7:44 – 9:19 (again, cued up for your viewing convenience).
How to Use this Report to Remit Sales Tax Correctly
When you click on Ship To State (Column AG), you can filter the sales tax liability by state. You’ll notice that not very many states are listed. Remember, only 5 states (as of the writing of this blog) that require sales tax don’t already have marketplace facilitator laws in place.
Opening a pivot table will allow you to summarize by state how much you’ve collected in sales tax and need to remit.
Now, before you panic wondering what a pivot table… don’t worry, we’re going to show you how to set this up. This part is not in the original YouTube video, but hopefully the screen shots and explanations will make it easy to understand.
Before we continue, you may be asking what a pivot table is.
Great question! It is a summary of your data, packaged up nicely in an easy-to-read chart so you can see at a glance what you need to see. Believe me, you will be very glad you learned how to set this up!
Preparing to Create a Pivot Table
It’s important to remember that the Ship To State (column AG) is associated with the state, city, county, and district jurisdiction info (columns AM and AN). Because of this, you need to make sure that all the orders are associated with the correct state, even if not all the cells are filled in column AG.
To make sure everything is associated correctly, insert a new column temporarily. Label it MODIFIED Ship_To_State.
* To help you remember that it’s modified, you can make it a different color to differentiate it from the rest of the report.
Enter conditional formatting in the first cell of the modified column (column AH here) by typing in =if(AG2=0,AH1,AG2). This means that if a state is specified in column AG, put it in AH. If a state is not specified in AG, go up to the next state that is specified and add that to column AH.
This will result in the first cell in the column filling in with the correct state. To auto-fill the rest of the column, left-click on the bottom right-hand corner of the cell (yellow square in the screenshot).
All the columns will now have the correct states filled in.
You’re all set and ready to create your pivot table!
How to Create a Pivot Table
Highlight the entire table by going up to the very top left corner of the table and clicking on the gray triangle. (Don’t forget this step! You’ll be very confused if you do.)
Go up to the top and click on Insert, and then click on Pivot Table.
The pivot table range will default to the entire table. That’s good. Next, choose New Worksheet for where you want the pivot table placed. Click OK.
Your shiny new pivot table will pop up. Label it Amazon Pivot Table so you know what you’re looking at when you come back to it later.
Summarizing the Data with Your Pivot Table
Now you’re ready to start summarizing data. This is where you decide which rows and columns you want included in the table. On the right side of the worksheet, you’ll see a list of fields, as well as boxes down below that you can drag and drop your selected fields into.
Under Rows, drag and drop MODIFIED Ship_To_State (this is so your rows can be labelled with the correct states).
Under Values, drag and drop Tax Exclusive Selling Price (the cost of the products being taxed), Tax Amount (the amount actually taken out for taxes), and Tax Amount Collected by Amazon (to make sure they didn’t collect anything for the states you have listed) ,
This is what your completed pivot table will look like:
There are plenty of other ways you can filter this pivot table and get other information you may need, but this is the basics of what you need.
Finding and understanding your Amazon Sales Tax Report is a necessary part of making sure you are remitting your sales tax correctly. Following these steps will hopefully enable you to make this a do-able task.
If you have more questions on sales tax in general, you can download our “10 Steps to Ensure Sales Tax Doesn’t Burn Down Your e-Commerce Business.”
If you need help with your Amazon sales tax compliance or sales tax compliance on other e-commerce sales channels, contact us here.