DISCLAIMER (and you know it’s serious, since I don’t use all caps often): I am not a tax professional. What follows is meant only for “entertainment value.”
The topic of sales tax draws many varying views. Do you collect sales tax in your home state? Do you collect sales tax in any state in which you have “Nexus” which is defined as:
“Nexus, also called “sufficient physical presence” is a legal term that refers to the requirement for companies doing business in a state to collect and pay tax on sales in that state.” – From Intuit
Some argue that you have Nexus anywhere that Amazon stores your products–and that’s not just those Amazon Fulfillment Centers (FC) that you ship to, since Amazon moves inventory around.
I won’t go into the issue in much detail, except to offer what I do, which is collect, report, and pay sales tax in my home state.
Registering for Sales Tax
Every state is different, when it comes to registering to collect sales tax. TaxJar (This is an affiliate link, thank you in advance for your consideration) has a good tool for what State and Local Sales Tax is required.
I will caveat that for my state, Maryland, the information is not 100% up to date, as the Amazon Fulfillment Center has been open for nearly a year.
Fulfillment by Amazon Tax Settings
You need to update your tax settings in order to start collecting sales tax on amazon.
Start off by going to Settings>Tax Settings
Then you’ll see this screen:
You’ll want to click “View/Edit your Tax Calculation Obligations and Shipping & Handling and Gift Wrap Settings.
Here you’ll get tons of instructions, putting them here for completeness:
Scroll down and you’ll see where you can enter your state’s sales tax, as well as your State Registration number. They give you the choice to also calculate based on County, City and District. I understand some states, you need to do that in, but I am no expert. You can see here, I selected Maryland, and put in the 6% tax.
Make sure you hit the checkmark to acknowledge and agree that your state tax registration number(s) are correct.
You’ll get the same screen as before, but this time, stating “Confirm everything is correct”, then you will get a second confirmation for Tax Calculation Services Set Up.
Then you’ll get a confirmation:
Monthly / Quarterly Reporting
States vary in the frequency of reporting. All said, you jump to your tax area by going to Reports and select “Tax Document Library”
Then you’ll see this screen (with more or less reports)
If you don’t see what you’re looking for, you’ll want to click the “Generate a tax report” (highlighted above). You’ll get the chance to select the time frame of the report you are looking for:
When you do load the report, it will identify those transactions that are taxable. From that you can determine what taxes you need to pay to the State.
Again, I won’t advocate of a particular approach to collecting sales tax. But, if you do decide to do so, I hope the tools I have provided, are sufficient to empower you to do so. If there is one thing I hope from this post, it is for continued conversation. So please, share your opinion in the comments.