If your business uses Fulfillment by Amazon (FBA) where Amazon handles third-party seller’s back-end operations, including storage, fulfillment and customer service, you may have sales & use tax nexus in those jurisdictions where the internet retailer has fulfillment centers. Amazon will ship a FBA seller’s inventory to various facilities based on space or product demand in a specific region.
Maintaining inventory in a state will create sales & use tax nexus for a remote seller, potentially giving the seller an obligation to register, collect and remit tax and file sales tax returns. Unfortunately FBA sellers do not have a choice as to where their inventory is stored or moved to. Amazon has distribution centers in a number of states, including: Arizona, California, Connecticut, Delaware, Florida, Georgia, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington and Wisconsin.
Amazon does not offer any assistance dealing with sales tax, except for calculating tax on behalf of sellers in accordance with their instructions. These instructions vary depending on where the seller is registered and the tax laws in each state. If your business is an FBA seller, than you may sales & use tax exposure in a number of states and should consider your options to mitigate potential liability before the dollars become significant.
If you have any questions about this or other SALT issues, please email Tom Mazurek at tmazurek@tsacpa.com. For additional State and Local Tax insights and resources, or to subscribe to our quarterly newsletter, visit tsacpa.com.
