Amazon Finally Offers 3P Sellers Ability to Collect Sales Tax
By Ina Steiner
Sellers on Amazon.com who choose to comply with state laws requiring collection of sales tax on in-state transactions have found the process costly. That's because in the past, Amazon offered no method for most third-party merchants to collect sales tax from buyers - so sellers either disregarded the law or remitted the sales tax out of their own pockets.
This week, Amazon.com posted a message in sellers' accounts, "Tax Collection Services Now Available to Professional Sellers - Your seller account now has access to tax collection services that enable collection of US sales and use taxes on your orders." As EcommerceBytes reported on Friday, sellers had begun seeing tax codes when they tried to list items last week.
However, Amazon is restricting the new functionality to Marketplace Professional and Webstore sellers and is charging sellers a 2.9% fee for using the system, provide via third-party system Vertex Indirect Tax O Series.
Upon reading about the new sales-tax collection capability, some Amazon sellers wrote they were confused. Some of the confusion centered around how to implement the new feature, but much of the confusion was about tax compliance. In addition, Amazon FBA sellers said they would have to determine if they are required to collect taxes on sold items stored in Amazon warehouses in another state.
Amazon.com spokesperson Ty Rogers said, "If sellers would like to know more about how the service works, there's information available on our help pages here. If sellers have additional questions about the service, our Seller Support team is always standing by to help out."
Amazon said its tax collection services calculate U.S. sales and use taxes for all states and the District of Columbia, and certain related local tax jurisdictions. "Our services do not calculate federal, state, or local product-based excise or similar gross receipt taxes (for example, a special fur clothing tax in Minnesota). They do calculate some taxes that are labeled as excise or gross receipt taxes, but that are commonly acknowledged to be sales and use taxes (for example, in New Mexico and Hawaii)." The functionality includes the ability to specify tax collection obligations for orders at the state, county, city, and district level and offers support for Shipping & Handling taxability.
One reader asked, "Isn't it illegal to charge to collect a legally mandated tax?" EcommerceBytes asked Rogers about this and asked if Amazon.com had built in a profit component to the fee it charged sellers for using the service.
Rogers did not provide answers to questions about the fee, but said, "We're always looking for ways to improve the seller experience and, as you may have seen, we're offering this service free through February 1, 2012."
Retailers can learn more about their sales tax obligations from state tax departments.
About the author:
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to firstname.lastname@example.org.
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