A court ruled in favor of Amazon sellers on Friday concerning a dispute over their obligation to pay Pennsylvania state sales tax simply because they used Amazon’s FBA fulfillment service, resulting in some of their inventory being stored in Amazon fulfillment centers in the state.
The Online Merchant Guild had filed a Complaint for Declaratory and Injunctive Relief last year over Pennsylvania’s Department of Revenue’s demands that merchants register with the Pennsylvania Department of Revenue based on their participation in Amazon’s FBA program.
Online Merchant Guild Director Paul Rafelson told EcommerceBytes on Friday, “Pennsylvania’s commonwealth court held today that FBA is not a significant enough presence to subject sellers to tax.”
In its opinion, the court stated that the key issue before it was whether non-Pennsylvania businesses that sell merchandise through Amazon’s FBA Program must collect and remit Pennsylvania sales tax.
“After careful review, we hold that Revenue has failed to provide sufficient evidence that non-Pennsylvania businesses selling merchandise through the FBA Program (FBA Merchants), and whose connections to the Commonwealth were only shown to be limited to the storage of merchandise by Amazon in one of Amazon’s Pennsylvania warehouses, have sufficient contacts with the Commonwealth such that Revenue can mandate they collect and remit sales tax or pay PIT pursuant to Sections 237(b)(1) and 302(b) of the Tax Code.”
A law firm wrote more about the case on its state- and local-tax blog.
Rafelson sounded cautiously optimistic about the ruling’s impact on disputes with other states, telling EcommerceBytes, “Basically all of that tax nonsense for the last five years, and even going forward was bogus and unconstitutional. Of course this is one state ruling, but it is a first state ruling.”