Amazon Will Handle WA Sales Tax (Effective Jan 1, 2018)


#10

I’m reading between the lines here, but I’m surmising that this development represents a confidential settlement with the Washington DOR, and that this is just the first of many more to come. This would be a win-win situation for everyone; the state gets its money, there are no findings of fact that could adversely affect Amazon, third-party sellers can breathe a sigh of relief, and the courts don’t have to grapple with a legal question that has no easy answers.

What this type of concession does is avoid the need of any determination of the question of what it takes for a third-party seller to establish “minimum contacts” or “nexus.” As a practical matter, the issue is now moot–at least in the state of Washington.


#11

Amazon has a real incentive to make this happen across all states (and provinces for us Canadians).

Currently, many 3rd party sellers have an advantage if not charging sales tax on a listing where Amazon has a competing offer. Now that advantage is slowly going away.

On the plus side, other 3rd party sellers will not be able to undercut you on taxes if you’re required to charge in a particular state.


#12

True, but the odds are that on other channels there are far fewer states that individual sellers will have nexus to. Unless they’re using Multi-channel fulfillment through FBA.


#13

…when selling on Amazon. As more states hop on the gravy train, and decide that “nexus” means whatever they want it to mean, it may become a lot harder to run your own shop.


#14

And sales from abroad will also be subject to sales tax as far as I can make out from the announcement.

Edited by: liverwort on Nov 13, 2017 4:14 PM


#15

I don’t think it matters (for Amazon sales, that is; whether you have to collect and remit taxes on what you sell elsewhere is still an open question).

We know that people in WA owe the taxes regardless, either as sales or use tax. What Quill said is that the state cannot force you to collect and remit them unless you have a substantial nexus. Amazon has volunteered to do that for you, so the state is not forcing you to do it.


#16

It will not fully answer nexus questions though. If the WA DOR consider that you have nexus because you have inventory in an Amazon warehouse then that means you have nexus for all sales across all marketplaces. Amazon is the biggest pot for sales tax so they may no longer be as aggressive but they could still go after FBA sellers for sales on other marketplaces.

I think with the litigation in SC and this development in WA state there is more arguments now that nexus is with Amazon and not the 3rd party FBA seller.


#17

>
It is also going to make things more complicated.

If you are already dealing with sales tax and Amazon takes over, you are going to need to go through audit proceedings because of the change.

There are also multichannel considerations. Those who sell on their own website or other marketplaces are going to still need to do everything they were doing before. They will just be remitting less in their filings.

Dave


#18

That’s no longer an issue. Amazon undeniably has a physical presence as they own and operate warehouse space in Washington. They will collect and remit sales tax for everyone. It establishes a level playing field for everyone, as taxes will be computed and visible for buyers on every sale.

Edited by: maphx on Nov 13, 2017 6:15 PM


#19

Wow, just saw this in the help.

I am surprised that it seems like a fairly workable situation was found. As long as your non-participating channels remain under $10k in the state of Washington, the controversy is over.

Wonder how long before the other states get in the gravy train?


#20

The states should rename sales tax to privilege tax as many want the tax for a item just being sold their with no presence of seller at all. The government will just keep squeezing every income source until their is nothing left to squeeze.


#21

> > Having items stored in warehouses does not necessarily constitute a physical presence.
>
> That’s no longer an issue. Amazon undeniably has a physical presence as they own and operate warehouse space in Washington. They will collect and remit sales tax for everyone. It establishes a level playing field for everyone, as taxes will be computed and visible for buyers on every sale.

No, this is good news. As waves of 3P sellers get culled later next year, they can all join to sue Amazon for the revenues that Amazon collected, failed to forward and instead applied to an unlawful tax.

+… there must be a way…+


#22

The sales tax is levied on the buyer, who is in Washington and subject to Washington laws. Amazon would be responsible for determining what is taxed in Washington. It will also resolve complaints from buyers who are either tax-exempt entities or who claim that an item is not taxable there.

The nexus question determined whether the state could force you to collect and remit sales tax, as opposed to requiring the buyer to pay it directly to the state as use tax. This is now a moot point, since Amazon has volunteered to collect the tax and you are not being forced to do anything.

Edited by: quirkybooksabq on Nov 14, 2017 4:01 PM


#23

These aren’t revenues that Amazon is collecting; these are taxes owed by the residents of Washington state. Sellers would get the same amount as always (price plus shipping less fees); buyers would just be charged a bit more (price plus shipping plus tax).


#24

What about for products that might be taxed in WA but are not taxed in your nexus state, who is responsible for making sure the right tax information is associated with the product?


#25

I don’t think it has settled in yet, quite a few long running forum controversies have just suffered a huge shift.

Controversy: FBA gives more tax liabilities to sellers than common carrier FBM.
Resolution: Not any more

Controversy: Supreme court decisions and practical considerations make enforcement of remote seller sales tax impossible unless congress passes new laws.
Resolution: Conflicts with observable reality

Controversy: States will have to win a court case before any sales tax gets collected by remote sellers. They are afraid to sue and lose, so are just bluffing.
Resolution: Amazon doesn’t think so

Let me repeat again how amazed I am that this didn’t come at our (third party seller) expense.


#26

So does this mean that buyers from WA will have sales tax applied automatically to their order and sellers won’t have to deal with it anymore?

Buyers from WA owe the sales tax even if they are buying from out of state. This would solve Washington financial problems in a heart beat!!! Or they will just go to ebay…


#27

Here’s the $500 question: Will Amazon be collecting and remitting taxes on its own behalf or on behalf of its third-party sellers? Does it matter?

What possible ramifications might it have if Amazon has stipulated that its third-party sellers, both in and outside the state of Washington, have sufficient nexus with the state to be subject to its sales tax requirements–and that Amazon will simply be acting as their collection agent?

Quirky, your thoughts?


#28

I was thinking more in the figurative sense, but I agree it isn’t good will that is motivating Amazon in this case. Amazon has a long history of fighting sales tax obligations as long as possible.

I also doubt anyone seriously considers collecting sales tax for the filer incentive, and thought there is currently a small Amazon fee for sales tax collected on our behalf.

I’m thinking taxjar will take this pretty hard.


#29

>
I am not familiar with WA sales tax, but many states allow the filer to keep a commission (some percentage of the taxes for their trouble). There are quite likely some incentives the state agreed to with Amazon. I doubt it was unilateral good will. They would also have a problem with Amazon charging a fee. Amazon would have to declare it and pay taxes specially on it. I don’t think that would fly.

Dave