Posted by Chuck on April 16, 2019
Misc

Published on April 16th, 2019 | by Chuck

31

Amazon Sellers will be Charged Sales Tax on Fees Beginning in June

Update 4/16/19: Amazon has sent out an update (full e-mail below). Important links are as follows:

Original post: Amazon sent out an email to their sellers indicating that some of the fees involved in being an Amazon seller may need to be taxed, similar to how we pay sales tax an many services. Only some states consider this taxable, not all.

We are reaching out regarding the possible tax implications on some seller fees beginning June 1, 2019. Some states consider specific Selling on Amazon fees such as per item, order, and refund fees as a taxable electronic service. Similarly, some states consider FBA inventory prep fees such as bubble wrap, polybag, taping and labels as taxable. Seller fees is not increasing however; you might see tax applied to some seller fees.

– What fees are taxable?

Selling on Amazon fees (based on your business location):
•    Referral Fee
•    Subscription Fee
•    Variable Closing Fee
•    Per-item Fee
•    Promotion & Merchandising Fee
•    Refund commission Fee
•    Checkout by Amazon
•    Sales Tax Collection Fee

FBA service fees (based on order fulfillment center):
•    Labeling Fee
•    Polybagging Fee
•    Bubble wrap Fee
•    Taping Fee
•    Opaque Bagging Fee
•    Repackaging Fee

Depending on your main place of business, this could take away some of your margins. I wonder if there are legal ways to avoid this tax, e.g. by incorporating in another state, etc.

Hat tip to our friend Grant from Travelwithgrant



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Alexandra Ocasio Cortez
Alexandra Ocasio Cortez

Amazon is an evil company. Plain and simple.

Parts Unknown
Parts Unknown

I mean, they saved The Expanse from cancelation so they can’t be all bad

Satellite
Satellite

Let’s see the 4th season first.

Parts Unknown
Parts Unknown

More swearing & nudity, seems like a sure thing to me.

Abe
Abe

LOL!!

Nick
Nick

Love them or hate them, this is Amazon trying to comply with state tax law. And the taxes get remitted to the states. Not sure where evil comes into this.

Regardless, this is definitely unfortunate for sellers.

Well I just noticed the name. This response was a waste, but I feel the need to hit save.

Lrdx
Lrdx

How is complying with tax laws evil?

Denis
Denis

4 comments, 44 upvotes
good job AOC, keep trolling 🙂

Ann
Ann

I bet I’m in one of those ‘some states’. A site I use to find freelance work recently started taxing the fees they deduct from each assignment in my state, because the state told them to. Seems to be the latest trend. Amazon already agreed to collect sales tax on all the products it sells to customers nationwide (in every state that has a sales tax), that should have given states a huge revenue boost already, but they’re still hunting for more things to nickel-and-dime.

vince
vince

The government is hutning for things to nickel and dime not them

David
David

Sales Tax Consultant Here. You’re not going to be getting around sales tax – even if you do “incorporate” into another state. https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.
(EDIT: URL includes period, hyperlink ignores the period for some reason).

SCOTUS recently decided WayFair vs. South Dakota – which basically overturned Quill vs.North Dakota which stated you must have business in the state. So now it’s the wild west – each states are passing their own laws regarding sales tax now. Plenty are also passing laws that state if you are a re-seller that you have to collect on-behalf of your sellers – which is directly targeting Amazon.

Prepare to get reamed. It’s definitely a good time for us consultants though.

Gary
Gary

Wrong. You didn’t read the article. The referral fee charge is not transacted in any given place, so it goes by your place of business. In either case, Wayfair is irrelevant, because Amazon is the seller in this case, and they have either physical or economic nexus in every state regardless.

David
David

Not sure what you’re referring to – my post wasn’t in regards to any one type of fee. Moreso related to docs quote of “wonder if there are legal ways to avoid this tax, e.g. by incorporating in another state, etc.”

You are correct though in that since Amazon is the one charging the fees then it will be based on their nexus. Now if those aren’t Amazon fees then that is a different story.

sloebrake
sloebrake

Thanks for the input guys.

Authority bias w/citations vs Overconfidence effect. David wins my opinion.

yuneeq
yuneeq

David has absolutely no clue what he’s talking about. He’s conflating nexus law regarding sellers collecting sales tax from buyers, and the electronic services tax Amazon is collecting for seller fees which has nothing to do with nexus. It has to do with the sellers home state.

No wonder, David is a “consultant”, not a SALT lawyer, and like every tax consultant that only gets paid from peddling fear, have absolutely no clue about the shit they’re peddling.

Go to onlinemerchantsguild.com which is run by an actual qualified SALT lawyer.

Screw Taxjar, avalara, and all the scummy tax software companies and consultants with their constant lying and misinformation given to sellers to make a quick buck.

YoniPDX
YoniPDX

A huge variable is the location of the FBA center.

I was charged CA sales taxed on a Costco order that was fulfilled by Google Express, even though It was delivered to my Home in Oregon . Cost more ordering even w/promotion than direct from Costco.

But normal Costco.com orders have always been tax free.

David
David

Interesting… A costco order that was fulfilled by Google? Mind explaining what that is? As in, Costco goods are sitting in a Google warehouse? Or Costco delivered the goods to Google and then Google forwarded it on to you?

Ann
Ann

Google Express has been around for years. It is a same-day delivery service using various courier services (and some Google-branded vehicles, in some areas), which can pick up products directly from the stores of hundreds of participating retailers. https://en.wikipedia.org/wiki/Google_Express

David
David

So Google is picking it up from the seller? That is definitely the answer then. As far as the seller is concerned (Costco) the product (or title transfer) was completed when Google picked up the product. Hence, it was taxed when the title was transferred to Google. Thus it is taxed at whatever point in which Google takes possession.

Zaos
Zaos

Complain to google and your state. That’ll raise some eyebrows, collecting a sales tax for a state that doesn’t have a sales tax.

Jessi
Jessi

margins are going to disappear or prices on amazon are about to collectively up.

Zaos
Zaos

Most likely the states that charge sales tax on services are going to see a magical disappearance of their amazon sellers. Many, many states don’t charge sales tax on services.

Mimi
Mimi

In my observation for things I buy, prices on amzn are higher than ebay that’s why I don’t load more GCs to my account. The only GCs I load are those I earn from Verzn UP rewards and those I receive as compensation for doing surveys.

Closertothesun
Closertothesun

Amazon was pretty non-specific about effected states. I hope CA is not one of the effected states, but I didn’t see anything either way.

mattl
mattl

just expect CA to be taxed, they tax us on everything else. i’m sure they’ll have to start resorting to taxing the tax eventually. A tax for the collection of the taxes.

Closertothesun
Closertothesun

Nope, Will just posted the e-mail they sent out. Thank god. Hard enough to sell as is.

I could definitely see CA following others on this though.

Braden
Braden

I don’t know how the states are getting away with this. This is clearly double taxation.

$50 Video Game sold, Amazon collects sales tax for the state the buyer is in, they get their sales tax.

Amazon’s Referral Fee: $7.50
Amazon’s Variable Closing Fee(on video games): $1.80

Both of those fees “may” be charged sales tax in select states.

So on a $50 Video game order there is now sales tax on $59.30. $50 for the state of the buyer and $9.30 to the state of the seller(if charged).

Celia
Celia

I never agreed when retailers started charging tax on shipping and handling costs some time ago. I live in Illinois, where it has never met a tax it didn’t like, and at 10%, that adds up pretty quickly.

I have learned though, that some retailers charge only the state tax when buying online. So, for Costco, if I go to the store it’s 10%. If I order online, it’s less than 8%.

Wilson
Wilson

That’s like wondering how two leaches can get away with sucking the blood out of you at the same time. The only limit is when you run out of blood.

JV
JV

Its not really double taxation. It is just taxing the entire portion of the transacted amount instead of only the sale price. I honestly understand it. I used to be a powerseller on ebay, but did 90% of my selling on half.com. There was a good volume of my business that i sold for a sales price of $0.01, which i made up on the S&H fee. Do I think it is necessarily fair, maybe not, but i at least understand the reasoning. It’s also why ebay charges a final value fee on shipping. I remember the days when you would see a playstation for a $1 buy it now price and shipping of $200. Seller pays like $0.07 ebay fee on the sale and pockets the rest.

Snorlax
Snorlax

I mean… its not double taxation, the sale to the end user and the commission are different transactions.

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