Amazon recently notified sellers that it would begin collecting and remitting sales tax on behalf of third party sellers starting April 1. This is the result of the newly enacted “Marketplace Facilitator Law” which Washington has also enacted. Amazon is also collecting tax on all sales in Washington. Normally, Amazon does not collect sales tax on third party sales that are not “fulfilled by Amazon.” Guidance on whether market place sellers have other compliance or filing requirements is still evolving.
For more information on how this new law may impact your business, contact your state and local tax professional.
California has contacted more than 2,500 out-of-state retailers to notify them that they may owe sales tax due to the presence of products in California warehouses. A remote seller owning products in a California warehouse creates a physical presence in California and therefore sales tax nexus. The most common example is holding inventory in an Amazon warehouse. If contacted by the State of California the remote seller will be required to remit sales tax on all sales into California from the time this nexus was created. Any seller who believe they are in this situation should contact Eide Bailly’s State and Local Tax Team to discuss options to minimize the tax, penalties and interest. Once the state contacts the retailer the options to mitigate the exposure are limited.
The emergence of ecommerce has compelled states to invent new ways to find their lost sales tax revenue. One novel solution states are implementing is identifying individual purchasers of goods who have not paid sales or use tax. This strategy forces remote sellers, who are not registered to collect sales tax, to turn over customer lists or face stiff penalties. Learn more in our recent article.