Tax collection for orders shipped to District of Columbia or Nebraska State – Effective April 1, 2019

#1

Based on changes to the District of Columbia and Nebraska State tax law, Amazon will begin calculating, collecting, and remitting sales and use tax for all orders shipped to customers in the District of Columbia or Nebraska on April 1, 2019.

Your existing tax calculation settings, order details, and payments reporting will update automatically to reflect Amazon’s responsibility. No action to your tax settings or seller account is required.

Answers to common questions are available in the Marketplace Tax Collection FAQ. Consider working with your tax advisor to determine any ongoing tax remittance and reporting obligations your business might have.

For more information, see Marketplace Tax Collection FAQ

For more information from Nebraska, click here

For more information from the District of Columbia, click here

#2

Hi Amazon, Please do this for ALL the States that you collect taxes for us. Just collect it and pay it all so we don’t have to process returns in 20-30 States. Thanks!

#3

Do it for California too, Save sellers from a big trouble. Secret: You will eventually will have to do it!

#4

The states that Amazon collects and remits the Sales Tax have passed laws that require Amazon to do so. Sellers that want Amazon to do it for their state should contact their states lawmakers.

#5

I’m pretty sure Amazon would be OK with that. It’s really the states that are having issues with it.

#6

I’m confused. I thought we had to report our own? But Amazon does it? What simple detail am I missing? We are just getting into reporting from the start.

#7

As @Arizona_Dave said, Amazon cannot just “choose” to collect taxes on behalf of sellers. The states for which Amazon is doing this have enacted Marketplace Facilitator sales tax laws. These laws obligate large online marketplaces (like Amazon, eBay, etc.) to collect sales taxes for sales that take place on their marketplace and remit them directly to the state.

You can see the list of states that have enacted this legislation here: https://www.amazon.com/gp/help/customer/display.html?nodeId=202211260

For all other states, you have to determine for yourself whether or not you have a nexus (legalese for sufficient presence) that would require you to collect sales taxes. If you do, you would need to register with those states and then use Amazon’s Tax Collection Service. This collects taxes on your behalf and remits the money to you. You then pay the taxes to the state.

Clear as mud?

#8

Gotcha! That helps a ton! I’m throwing around the idea of having a service do it or taken on the job myself. Any thoughts?

#9

Please take it for all. Kentucky is after me - a state which has very little sales w/Amazon but lots of collection efforts.

#10

The link posted by Amazon was not the final copy.
The correct link for the law that was passed by Nebraska is https://nebraskalegislature.gov/FloorDocs/106/PDF/Slip/LB284.pdf.

#11

Thank you.

For what it’s worth, could you do the same for Colorado? Compliance is a nightmare there.

Monetise it if you must but kudos either way if you decide to.

#12

So on those states that Amazon is collecting and paying the tax for, how are they reporting on our behalf? Do they set up an account with the state in our name, or what? Does their reporting fall into the 3rd party and it is submitted in their account name?

#13

In regards to MFT (Marketplace Facilitator Tax), at my last count, 19 other states have passed MFT laws that will become effective later this year, in 2020, or else have MFT bills pending.

It makes more sense for the states to go to MFT, as they only have to collect taxes from each market, rather than from each of the thousands or millions of sellers on each market. They can also collect sales tax on items from sellers who aren’t collecting and remitting sales tax that don’t meet the state’s threshold for individual sales, or from sellers that are not based in the US, who would not normally collect and remit sales tax. Some states do still require sellers to file a sales tax return, even if all of their sales tax was collected by a marketplace. You will mark it as $0 tax due, or that the sales tax was collected by a marketplace, depending on how that state wishes the form completed.

With the current trend, it does seem like most states (if not all) that charge sales tax will eventually go to MFT.

#14

Yes, you would think that would be the easiest for everyone involved. One of my issues, is that I just don’t want to hand this over to a 3rd party company to process even though it might be the easiest, I don’t like other people calculating without knowing the process myself, (VAT)!
So because our products, like many, go to at least the 48 contiguous states, applying for registration in each is necessary to cover ourselves. That’s another thing, how am I to find a report that shows sales in each state?
I very much appreciate your time Rover! This is more information than I’m getting from a lot of official sources. :):stuck_out_tongue_winking_eye:

#15

This is my understanding of the various sales tax bills that have been passed or are pending. New bills are being introduced at a very high rate, so it is hard to keep up with all of the changes.

In CA, effective 4/1/19, sellers who have more than $100k in sales or 200 transactions in the current or previous calendar year - are supposed to register with CA to start collecting/remitting sales tax at the state and district level. But another CA bill (AB147) is pending. If unchanged, AB147 will add MFT, and change the threshold for individual sales to $500k with no transaction threshold. It will not relieve sellers from previous sales tax that may have been due, it only affects sales going forward. But another CA bill in the works that will forgive many sellers that owed sales tax from previous sales due to storage nexus.

Since people asked about CO & KY too, here is what info I have found.
HB19-240 has just been introduced in CO, that will enact MFT. Pending effective 6/1/19.
HB354 was just signed by the governor in KY that will enact MFT effective 7/1/19. I do not know if previous sales tax due will be forgiven. The bill is over 200 pages, and I have not read the entire document.

There are also some bills pending on the federal level that will limit how much authority the states can have over out of state sellers, in regards to sales tax. From what I have heard, it doesn’t sound like these will federal bills gain much traction this year.

#16

It is up to each state, as to how they want to handle sales tax (unless the federal gov’t decides to step in). It appears that most states will be requiring the marketplace to collect and remit sales tax, so it is entirely out of the hand of the sellers (except a few states that require sellers to file a $0 report for sales made on a marketplace). Most states have thresholds to determine what sellers have to collect and remit sales tax in their state. Most states are $100k in sales or 200 transactions. You would need to determine the threshold for each state. So, unless you reach their thresholds, you do not need to collect sales tax in that state.

There is no easy report to find that has sales tax for each state. Each state has their own requirements too, what is taxable in one state, may not be taxable in another. Some states not only require sales tax be collected at the state level, but also at the district level. Here is a link that has helped me a lot, but most of the info I have found is just by doing research on each state’s website. https://www.salestaxinstitute.com/resources/state-notices-resources-for-remote-sellers.

#17

From what I understand, the states with MFT consider the marketplace as the one who makes the sale. Therefore, the marketplace is responsible for collecting and remitting sales tax for purchases delivered into the state. For states with MFT, Amazon collects and remits sales tax (for state and district levels) from the customers based on the tax code the seller applies to each SKU in their inventory, and the buyer’s delivery address.

Please note, that if you sell on your own website, or through what would be considered non-marketplace websites, then you need to make make sure you comply with each state’s laws regarding sales tax. Some states will combine your sales on a marketplace with the sales that you make on your own site to determine if you reach their thresholds. For example if the state has a $100k in sales threshold, you sell $80k into that state via a marketplace and $25k on your own site, you would then reach the threshold where you would need to collect and remit sales tax on purchases into that state that you sold on your site.

I have tried TaxJar, Avalara and Taxify, and they didn’t work properly for us. None seem to be able to figure out sales tax for eBay correctly (at least that was the case when I last tried them), so they consider all sales into a state as taxable. It is not entirely the services’ fault, as eBay does not allow the seller’s to apply tax codes like Amazon does. Therefore, there is no way to collect the proper amount of sales tax for each state. For example, most food is not taxable in FL, but it is taxed at 1% in IL, and in GA, the state doesn’t charge sales tax on food, but various districts consider food taxable, so the rate varies by district. You only have the option to charge one sales tax rate per state, which is an issue when a state has more than one sales tax rate. We just recently changed all of our eBay items to be taxable (at the average sales tax rate for our previous year’s sales), whether or not the state considers them taxable. This will make some customers unhappy, but it is the only way I see that we can charge sales tax in multiple states and not end up paying some sales tax each month out of pocket. Besides, that appears to be how eBay is handling sales tax for MFT states, which is by considering all sales into those states as taxable.

#18

So at this point,
I am thinking I should just register in all 48 states. Not only do we sell on Ama but we have a retail site as well that we ship to customers all over the US. That way, we are set up in all ways even though some states will be MTF with our Amazon. Would you agree?

This just seems like an accounting nightmare. Here in KS we submit sales tax quarterly. Are all states different in reporting?

Can I contact you somehow and visit more about this?

#19

Be careful. You are damned if you do and damned if you do not. It is not just the sales tax collections you are signing up for. Some will require you to file state income tax returns. Then all other fee’s. The cost of compliance is high and the cost of non compliance can also be high. The federal government needs to step in and make some middle ground for small and medium size sellers. I understand states want a piece of the sale. I am ok with it. But make sales tax filings easy for the average seller. One flat rate for the entire state. Insert you total sales on taxable sales and pay the tax owed. Do not make us register our business in your state unless you meet a threshold that separates us from lets say a walmart. $500,000 in sales is decent #. Let everyone sign register without the fear of getting hit with back taxes that will put many of us out of business. If they did this there would probably be close to 100% compliance moving forward.

#20

This is what I have with regards to upcoming/pending State Legislatures’ Bills regarding enacting MKF laws. Not all have passed the state legislatures and signed into law yet so the dates quoted are what is in the Bill if passed without any hurdles:

Already in effect:
NJ, OK, PA, WA, MN, AL, CT, IA, SD

April 1, 2019:
NE, Washington DC

June 1, 2019:
ID, CO

July 1, 2019 (the biggest month yet):
VA, WY, FL, IN, KS, KY, MD, NM, VT, WV, WY

Sept 1, 2019:
NY, TX (or October ~ their law is very confusing regarding dates)

October 1, 2019:
ND, UT, CA

January 1, 2020:
GA, HI, MO