Amazon FBA tax planning

What You Need To Know About Amazon Marketplace Facilitator Tax

The new marketplace facilitator legislation has thrown many e-commerce companies into a state of uncertainty. The Amazon Marketplace Facilitator tax and related e-commerce tax laws are complex issues, especially when your team is still trying to figure out how to sell on Amazon and make a profit.

Amazon FBA sellers who reach state-defined sales thresholds must now follow complex reporting guidelines. No matter where your company is based, you'll need to follow the marketplace facilitator legislation of each state from which you earn revenue. The problem arises after your first payments are made. Some states are exceedingly strict about looking at your past Amazon revenues and forcing you to pay back taxes on those sales. It can take several years, perhaps, for each state to come in line and begin pursuing all sellers who had sales revenue prior to the recent legislation.

Are you prepared to deal with letters and collection activity from up to 50 different states over the next several years? Do you know how to get the required information from Amazon and other online marketplace facilitators in order to bring your state sales tax obligations up to date? It's challenging enough to figure out how to sell on Amazon, but this new wrinkle in the tax law can be an extremely complex challenge for e-commerce businesses.

The Basics for Amazon FBA Sellers

New legislation going into effect in each state dictates and how much tax sellers must pay on items sold through their Amazon stores. Each state has slightly different rules and sales thresholds. The so-called marketplace facilitator rules, technically speaking, apply to Amazon, who acts as the facilitator for your transactions. These online marketplace facilitators, Amazon is just one prominent example, are now required to collect and remit sales taxes to each state government.

The core components of the new legislation, as it pertains to sellers, include the following points:

  • States can now demand that Amazon and other "online facilitators" turn over their revenue information to state taxing authorities
  • Tax departments from states will pursue you for and sales taxes you owe that were not collected and remitted by Amazon or other facilitators
  • It's convenient to have Amazon collect the tax from you upfront, so from here on out, you need not worry about facing collection activity
  • Even though Amazon collects the sales taxes from you, the seller —you'll still potentially need to file state income tax forms in every state where you have buyers
  • States will also be looking at your past Amazon sales figures in order to determine if you owe back taxes
  • To comply with the new laws, sellers need to gather up all prior sales revenue data from previous years' online transactions
  • The best way to deal with this new, potentially expensive legislation is to hire a professional CPA firm

Getting Your Tax Situation Straightened Out

Our experienced team at Fusion CPA can help you get all your sales tax challenges resolved. We assist online sellers with e-commerce tax situations involving sales tax, marketplace facilitator rules, and the new Amazon Marketplace Facilitator tax. It's possible that multiple states could seek payment from your company if you've been selling online for more than two years. Seasoned professionals at Fusion CPA can help you plan for future collection activity and get your tax bills taken care of now. You can learn more about our services by clicking the button below to schedule a complimentary discovery call today!

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This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive