|Tue Nov 5 2019 22:58:08|
Amazon Seller Faces Million Dollar Sales Tax Liability
By: Ina Steiner
Amazon sellers are buzzing about an article in the Philadelphia Inquirer
today about a seller who faces liability of $1.6 million from California for uncollected back sales tax. The seller is based in Pennsylvania but sent inventory to Amazon through its FBA fulfillment service.
As we noted in August
, FBA merchants say the state should be looking to Amazon for uncollected sales tax, since they didn't know where Amazon was storing their goods.
The Inquirer quoted Jared Walczak, director of state tax policy at the Tax Foundation in Washington, who said the pursuit of Amazon's third-party merchants is extreme and violates protections under the U.S. Constitution, even though states a have significant leeway in how they impose taxes:
""Retroactivity is always bad policy, but in this case, it raises serious constitutional due process concerns, because due process requires that you have notice and can anticipate a policy. Here the retailers lacked notice to collect. No one believed they were supposed to be collecting this tax for all of these years," Walczak said."
A seller who posted a link to the article on Reddit
said he had been successful in getting California to stop pursuing him, though as of yet he doesn't seem to have revealed his strategy.
The LA Times has called the state's activities with regard to sales-tax collection a "gotcha" approach.
Ironically, the notice that the Inquirer included in the article points out that as of October 1st, Amazon will be the party required to collect California's sales tax going forward thanks to the state's new marketplace facilitator law.