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Sun Aug 25 2019 10:57:13

Beware Tax Consequences of Amazon FBA Donation Program

By: Ina Steiner

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Amazon sellers who participate in Fulfillment by Amazon (FBA) currently pay fees to have the marketplace dispose of their unwanted inventory, including returns and overstock products. Amazon can choose to destroy the inventory, or - at least for its own products - dispose of inventory by selling it to liquidators who can resell it.

In a recent blog post, Amazon announced a new program called FBA Donations that "enables donation of excess and returned products to charities for sellers who use Fulfillment by Amazon." It said the initiative builds on its history of donating millions of Amazon retail products to charities each year. It is working with Good360 in the US and with Newlife, Salvation Army, and Barnardo's in the UK.

Upon hearing the news of Amazon's new donation program, some sellers were confused about who would be able to take the tax write-off for donations made through the new program.

Sellers shouldn't make any assumptions - those with questions should consult their accountant. As one seller warned, removing items from inventory is a write-off, and merchants cannot report both the removal of inventory *and* the donation. 

Here's what Amazon states in its help file: "Amazon cannot provide tax advice to sellers who take part in the FBA Donations program. Contact your tax adviser to discuss the FBA Donations program and your tax reporting obligations."

Note that even when sellers opt to have Amazon donate their unwanted inventory, they will continue to pay disposal fees to the company.

The program starts on September 1, 2019, and while sellers can opt-out of the donation program at any time by disabling FBA Donations in their FBA Settings, it may benefit them in that their overstock won't end up in bin stores like the one in South Carolina we recently wrote about that lists overstock Amazon products for between $1 - $3, even for expensive unopened products. It also has the obvious advantage of benefiting charitable organizations. 

Interestingly, while it's sellers' stock they've paid Amazon to dispose of, the program reflects positively on Amazon's image. 

Here's an excerpt of Amazon's notice to FBA sellers:

"Amazon will automatically make eligible inventory available to charitable organizations when you choose to dispose of overstock, returns, and other unwanted items. The donation option will apply to inventory you select for disposal manually and through automatic disposal settings."

"Our usual disposal fees apply."



Comments (3) | Permalink

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Perminate Link for Beware Tax Consequences of Amazon FBA Donation Program   Beware Tax Consequences of Amazon FBA Donation Program

by: epuise This user has validated their user name.

Mon Aug 26 10:17:00 2019

Keep a record of donated merch & assoc fees & write it off

Perminate Link for Beware Tax Consequences of Amazon FBA Donation Program   Beware Tax Consequences of Amazon FBA Donation Program

by: TomH This user has validated their user name.

Mon Aug 26 11:11:08 2019

''Keep a record of donated .......etc''

Yes, it is only a charitable contribution. Nothing really special or different than any other.

Perminate Link for Beware Tax Consequences of Amazon FBA Donation Program   Beware Tax Consequences of Amazon FBA Donation Program

by: val2525 This user has validated their user name.

Tue Aug 27 21:29:32 2019

It doesn't matter what AMZ does with the forfeited inventory. The seller's deduction is when they deduct the COGS at year end. You can't take a COGS cost deduction AND charitable donation deduction. That's double dipping.



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