No because my sales and use tax is deductible lol
As it will be in this case . . .
Yes, it is interesting that all of the fees will be deductible. The federal government will now actually now receive less income tax because of these fees.
That is not how profitable businesses work. They plan for all associated fees prior to engaging in the business. That way they can make the desired profit.
Yes, just saying that the “irony” here is that by adding a sales tax at the state level, it results in less income tax at the federal level (and income tax at the state level for that matter), because these additional sales taxes will be deductible.
Not sure if that sort of thing is enough to help prompt that federal government to legislate, but it can’t hurt.
State sales tax would have no effect on the federal level or your business, because it is money paid by the customer, IN ADDITION to the product cost. Sales tax is just a pass thorough for retail businesses.
Sorry, I was referring to this new sales tax that we (Amazon sellers) will be paying starting June 1, not customer paid sales tax.
Let’s say I pay a total of $5000 for the year of sales tax on these “taxable electronic services” (referral fee, subscription fee, etc…) That sales tax is now a deduction for my business and that deduction results in less money the federal government will receive. That was my point.
Yes, you are correct. That is because sellers would be buying a taxable service that Amazon is offering for sale to it’s FBA sellers in those states. With the sophistication of Amazon accounting it will be easy for them to do. The only way around it would be not to purchase (or offer) any of the services, adjust your costs accordingly, or leave FBA altogether.
Wouldn’t it be the same either way?
Either you pay 50k plus say 5k for these “taxable electronic services”, so total of 55k and you get to make a deduction of 55k.
Or you pay 50k plus zero tax for the “taxable electronic services”, so total of 50k and you have a deduction of 50k.
The amount paid minus the deduction is the same in the end.
Has the tax been applied to product price and shipping fee already? Why is WA having more than 10 percent tax on overall price included shipping now?
I was wondering about the shipping portion. The customer currently already pays sales tax on the shipping charge, so not sure why sellers are paying sales tax on top of that. I know they are saying it’s for the “service” of shipping, but it seems to me the shipping sales tax already being paid by the customer should include things like taping, bubble wrap, etc…
I’m not sure how you’re calculating that though. If it’s 10% of 15%, that’s 1.5% extra of your total sale.
We sell fast-selling high value electronics and our margin is very low (5-6%). For example, if you sell 1M products, our profit is 60k, and we have to pay 100k or moe see to Amazon. If all sees are subject to 10% tax, means that we have to pay 110 k fee, that being said, our profit decreased from 60k to 50k, 16% lost.
how exactly will anyone make money now that fees are taxed, and we also have “high pricing error” making our inventory inactive. with the fees and that error we can no longer double any money.
• Amazon is required to collect taxes on Selling on Amazon fees in Connecticut, the District of Columbia, Hawaii, South Dakota or West Virginia, based on each state’s tax rates. Selling on Amazon Fees include the Referral Fee, Subscription Fee, Variable Closing Fee, Per-item Fee, Promotion & Merchandising Fee, Refund Commission Fee, Checkout by Amazon, and Sales Tax Collection Fee. For example, if your business is located in West Virginia, and your sales tax rate is 6.39%, and you sell an item with a total price of $20, which is subject to a 15% referral fee, we will collect and remit a sales tax of $0.19 to comply with state laws (calculated as 6.39% of the referral fee amount of $3.00). If your business is located outside Connecticut, the District of Columbia, Hawaii, South Dakota or West Virginia, we will not collect sales tax on the Selling on Amazon fee you pay.
• Amazon is required to collect taxes on FBA Prep Services in Arizona, Connecticut, Illinois or West Virginia, based on each state’s tax rates. FBA inventory prep fees include the Labelling Fee, Polybagging Fee, Bubblewrap Fee, Taping Fee, and Opaque Bagging Fee. For example, if you decide to use FBA Prep Service to bubble wrap your products, and the service is performed at a fulfillment center in Arizona, and the sales tax rate at that location is 8.37%, and the bubble wrap fee is $0.80/unit, we will collect and remit a sales tax of $0.07 to comply with state laws (calculated as 8.37% of the bubble wrap fee amount of $0.80/unit). If the service is performed at a fulfillment center outside Arizona, Connecticut, Illinois or West Virginia, we will not collect sales tax on the FBA Inventory Prep fees you pay.
So, at least some more clarification.
Interesting that FBA (Pick and pack) fees do not seem to be included. Which is good.
Where is the petition? I’ll sign it, but better yet, I want to block sales to those states. Somebody with balls needs to step up and start a class action lawsuit.
This is not about sales to those states. This is about FBA prep services performed in those states and about the location of your business.
To avoid the first one you will have to not use FBA prep services.
To avoid the 2nd, and if your business is located in one of those states, you will have to relocate your business.
As far as I can tell, the FBA fees are not horrendous because sellers can do that work before shipping to warehouses.
As far as I can tell, the packing, shipping, and customer service for FBA are not taxed.
And the FBA sales taxes apply equally to all sellers.
Though I may still suggest that Amazon consider tending to route inventory requiring prep away from the states of Arizona, Connecticut, Illinois, and West Virginia to avoid us taking these costs.
Sales taxes on Selling on Amazon Fees are more disturbing.
This is a problem for those living in Connecticut, District of Columbia, Hawaii, South Dakota, and West Virginia.
And there are many other states considering enacting taxes on Selling on Amazon services.
If you have smaller margins and are in those states, you really need to be looking critically at your business model now, and be considering how to change things.
If you are considering moving, I recommend you contact your state representatives first to explain the situation.
I am in particular awe of the greed of Connecticut, D.C., and South Dakota.
They all have a facilitator tax that is now active on Amazon, and are now looking also to take a massive cut of seller fees too.
I still think we need to do some advocacy to help those in Connecticut, District of Columbia, Hawaii, South Dakota, and West Virginia.
And to prevent this from becoming a problem in other states.
Things could get a lot worse here.
Rest assured. It only affects: “If your business is located outside Connecticut, the District of Columbia, Hawaii, South Dakota or West Virginia, we will not collect sales tax on the Selling on Amazon fee you pay.”
I’m in South Dakota this will cost me a lot of money. I paid 89,000 in referral fees to amazon last year at if I’m tax at 6.5% local tax rate this going to cost me $5,785 at least this coming year. I will be talking to the representatives and discussing solutions. This only makes SD less viable for me as Amazon seller and hurts future sellers from starting.