If you’re an online seller using the Amazon FBA program to facilitate sales, there’s a lot to absorb and consider these days regarding sales tax compliance. Depending on who you talk to, you may get different advice:
- Some attorneys, hungry to fight the legal issues in court (a highly costly endeavor with no guarantees), will advise that if your only activity in the state is inventory in an Amazon warehouse, you do not have to comply with that state’s sales tax laws ... that your inventory in an Amazon warehouse does not establish nexus in that state for sales tax purposes;
- They or others may advise that Amazon should collect the sales tax ... that Amazon is acting in an agent capacity on behalf of the FBA sellers and that the sales tax compliance responsibility should fall on Amazon’s shoulders (see South Carolina’s recent announcement espousing this theory);
- In contrast, other state tax experts, seeking to minimize your risk – including the author - will advise that your inventory in an Amazon warehouse in a state does establish the requisite sales tax nexus sufficient to require compliance with that state’s sales tax laws, and that arguably Amazon’s activities on behalf of FBA sellers establishes an agency nexus for the online sellers in those same states, regardless of the inventory, but bolstered by the presence of it;
- These experts may also advise that even if Amazon were determined to have taken on the sales tax compliance obligations of its FBA sellers, that the FBA sellers likewise have the same compliance obligations (joint and several liability for both Amazon AND the FBA seller, if you will);
- Likewise, they or others may advise that in state auditors can and will hunt down Amazon FBA sellers, subject them to their state’s sales tax laws and assess them for historical liabilities relating to all prior periods in which they had inventory in an Amazon warehouse in the state (witness what California, Washington State and several other states are achieving in this regard).