Amazon will provide Rhode Island with the names and addresses of sellers who made sales to customers located in the state in 2017, saying it believes it is required to do so under a new Rhode Island state law.
It follows a similar move in which Amazon informed sellers who use its FBA services that it would provide detailed information about their selling activities to Massachusetts including names, contact information, and the estimated value of their inventory in its Massachusetts fulfillment centers.
A reader asked us about the latest letter from Amazon. “Quite a few sellers have received an email from Amazon stating that their information has been provided to Rhode Island. My sales in Rhode Island on Amazon are below 5000.Why then has my information been provided? What can I look forward to from Rhode Island?”
Scott Peterson, Vice President of US Tax Policy and Government Relations at Avalara, told EcommerceBytes that Rhode Island can only require sellers to collect sales tax if the seller has a physical presence (nexus) in the state. “The state currently has the legal authority to enact a law requiring sellers to remit sales information so the state can collect use tax from Rhode Island residents,” he said. He wrote more about it in this blog post on the Avalara website.
How does Peterson expect Rhode Island to use the seller data provided by Amazon?
“Every state has a program that looks for merchants doing business within its borders. First, Rhode Island will compare the Amazon list to its existing list of licensed businesses. Second, every business that isn’t already licensed will be examined to see whether it has nexus in the state. Those determined to potentially have nexus will receive a letter from the state demanding registration and sales tax collection.”
Peterson said Pennsylvania’s marketplace law is the next to go into effect, and New York, Hawaii, New Mexico, and Iowa are already discussing whether to adopt similar legislation this year.
In its recent letter to sellers, Amazon included a link to a directory with information about several experienced tax advisors and wrote, “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.”
Many sellers simply want the ability to easily understand and comply with tax laws. The current moves by various states are resulting in a lot of uncertainty and anxiety for businesses and sellers who have no physical presence in those states – and there’s no agreement from experts about what sellers should do, as this post on TaxAnalysts.org shows.