Amazon FBA Sales Tax Returns

How to Handle Amazon FBA Sales Tax

January 20th, 2017

January is one of the times during the year that just about everyone has to deal with Amazon FBA sales tax returns.  Depending on the volume your business does, you may be required to file more often than annually, but almost everyone will have at least one sales tax return to do in January.  In today’s post, I’m going to share some tips on how to best manage your sales tax on Amazon as you are going through the process.

If you are still figuring out what to do when it comes to Amazon sales tax, I did an introductory post awhile back.  It goes over the issue of sales tax for Amazon FBA sellers, and shares the basics of how you determine which states you should be collecting sales tax in.  You can read that post HERE.

The first step once you are setup with collecting sales tax is to make sure you know the due dates for each of the states that you are filing in.  These due dates can easily be found via google by searching “STATE NAME sales tax return due date” or via the applicable state’s website.  Each state has different requirements, and some differ depend on your filing frequency, so it’s important to make sure you check these to make sure you are compliant.  I recommend setting up calendar reminders so these deadlines don’t accidentally pass you by.

The next step is to actually remit payment to the states for the sales tax that you have collected.  There are 2 main options when it comes to gathering the information needed to file sale tax returns and remitting payment to the states.  You can do it yourself manually using Amazon’s reports, or you can use a service such as TaxJar to help automate the process.  If you prefer to go through the process yourself, I did a full blog post with the step-by-step instructions on how to run the necessary reports.  You can read the step by step post to walk you through the necessary amazon reports HERE.

The other option is to use a service like TaxJar to simplify the process. This service will generate all of the info you need to file your sales tax returns in each state, and in some cases it can automatically file the sales tax returns for you as well.  I am finishing up this year using the method I linked to in the blog post above, but for 2017 I am planning on switching over to using TaxJar.

Either option will work just fine, just make sure that you are taking care of your sales tax using whichever method works better for you.

Jennifer Dunn, the Chief of Content for TaxJar, shared a few “sales tax pro tips” with me for this post that I believe are helpful that are listed below.

3 Sales Tax Pro Tips: 

1. How often you pay sales tax is often linked to your sales volume. The higher the volume of sales in a state, the more often that state will ask you to file and pay sales tax. Some states, like Arizona, will even allow you to change your filing frequency if asked. Most sellers prefer to file annually or quarterly when possible so it can definitely pay to contact your state taxing authority to see if this might be an option for your business.

2. You’ll want to make sure you file a return for every state where you’ve registered for a sales tax permit, even if you didn’t end up actually collecting any sales taxes for that state. This is called filing a “zero return.” Failing to file in states where you’re registered can result in fines or even having your sales tax permit revoked.

3. Here’s another tip—some states have a discount for filing sales tax on time.  I’d recommend checking with each state that you file in to make sure that you are taking advantage of any discounts that might be available for your business.

Sales tax compliance is not the most fun part of selling on Amazon, but it is very important to do it properly to make sure you don’t cause unnecessary problems for your business.  With any tax or legal matter like this, I recommend getting the advice of a professional.  I always make sure to run decisions regarding sales tax and accounting issues by my CPA to make sure that I am properly covering my bases.

Also, I will add the disclaimer that I am not a CPA or tax professional, so this post is not to be construed as legal or tax advice.  I am happy to answer any questions though based on my experiences, so if you have any questions or comments, please share them below!

 

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4 responses to “How to Handle Amazon FBA Sales Tax”

  1. John Tenny says:

    Am I right — I’m in Oregon which has no sales tax and selling FBA. Since the ‘sale’ is made in Oregon I don’t need to collect tax or file returns. That is, since I have no physical presence in any other state I do not need to register as a vendor nor deal with sales tax.
    Correct?

  2. hodedofome says:

    There’s something I don’t quite understand about all this. I live and have nexus in Texas. So I setup Texas sales as taxable with my Amazon account. I setup each item as taxable (if applicable) and all Amazon FBA sales to my state are charged sales tax (I can see the tax on the order to the customer). So, what’s left to do than to file a no-tax return to my state? Amazon collected the sales tax, not me. So it’s on them to send that $$$ to the state correct?

    It wouldn’t make sense for me to pay the sales tax when I didn’t collect it but someone else did. And it for sure wouldn’t make sense for both myself and Amazon to send in sales tax receipts – that would mean the state would get double what they are owed.

    • ose says:

      Hello,

      Amazon collects it and then pays it to you. So it’s your responsibility to file the return with the amount of the sales, and then pass the sales tax amount collected by Amazon on your behalf over to the state.

      Best Regards,
      Ryan

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