FBA Sellers

How many of you have received a tax notice from a state like California saying you owe back sales tax, even though you don’t have a presence there?

***Thread***
I’ll skip the court history, but prior to the fall of 2018, a state couldn’t require you to collect and remit sales tax unless you had some physical presence there.

Like an office, a warehouse, employees, etc.

Basically if you were just selling from out of state, no problem.
The gray area in the law was if you had an independent contractor in a state that was acting more like an employee and doing significant things for your business.

Think a person devoting most of their work time to your business and basically reporting to you on operations.
Some states decided that Amazon FBA and it’s warehouses and employees working on your behalf was creating a physical presence for your business in their state.

So they started telling you that you should be collecting and remitting sales tax from your customers on FBA Sales.
Worse, they wanted three years of back taxes that you didn’t collect, which could be more than your annual profit!

Much of this has been resolved going forward, but some states may still be hassling you for back taxes.

If this is the case for you, I’m happy to help.
In the fall of 2018 a US Supreme Court case involving Wayfair ruled that states could tax out of state sellers if they hit a certain threshold of sales, rather than requiring a physical presence. (Economic nexus)
At first this sounds bad for FBA sellers. We’re they going to have to remit sales tax in potentially 45 states with sales tax?

...but some reform quickly happened with 38 states now requiring Amazon to collect and remit sales tax on your transactions. (Marketplace facilitator)
You aren’t totally out of the woods.

There are some states with economic nexus that don’t yet protect you with marketplace facilitator rules.

There are also some cities with the same problem.

Reform is continuing to be worked on, but until it’s finished watch for tax notices.
Let me know if I can help.

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