Understanding+Nexus+&+Sales+ Tax+for+the+Amazon+FBA…sams-course-content.s3.amazonaws.com/sams-content-15-taxes... · Mark Faggiano, TaxJar Understanding+Nexus+&+Sales+ Tax+for+the+Amazon+FBA+Seller

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Mark Faggiano, TaxJar

Understanding Nexus & Sales Tax for the Amazon FBA Seller

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•  “General Rules” of Sales Tax •  Mul@-‐channel & Mul@-‐state Compliance •  When to Collect •  How Much to Collect •  Here to Help

Today’s Topics


About Me

•  I love solving boring and complex problems! •  Previous tax products:

–  FileLater (IRS efile) –  EasyEs@matedTaxes (Treasury)

•  Founder of TaxJar •  Not a CPA or tax professional


“General Rules” of Sales Tax

•  There are too many rules! •  In-‐state sales = collect and remit sales tax •  Out-‐of-‐state sales = not obligated….yet •  The defini@on of out-‐of-‐state (a.k.a nexus)

depends on the state


“General Rules” of Sales Tax •  How much to collect depends on various factors •  Filing deadlines usually @ed to sales volume •  Some states have discounts for early payment •  All have penal@es for late payment •  Save everything in case of audit


It’s Compe@@ve Out There!

•  Selling items on more than one pla[orm •  Some pla[orms help you collect sales tax

– None help you file or pay – Sales tax is being collected in different accounts

•  Delivery @me is a differen@ator


Impact on Compliance

•  Combine and file a single return – Not separate returns per channel

•  Most sellers manually combine transac@ons in excel •  Selling On Amazon = mul@-‐state business


When to Collect


•  Presence in a state significant enough that you need to collect sales tax in that state

•  Collect sales tax from customers and remit to the state

•  No presence in a state means you don’t have to collect

Nexus: When to Collect


Nexus Types

Home Office

•  Where you live and/or operate your business

•  Live in San Jose and sell out of your house

•  Collect: CA

Inventory

•  Inventory is in a warehouse •  Live in San Jose with

inventory Pennsylvania •  Collect: CA & PA


FBA States •  AZ •  CA •  IN •  KS •  KY •  NV

•  NJ •  PA •  SC •  TN •  TX •  VA •  WA

All FBA states consider inventory to equal nexus


Collec@ng The Right Amount


How Much Do I Collect?

•  Tax rate usually = state + local + special •  Origin-‐based state

– Tax rate = seller’s loca@on •  Des@na@on-‐based state

– Tax rate = where item is shipped •  California


Sale in Texas IRVING ARCHER CITY

Rate collected: 8.25% •  State: 6.25% •  Irving: 1.00% •  Dallas MTA: 1.00%


Des@na@on-‐Based: NY


Sale in New York STAMFORD BUFFALO

Rate collected: 8.75% •  State: 4.00% •  Erie County: 4.75%


Filing in Des@na@on

•  Huge pain! •  Calculate taxable sales and sales tax collected by jurisdic@on

•  Gets worse if you’re mul@-‐channel


Ohio eFile



California Is Special! •  Technically, neither Origin or Des@na@on •  Sales tax rate= state + district tax(es) •  District tax only collected on sales in a district in which you are “engaged in business”

–  (Pub 44, Page 5)

•  Sellers are able to charge 2 different rates –  Customers in your district –  Customers outside your district

•  Pub 177


Same District Sale SAN DIEGO CLAIREMONT

Rate collected: 8.00% •  State: 7.50% •  San Diego County: 0.50%


Out-‐of-‐District Sale SANTA CLARA ALAMEDA

Rate collected: 7.50 %

Buyer responsible for local use tax


Marketplace Fairness Act: Status

•  Passed quickly in Senate •  Stalled in commiree in The House •  Will it be added to ‘larger’ bill?


If Legisla@on Passed Today…

•  Current nexus rela@onships will remain •  Remote sales = nexus = compliance •  $1 million remote sale exemp@on


TaxJar: Here to Help

•  Automa@cally pulls and organizes sales and tax data from your accounts on Amazon, eBay, and Shopify

•  Custom local jurisdic@onal reports by state •  Payment reminders •  Sales tax exper@se


TaxJar: Here to Help

•  30-‐day free trial (no credit card required) •  Monthly or annual subscrip@ons •  Pricing based on transac@on volume




Let’s Talk!

[email protected]

SalesTaxCommunity.com

Twirer: @taxjar


Q & A Session

Documents

Understanding+Nexus+&+Sales+ Tax+for+the+Amazon+FBA…sams-course-content.s3.amazonaws.com/sams-content-15-taxes... · Mark Faggiano, TaxJar Understanding+Nexus+&+Sales+ Tax+for+the+Amazon+FBA+Seller