What is Sales Tax Nexus?

Sales tax nexus is when you have significant presence in a State to be liable to collect and remit sales tax on customers’ orders. There are different ways to earn this “privilege”, as some States call it, but for Amazon sellers using Amazon’s warehouses to store your inventory and FBA services, the information on the States’ websites has been interpreted by professionals in the sales tax field as giving you a presence in those States. This is not to be confused with ‘doing business’ in the State.

Should I collect sales tax for other States?

I am not writing this blog to discuss whether or not you should pay out-of-State sales tax. I am neither a professional nor authorized to make decisions on how you run your business. I am simply writing to explain my choice because many ask me.

My choice to collect

I have a low risk tolerance and since my husband was retiring June 2016 at age 60, given the choice of having Amazon get it from the customer or waiting to find out if I should or shouldn’t collect it, I chose the former rather than it coming out of my pocket along with fines.

I would much prefer Amazon to collect and remit it, but failing that, at least they provide the service for us to use because it’s a very complicated system, for example. many States have “sales tax free” weekend on certain products the first weekend in August, for school supplies, even shower curtains! So be sure to set up your Product Tax Codes properly.


Update 8/10/2018 MTC Amnesty Program

As sellers are informed about sales tax nexus some have expressed an interest to begin collecting tax but were put off by the amount due in past taxes and fines imposed. The States have now put into place a program FOR A LIMITED TIME that will turn a blind eye to the past and allow sellers to go forward with a clear slate.

I strongly advise everyone to educate themselves on this subject before the waiver runs out. Keep informed directly as more States are being added.

Voluntary Disclosure PDF


Update 8/16/2018 Read Before Acting on MTC Amnesty Program

This is a wonderful, easy to read, article by Paul Rafelson that ecommerceChris posted on his blog.

Amazon Seller FBA Tax Amnesty

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About the author: Karen Holmes

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