We are continuing to discuss the sales taxes system; today, we are going to introduce you to Amazon FBA Sales Taxes. Amazon is considered to be one of the most powerful and profitable e-commerce platforms, and many sellers want to run their business on the platform. If you are an existing Amazon FBA seller, settle in since this topic is exactly for you.
In Which Cases Should You Charge Sales Tax?
If you are an FBA seller, you are required to charge sales taxes in the state where you are running your business. As a rule, you have to comply with two main requirements: sales tax nexus and product taxability. Once you understand these two criteria, you will have an overall understanding of when you need to collect taxes from your FBA buyers.
Amazon FBA Sellers and Inventory Nexus
Amazon FBA Sellers have sale tax nexus in the states where their FBA inventory is located in an Amazon fulfillment center. Amazon has its fulfillment centers in 27 different states.
Each of the states that Amazon fulfillment centers are located in, has a Marketplace Facilitator Law. If you are located in one of these states and are running your business on Amazon, Amazon is responsible for charging sales tax to your customers on your behalf. Keep in mind that you are still required to have a sales tax permit and file sales tax returns in your home state.
How to Charge Sales Tax on Amazon
Amazon charges sales taxes on behalf of sellers in states where it has Fulfillment Centers. After registering to collect, you have to ensure that you are collecting taxes from your FBA customers. Fortunately, Amazon has a developed strategy for the sales tax collection. After announcing that you want to charge sale taxes, Amazon will carry about it by collecting sales taxes at the right rate. As a rule, Amazon charges 2.9% from each transaction for sales tax.
How to Start Charging Sales Tax on Amazon FBA
First of all, log in to Seller Central, click on Settings and edit your tax collection.
Your second step is going to be to choosing the states where you want to collect sales tax.
Keep in mind that you should have a state sale tax registration number for setting up the process of sales tax collection. It will help you protect yourself from illegal sales tax charging.
The Process of Reporting Amazon FBA Sales Tax
Keep in mind that you should report the amount of sales tax that you have collected from your buyers in each of the states. Most of the states want to know not only the amount of sales taxes, but also how much you have charged in each county, city or state. You can find this information by downloading a report from Amazon or by using sales tax automation. After reporting about your sales taxes for the state, you should file your sales tax returns. You can file your tax returns online or via sales tax software.
If you decide to launch your e-commerce-based business and have some additional questions concerning taxes within your business, you can reach the Prestige Auditors team, and we will help you in creating a successful business in accordance with all the requirements.