on Feb 15, 2018Some Monsoon sellers received the following email from Amazon regarding Rhode Island tax law:
Under a new Rhode Island state law, Amazon is required to disclose to the Rhode Island tax authority the following information about sellers who made sales to Rhode Island customers in 2017:
- Seller contact information (name and address).
To comply with this obligation, we plan to provide your information to the Rhode Island Department of Revenue by February 15, 2018.
Because each seller’s business and tax needs are unique, we encourage you to consult with a tax advisor to answer any questions you may have. You also may refer to the following seller resources:
- Solution Provider Network: a directory with information about several experienced tax advisors.
- Tax calculation services (sign-in required): optional services for calculating U.S. sales and use taxes.
Thank you for selling on Amazon.
Sincerely,
The Amazon Services team
In light of this email and Amazon’s tax collection/remittance for orders shipped to Washington state, I’m sharing a couple articles with more information about the ongoing discussion of state tax collection for online retailers and nexus:
The Seattle Times: Amazon pulled into another sales-tax fight as states go after third-party sellers on its marketplace
Also, you can view Amazon's tax guidelines here.
While we at Monsoon can’t advise on tax collection and how online and marketplace sellers should respond to these events, we are posting this to encourage conversation on the topic. It would be good for all customers to get a sense of how impacted sellers are handling the sales tax issue and we are hoping that folks will share their experiences and practices.
While I am reluctant to publish my sales tax policies on a community forum, I would like to point out a few salient points that help us decide what approach to take.
1. It is settled law that retailers must remit sales taxes on orders that ship to states where they have significant nexus. At minimum this will be their home state. This applies to both FBM and FBA sales.
2. There have been no reported instances where states have won lawsuits with retailers that did not have significant nexus in the state and compelled them to remit sales taxes on orders that shipped to the state or where the merchandise was stored for a time in an amazon fc in the state.
3. Some retailers have multi-state operations or other factors that may cause them to be concerned about the size of a retroactive exposure (tax, interest, and penalties). These retailers may opt to remit sales taxes in some or all of the states because of this exposure.