Tax on U.S. seller fees FAQ
Why does Amazon collect sales tax on seller fees?
Some states consider Selling on Amazon (SOA) fees, such as per item, order, and referral fees, as taxable. Similarly, some states consider Fulfillment by Amazon (FBA) inventory prep fees, such as bubble wrap, polybag, tape, and label fees as taxable. To comply with state tax laws, Amazon.com collects and remits applicable sales tax when a taxable fee is charged.
Which seller fees are considered taxable?
Amazon offers many services and programs to sellers and a particular fee taxability depends on the state tax rules where your business is located or where an FBA service is performed.
To understand the different fees Amazon charges, go to our fee schedules:
When does Amazon charge tax on a seller fee?
Services and seller fees vary greatly among programs available to our sellers, and thus we cannot address every situation. However, Amazon will follow local and state tax rules that may apply to any seller fee you pay. If tax is charged on a seller fee, it will be reflected on your transaction detail page.
Tax rules can change frequently, and the chart provided below is a general reference to some fee taxability scenarios you may experience. This chart should not be considered tax advice or solely relied upon for fee taxability. If you have questions, consult your tax advisor.
| U.S. State | Selling on Amazon (SOA) fee (based on your business location) | FBA inventory prep fees (based on fulfillment center location) |
|---|---|---|
| Arizona | Non-taxable, except subscription fee is taxable - state | Taxable: state + local |
| Connecticut | Taxable, reduced 1% state tax | Taxable: state |
| District of Columbia | Taxable: state | Non-taxable |
| Hawaii | Taxable: state + local | Non-taxable |
| Illinois | Non-taxable | Taxable, only 50% of fee total is taxed: state + local |
| South Dakota | Non-taxable: order related fees* Taxable: non-order related fees** state + local | Non-taxable |
| West Virginia | Taxable: state + local | Taxable: state + local |
| * Per-order related SOA fees are typically charged as a result of a sale to a customer (for example, the referral fee, variable closing fee, and other per-order item fees). ** Non-order related SOA fees are typically charged as a result of a program, service, or subscription you elect to participate in (for example, monthly subscription fee, program fee(s), advertising fee(s), etc.). |
The following examples illustrate how the sales tax will be calculated:
- If your business is located in West Virginia and your sales tax rate is 6.39% (rate may vary based on your location), and you sell an item with a total price of $20 with a 15% referral fee (fee % may vary based on product type), we will collect and remit $0.19 sales tax on the $3 referral fee to comply with state laws (calculated as 6.39% on the referral fee amount of $3).
- If your business is located outside a US state that does not consider SOA fees taxable, we will not collect US sales tax on the Selling on Amazon fee you pay.
- If you use FBA Prep Service to bubble wrap your products for a service fee of $0.80/unit (fee amount may vary), and the service is performed in an Arizona fulfillment center (FC) with a tax rate of 8.37% (rate may vary based on FC location), we will collect and remit $0.07 sales tax on the $0.80 fee to comply with state laws (calculated as 8.37% on $0.80 bubble wrap fee).
- If you receive FBA inventory prep services at a fulfillment center located in a state that does not consider FBA inventory prep fees as taxable, we will not collect US sales tax on the FBA inventory prep fees you pay.
I am located outside of the U.S. Why are you collecting tax on my selling on Amazon fees?
In most non-US countries, Selling on Amazon (SOA) fees and/or Electronically Supplied Service (ESS) are typically defined as remote services. When selling on an Amazon store outside your home location, remote service fees may be subject to your home location’s tax rules.
Tax rules and regulations are country specific. Go to your VAT information page and search VAT, GST, or your country name in Seller Central help to locate additional information.
Can I receive a refund of tax collected on my seller fees?
If you receive a refund of seller fees paid, any applicable tax originally charged on the seller fee will also be refunded at that time.
My business is exempt or I have an exemption. How do I become exempt from tax on my taxable fees?
At this time, we are unable to automatically process a business exemption for a taxable seller fee. If your business has an exemption you would like Amazon to consider, you may contact Selling Partner Support to provide details about your exemption, how it applies to a taxable seller fee, and a reference to the state rule supporting your inquiry.
Can I opt out of using FBA inventory prep services that may be taxable?
When you purchase FBA inventory prep services, the service could be performed at one of our many fulfillment centers across the United States. With that in mind, there is no option to opt out of a service based on that service being taxable.
You can manage your FBA settings in the FBA Settings page. To learn more, go to Packaging and prep requirements.
Will I receive an invoice for taxes paid on seller fees?
Invoices are not generated for US sales tax on seller fees. However, if any tax is charged on your seller fees, it is always reflected with your transaction details.
When did Amazon begin collecting sales tax on seller fees?
Amazon.com began collecting sales tax on seller fees beginning June 1, 2019. Tax will be collected based on the latest state law and administrative guidance. If you have questions, consult your tax advisor.
- Amazon Tax-Exemption Program
- US Marketplace Tax and Regulatory Fee Collection FAQ
- Tax on U.S. seller fees FAQ
- Marketplace Withheld Tax
