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Tue Jan 23 2018 21:04:05

Amazon to Divulge Seller Names to Massachusetts Tax Agency

By: Ina Steiner

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Sellers who use Amazon's FBA service to store their inventory and fulfill orders are worried after the marketplace sent them a notice on Monday that it would provide detailed information about their selling activities to Massachusetts by January 26, including names, contact information, and the estimated value of their inventory in the state's fulfillment centers.

Pressuring Amazon in this way is latest ploy on the part of states who are trying to force out-of-state sellers to collect and remit sales and use tax on sales made to in-state buyers. 

Avalara executive Scott Peterson said it was the first known instance of Amazon disclosing information about its third-party sellers to state taxing authorities. Avalara provides compliance solutions to online merchants.

Should sellers panic if they use FBA but don't collect and remit sales tax? Panic is a strong word, Peterson said, but they should talk to their accounting partners right away.

A spokesperson for the Massachusetts Department of Revenue told EcommerceBytes today that the Commissioner and Amazon were continuing to work amicably toward a resolution of the matter. 

We are awaiting clarification from the state DOR since Amazon's letter seemed to indicate the matter was resolved. Could it be a ploy on Amazon's part to get media attention to the issue before complying with the demands? Probably not. But it is possible the agency had agreed to wait for Amazon to comply until after the busy holiday shopping season when it would have been more difficult to handle any requests from sellers who wished to make changes to their FBA accounts as a result of the disclosure.

If Amazon does release seller data to Massachusetts by Friday, the information could wind up in the hands of other state tax agencies. Peterson said it was not unusual for states to share information with other states.

"In other words," he said, "this local case could lead to a step change in sales tax enforcement in late 2017 and right through 2018. With more information, states will have the ammunition they need to go after third-party vendors for sales tax. Ecommerce vendors will have to redouble their efforts (and spending) to ensure tax compliance, because they will be facing more scrutiny than ever."

However, Peterson said even if Massachusetts has this information, the state must still prove that these sellers have sufficient physical presence in the state before it can force sellers to register and collect. He believes the courts will have the final say about whether selling through FBA creates physical presence and pointed to the recent decision by the Supreme Court to grant cert in the South Dakota v Wayfair case. 

Some additional points Peterson made that sellers may find interesting: In the legal brief Massachusetts filed in the case, it asked for a list of sellers that store property in the state and also make sales in the state. He also said that once a business has physical presence in a state, all its sales are taxable regardless of where those products are shipped from. 

The notification Amazon sent sellers follows; note that Amazon did not respond to our inquiry before publication.

Amazon has received a valid and binding legal demand from the Massachusetts Department of Revenue (DOR) requiring that Amazon disclose the following information about sellers to the DOR:

- Contact information (name, address, federal tax ID number, and phone number)

- Estimated value of the seller's inventory in our Massachusetts fulfillment centers, calculated based on the seller's selling prices in late 2016 and in 2017

To comply with our obligations under the law, we plan to provide your information to the DOR by January 26, 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 resources in Seller Central: 

- Solution Provider Network: a directory with information about several experienced tax advisors

- Tax calculation services: optional services for calculating U.S. sales and use taxes

- Monthly inventory reports: a tool showing the quantity, location, and disposition of your inventory in our U.S. fulfillment centers

Thank you for selling on Amazon.
Sincerely,
The Fulfillment by Amazon team

As a reminder to readers, Amazon and Etsy began collecting Washington sales tax on behalf of third-party merchants beginning January 1, 2018.



Comments (15) | Permalink

Readers Comments

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: FeelingFroggy This user has validated their user name.

Tue Jan 23 23:54:22 2018

Sounds right to me. If you owe the taxes and either don't collect or collect and don't pay them to the entity that you collected for YOU SHOULD BE IN JAIL.

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: topdog This user has validated their user name.

Wed Jan 24 00:33:47 2018

You have to have merchandise in a Mass warehouse, AND it has to be sold to a Mass resident for it to qualify. If you have merchandise at warehouses in other states, if a Mass resident orders something, it's not applicable.
That's why I am very particular as to where I ship to, I don't want to store merchandise in Cal or Mass.
On the flip side of the coin, Amazon is going to start collecting and remitting tax on 3rd party sales in Wash. That's how this should go - it's their site, it's their sales, let them handle the taxation and remittance.  

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

This user has validated their user name. by: Ming the Merciless

Wed Jan 24 04:17:01 2018

Another good reason to pull merchandise from Amazon fulfillment centers. This is just the beginning.

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: Chicago48 This user has validated their user name.

Wed Jan 24 04:24:17 2018

@topdog:  Thanks for explaining.  IMO the only sellers who should be FBA are sellers making $xxx,xxx a year.  If you're a little guy making $xx,xxx or less a year it makes no sense to be on FBA.

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: Snapped This user has validated their user name.

Wed Jan 24 08:35:18 2018

If one had a B&M facility and utilized a fulfillment 'service' located in another state to ship goods to a customer for whatever reason (vice cash n' carry), that would not constitute having a 'legal physical presence' in that other state, would it?

So it would seem to be a reasonable contention that the state where one is registered to do business (or for the non-registered, their actual address), should determine juristiction.

And until the law catches up to treat on-line sales the same as B&M sales regarding sales taxes (i.e., charge it to/remit it from ALL buyers regardless of buyer's address), this issue - which could thus be made moot and completely eliminate need for cumbersome multi-state accounting - will remain.

Of course, the issue would then revert to argument over 'disadvantages' for higher rate states, but that's already the issue when it comes to 'attracting' business to lower rate states, right?  Which is the point of defining lower rates in the first place.  Same reasons so many businesses located elsewhere 'incorporate' in Delaware for example - tax advantages.

So simple, yet inconceivably continuing to be so complicated....

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

This user has validated their user name. by: VV

Wed Jan 24 09:20:17 2018

@snapped - you have it backwards. The sale takes place where the product is with the seller. The buyer buys FROM the seller. That is where the transaction takes place. This is one of many reasons I do not use FBA

If you're from Mass. and on vacation and buy a t-shirt in Georgia do you pay Mass. tax?

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: epuise This user has validated their user name.

Wed Jan 24 09:49:59 2018

IF you are a MASS Seller, have a MASS sale from a MASS FBA Warehouse... then, DUH... you SHOULD have been collecting sales tax...

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: topdog This user has validated their user name.

Wed Jan 24 11:07:48 2018

I'm a bit unsure of why so many of y'all are so down on FBA. It actually makes TOTAL sense for small sellers to be there, much moreso than it does for larger ones. I resisted for years, and understand now that that was a big mistake.
Why? Simple. That's where the sales are. Amazon tilts the playing field so heavily toward FBA and away from FBM that for most items - MOST, not all - you'll do much better with FBA. If you sell products under MAP like we do, it's the only option - if everyone is selling at the same price, the buy box will always go to a FBA merchant.
Add to this the fact that Amazon's FB system is so screwed up, but with FBA you can get almost everything removed (since it's due to their errors, not yours). That in turn should give you a near perfect FB score, meaning you'll get even MORE buy box opportunities.
Amazon isn't dumb - they have a lot of levers to use for FBA, and they use them very well

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: mcposty This user has validated their user name.

Wed Jan 24 11:52:06 2018

surprise surprise, Amazon is not protecting its sellers from obvious illegal ploy of the states.

Its the sellers responsibility to submit taxes if they live in that state. end of story.

These states are trying to go after every seller in the universe instead of their own residents which is what they should be doing.

Pull out from Amazon NOW.

To me, its Amazon's repsonsibility since they are the ones hwo put the items there, they are th eones collecting the sales moeny, they are the ones doling out the money back to the seller..so Amazon should collect and pay taxes that needs.

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: mcposty This user has validated their user name.

Wed Jan 24 11:53:50 2018

One last thing, Amaozn doesnt even give you the option to collect tax from where your items are stored do they? Can you place in your listing: collect tax if item is stored in fba in mass for mass?


Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: dander This user has validated their user name.

Wed Jan 24 12:46:49 2018

the states will whine about small sellers not paying taxes one minute and the next give away billions to get a company to locate in their state the next. If a state can afford a billion plus to lure Amazon, then they don't need my puny amount in sales taxes for my sales in that state.

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

This user has validated their user name. by: Rexford

Wed Jan 24 12:51:24 2018

While I am a firm believer in paying taxes, are there no privacy issues here as it relates to the sharing of data?  Moreover, state tax collection can be incredibly complicated.  Why doesn't Amazon simply collect it  from the sellers and pay it directly to the state?  And states sharing seller data with other states?  If that data falls into the wrong hands, watch the law suits come out of the woodwork.  

It will be interesting to see how all of this plays out.  

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: YYA This user has validated their user name.

Thu Jan 25 01:41:47 2018

https://www.change.org/p/require-amazon-to-collect-and-remit-sales-tax
-for-all-fba-sales

Require
Amazon to Collect and Remit Sales Tax For All FBA (Fulfilled By Amazon) Sales

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: Snapped This user has validated their user name.

Thu Jan 25 07:28:13 2018

@VV - no, not backwards.  What you example IS the concept the post refers to.  Tax based on seller location no matter where the buyer resides; just like B&Ms.

Perminate Link for Amazon to Divulge Seller Names to Massachusetts Tax Agency   Amazon to Divulge Seller Names to Massachusetts Tax Agency

by: TomH This user has validated their user name.

Fri Jan 26 07:15:59 2018

Where is your stuff in a FBA warehouse? Well it is likely that much of it will not be located in the warehouse you thought you sent it too.

Amazon moves your stuff all over its FBA warehouse network, in their words, to balance the load and get items closer to expected buyers.

There are several detail reports you can pull to see where each item is actually located.  You might have a physical presence in more states than you thought.  



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