- Sales Tax Trash Talk
- Posts
- The one for Amazon FBA sellers
The one for Amazon FBA sellers
Rohit Bhadange
July 09, 2023
The post-July 4th blues are real - no more fireworks, no more outrageous hot dog eating contests, and a long 2-month wait for another patriotic excuse to drink & grill.
Based on the responses from last week, or at least the ones that were mildly legible, seems like many of you didn’t do much of the grilling part. Just a lot of trash talking…
…which made me happy… and concerned on how triggering sales tax can be for some of you.
Now that we’ve had time to recover, I’m excited to pile on more trash this week:
Amazon FBA impacts Sales Tax Nexus 🎯
S. Dakota state tax rate changes July 1st 🚨
NY declares Hot Dogs = sandwiches 🌭
Meme of the Week 😎
Q from you - “Tax based on Customer or Seller location?” 🙋♀️
How Amazon FBA impacts Nexus?
If you are an Amazon FBA seller, you likely have merchandise stored in several states, meaning… you have sales tax liabilities.
Reminder for newbies… states consider holding inventory in-state to create a nexus even if you don’t have any other employees or places of business there.
So, how do you determine which state and when you first achieved nexus?
🖐 FBA Five:
You must be a “Pro Seller” to collect sales tax on Amazon.
Amazon fulfillment reports (Seller Central → Reports → Fulfillment) will tell you where your inventory has been stored for any period of time
On the left side, click into “Inventory Event Detail” → “Download” tab & “request download” for a report starting from when you first started selling on Amazon
In the Excel file, find “fulfillment-center-id” column to get a full list of every Fulfillment Center where your product is stored. To help decode, here’s a list of airports and Amazon Fulfillment Centers.
You can go through each location to determine which states you have nexus in + when the inventory first arrived so you can accurately register for a sales tax permit in each state
Amazon prime is a blessing for consumers but has created additional headaches for emerging & growing businesses.
🚨 S. Dakota changes State Tax 🚨
Starting July 1 (9 days ago), South Dakota changed its state sales tax rate to 4.2%. Previously, the rate was 4.5% but the state temporarily reduced the rate for four years.
Don’t forget that on July 1, South Dakota also eliminated the 200 transaction count from its economic nexus threshold.
The Great Debate - is a Hot Dog a sandwich?
The National Hot Dog and Sausage Council says, definite no… but the NY government says, yes.
According to NY laws, anything that involves ingredients layered between bread, rolls, etc. counts as a sandwich. That means all your favorites: wraps, hot dogs, and even burritos.
For the purposes of collecting sales tax, states differentiate between: (1) “food for home consumption” and (2) “prepared food” - typically taxed higher
Every state has its own niche definition of how this works:
📌 CA: if the sandwich is heated, then it’s taxed; if not, it’s exempt.
📌 MA: a sandwich from a vending machine is exempt as long as all of the items sold in the machine are under $3.50.
😎 Meme of the Week 😎
Send us a meme - best one will be featured next week
🌟 Partner Spotlight 🌟
UpCounting is an accounting, marketing and business consulting firm that empowers brands to succeed at DTC. They leverage powerful cloud technology and expert analytics to deliver experiences customers love. Their team can help you build the company of your dreams.
Interested? Just reply to this email and I can make an intro.
🙋♀️ You ask, we answer 🙋♂️
Q (Julie): Is sales tax based on the seller’s location or the customer’s location?
A: Seller should collect tax for the state where the property is delivered to the customer.
If the customer picks up the item at the seller’s location, tax should be collected for the state in which the seller is located.
If the item is shipped to the customer, then tax applies for the delivery state, whether that is the same state where the seller is located or a different state.
Note: Sellers should collect sales tax only if they are registered to collect sales tax in that state.
Struggling with Sales Tax?
Our team of sales tax experts will answer all your questions and address any concerns for free.
Let’s free you from sales tax.
Thank you for reading along. I’ll be back next Sunday with more sales tax shenanigans.
If you enjoyed this one, please share it with your network. 🤝
If you caught a laugh, reply back and let me know. I live for the people.
If you have any feedback, suggestions or questions, please let me know by responding to this email or DM me on Twitter or LinkedIn.
Until next week’s 🗑 …
Rohit