Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Fri Apr 12 2019 01:32:48

Amazon to Collect Tax on Seller Fees

By: Ina Steiner

Sponsored Link

To the horror of many sellers, Amazon sent a notice on Thursday that it would begin collecting sales tax on seller fees and services, but sellers were left with many questions, and the company did not respond to our request for more information. 

Many readers forwarded the letter with questions and comments. "I just got this notice from AMZ and I swear I'm ready to stop selling online," wrote one seller. "This is too much. We are small, little sellers and we can't comprehend all this tax stuff. Taxes on Referral fees; subscription fees????"

The taxes affect sellers based on the state in which they are located, though Amazon did not provide such a list, and it impacts FBA *and* non-FBA sellers.

Here's the letter from Amazon to sellers:

Dear Seller,
We are reaching out regarding the possible tax implications on some seller fees beginning June 1, 2019. 

Some states consider specific Selling on Amazon fees such as per item, order, and refund fees as a taxable electronic service. Similarly, some states consider FBA inventory prep fees such as bubble wrap, polybag, taping and labels as taxable. Seller fees is not increasing however; you might see tax applied to some seller fees.

For more information regarding this change, refer to the FAQ below:

- What fees are taxable?

Selling on Amazon fees (based on your business location):
Referral Fee
Subscription Fee
Variable Closing Fee
Per-item Fee
Promotion & Merchandising Fee
Refund commission Fee
Checkout by Amazon
Sales Tax Collection Fee

FBA service fees (based on order fulfillment center):
Labeling Fee
Polybagging Fee
Bubble wrap Fee
Taping Fee
Opaque Bagging Fee
Repackaging Fee

The above list is some common seller fees. For a complete list of seller fees, refer to the following Help pages:
Selling on Amazon Fee Schedule: https://sellercentral.amazon.com/gp/help/200336920 
FBA features, services, and fees: https://sellercentral.amazon.com/gp/help/G201074400

- How will tax be calculated on my seller fees?
For Fulfillment services, the fulfillment center performing the taxable service will determine the tax rate. 
For Selling on Amazon fees, the location of your business in a taxable state will determine the tax rate calculated.  

- When does this begin and where can I see any tax collected on my seller fees?
Beginning June 1, 2019, Amazon will start collecting sales tax on taxable seller fees. Tax collected will reflect with the order fee on the transaction details of your Payments Reports. Date range payment reports will continue to reflect the sum of fees per order. 

- Can I opt out of using FBA fulfillment services that may be taxable?
FBA services are performed on your items when you elect to purchase these services from Amazon or when the packaging and prep requirements are not met. To manage your FBA settings and minimize FBA service fees by prepping your items before sending to an Amazon fulfillment center, visit Fulfillment by Amazon settings at (link).
To learn more about packaging and prep requirements, refer to the Help page available at https://sellercentral.amazon.com/gp/help/200141500.

For more information on Amazon fees, please visit the Selling on Amazon Fee Schedule at https://sellercentral.amazon.com/gp/help/200336920.
Regards,
Amazon Seller Services

Etsy already collects tax in certain states on applicable seller fees where required by law, but the only information we could find is on this page where it states, "Where applicable, state sales tax will be applied to the Pattern subscription fee and the Etsy Plus subscription fee charged by Etsy."

eBay has a help page about taxes where it mentions taxes on seller fees, but only VAT and GST: "Depending on tax legislation where you live, local Value Added Tax (VAT), Goods and Services Tax (GST), or similar consumption tax might apply to your eBay seller fees."

A seller on Reddit said, "It's worth mentioning that many of the electronic services we use such as accounting, sales tax, payroll etc.. have started charging sales tax within the last 6 months."

Paul Rafelson of the Online Merchants Guild compared the taxes described in Amazon's letter to sellers to VAT tax systems (Value Added Tax).

"If this is allowed, then states will have essentially created a VAT system, where they are going to tax direct input costs along the supply chain. But unlike VAT, there is no refund mechanism, so the sellers' price would have to reflect the double charge, so that the cost could be pushed down to the consumer."

He said that while businesses pay sales tax too, items that are taxed at the business level are typically overhead (not including Cost of Goods Sold), such as office computers - and are not direct / per unit costs.

"Sales tax law and policy is written to avoid a scenario like this where there is a direct double tax on per unit inputs that would directly be pushed down to the consumer," he said.

One concept we find outright absurd is that Amazon would collect sales tax on what it calls a "Refund commission fee."

Note that we are also waiting to hear back from eBay to see if it has similar plans.

Comments (51) | Leave Comment | Permalink
Readers Comments

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: Mark4 This user has validated their user name.

Sun Apr 14 11:36:04 2019

No more ebay  states
1. Listing fee
2. Final value fee
3. Fee for postage
4. Paypal transaction fee
5. Paypal 30 cents fee
6. Postage cost
7. Shipping materials cost
8. Item cost

I could not agree more. We have switched our business approach quite dramatically since paypal announced they will be stealing fees for returns. Now this from Amazon. Ebay and Amazon are no longer a place where one can run a successful business. Only ones that still can are the Chinese junk sellers.  We have begun listing heavily on Facebook Marketplace, Letgo, and Craigslist all of our listings we have on ebay and amazon, thousands so taking awhile. Amazed at how many "driveway" cash sales we are doing. No taxes, not fees, no stupid seller marketplace evaluations, business our way. I would encourage everyone reading this to give it a try. We are going back a bit (with this experiment) to the old fashioned way of selling things with very big results.  

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

This user has validated their user name. by: toolguy

Sun Apr 14 11:49:59 2019

This is GOOD news for Walmart brick & mortar

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: Mark4 This user has validated their user name.

Sun Apr 14 12:05:15 2019

toolguy   Been good for us, we already did 300$ in cash sales this morning in the driveway and it is only 12:04p.m. here.  And on a Sunday morning!!!!

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

This user has validated their user name. by: toolguy

Sun Apr 14 12:46:37 2019

@Mark4

Yard sales are a bust

I do good at the swap meet but it's a lot of work, I usually bring in $200-$1000 on a Saturday depending on how much stuff I take out.

We might be getting back into the swap meet scene this year with all the BS happening with online sales.

Only 2 mores years and I'm on the Social Security gravy train ~ LOL

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: Mark4 This user has validated their user name.

Sun Apr 14 13:57:46 2019

@toolguy  Yard sales are great for purchasing items, I agree lousy for selling.  We buy at them, then bring home and list on Facebook and Letgo, CL, usually at least a 50% markup. Very easy and fast to do with smart phones.  We used to sell these items on ebay, just not worth it anymore. Some items we end up flipping same day.  Yesterday bought a Eddie Bauer Cold Weather sleeping bag for 5$. Brought home put on Facebook, sold in driveway 6pm for 100$ cash. In years past this would have been an ebay item, not anymore.  

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: Chicago48 This user has validated their user name.

Sun Apr 14 18:23:17 2019

Time for Congress to act; or time for a class action lawsuit.

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: maxmad This user has validated their user name.

Sun Apr 14 18:57:01 2019

Attention sellers,,,,,,,,,,,

it will NEVER end, and it will never stop ever, these super rich venues will continue to find ways to take more from you,

The sooner you break free of these greedy out of control venues, the sooner you will start making real money again,



Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: lalaland This user has validated their user name.

Mon Apr 15 00:40:14 2019

Someone has to pay for all these illegal aliens coming in this country.  And it is going to be US tax dollars.  Bezos  & eBay love the illegals.

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

This user has validated their user name. by: MainelyVintage

Mon Apr 15 00:43:30 2019

So the only alternate choice is sell in person?

No one is advocating your own website??

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: kazaly This user has validated their user name.

Mon Apr 15 01:09:18 2019

Australia has already gone there and we pay 10% gst on all eBay and Amazon fees and services (collected by those companies).
Buyers also have to pay 10% on the Cost+Shipping of any O/S items bought (the China Tax).

If large sellers are registered with the Tax Office (ATO), no GST is paid to eBay or Amazon but 10% of sales is paid to the govt quarterly and we must submit a BAS (Business Activity Statement) which is a bit like a mini tax return for turnover only, though we do get to deduct any GST paid in that period so some balance is achieved.
Small sellers pay GST upfront but just add any sales to income in their yearly tax return and the gst+fees they paid to Marketplaces during the year is deducted as a business cost at that time.

The system does not work out too badly in the long run and it really just equates to an extra small % in marketplace fees ie 10% GST on 10% FVF sums out as 10% + (10% of 10%) so 10% + 1% = 11%

The main reason this has come about is that neither Amazon nor eBay pay any meaningful tax to the govts of the countries in which they trade (USA included).
They are both offshore companies registered in, or making extensive use of, tax havens.
They rort the taxation systems of countries in which they operate so we are the ones left to honour the cheques they fail to write.

The US is late to the party but Aus, UK  and EU sellers are quite used to this arrangement.

If this sort of approach was applied to all multi-nationals hiding their cash offshore, we would all be a lot better off.

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: val2525 This user has validated their user name.

Mon Apr 15 03:38:59 2019

Um, folks? These taxes are being implemented by states, counties and cities.  If you live in an area where services are taxed, you need to write and call your state legislators. This is not an arbitrary fee from AMZ.  And eBay will probably follow soon.

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: val2525 This user has validated their user name.

Mon Apr 15 03:39:57 2019

@max mad, going to a stand alone website doesn't mean you won't pay tax. Many states tax hosting services.

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: hawk This user has validated their user name.

Mon Apr 15 06:04:46 2019

it's going to be like the old days. taxed into starvation , taxed into owning nothing , taxed into living in the dirt with no housing , taxed and beaten into an animal.

when will these greedy , power hungry a*s holes ever learn that killing people for everything they have leads to the fall of these creeps. the enemy will fall one day.

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: Chicago48 This user has validated their user name.

Mon Apr 15 06:41:57 2019

I don't understand how a company - offline or online - can collect taxes on these items:
Subscription Fee
• Variable Closing Fee
• Per-item Fee
• Promotion & Merchandising Fee
• Refund commission Fee
• Checkout by Amazon

It seems AMZ is making this up.  Promotion & Merchandising fee tax?  Refund commission fee?  Per item fee?  Even B&M stores don't tax like that.  Where are they getting their information?

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: Chicago48 This user has validated their user name.

Mon Apr 15 07:24:53 2019

"Amazon's fees _are_ higher than eBay's though.  They take 10% out of an anemic shipping voucher, which forces you to pad the item price where they charge 15% plus a flat 99c fee.  That's if you aren't paying FBA rent."
the good thing about AMZ is when your item is sold, they send an email listing line by line what the fees are (not EBAY! you have to wait for the invoice to be released).  And when companies see that line by line they are paying subscription fees, reference fees, commission fees - whoa nelly - that's when the complaints to Congress and lawsuits will start.

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: maxmad This user has validated their user name.

Mon Apr 15 08:06:09 2019

@val2525

The cost to host one simple shopping website is $4.99 a month , ?









Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: cvsharkey This user has validated their user name.

Mon Apr 15 09:48:29 2019

I'm starting to develop a twitch every time I hear the word "TAX."

If nothing is a surety except death & taxes....why's death starting to look appealing?  

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

by: epuise This user has validated their user name.

Mon Apr 15 10:13:49 2019

To understand cause & effect, you need to go back to the Reagan years, where the first big business tax cuts were implemented, and the first nail hammered into the middle class coffin: elimination of deduction (from income tax) of personal credit card interest by non Corps.
Every tax cut to The Fed cuts money that is then sent back to the States, and, good Federal programs like Medicare, Medicaid, Social Security.
These programs were designed to keep our people at a minimum standard of living and health. To keep severe poverty & increased mortality from destroying our country.
Instead, lobbyists and disingenuous politicians only interested in their big money lives, lie to the little people, and push thru silly projects so the can say they funded some initiative, that really did not help the average joe at all.
The Trump Tax Cut cut taxes for the top 20% to the extreme, now over 60 big Corporations not only pay nothing, they get incentive refunds.
The Tax Code is so important to life in the US, and, who you vote for affects your business & your family's ability to thrive.
The Tax Code allowed Walmart to pay employees sub par wages, allowed companies to cut hours to 30 to avoid paying health insurance & offering a retirement plan.
Then, these Corporations send their low paid workers to Medicaid for health ins. & 'food stamps'; basically using the Gov't tax reserves to pay people as they should be paid.
These Corps have no problem paying a working Mom $15. an hour, and a CEO $48,000. a day
Tax Laws can add a penalty to Corps where the pay disparity is so staggered, a formula where the CEO pay, which was once 30X average worker, is not now, 300x average worker.
By 'dumping' their underpaid onto the Federal 'dole', these owners are now billionaires.
Pre-1980s, Unions allowed a single breadwinner to work one job, support an average family, be home weekends. Families had vacation pay, health insurance, and a pension at 65.
These benefits are hard to find, now, and, many work 2-3 jobs, w/ both spouses working. This is Corporate Welfare. Supporting Corporations.
With the Union system, the Middle Class thrived, and the poor accelerated the ranks.
You can repeat the mantra about immigrants all you want. They are not causing the disparity, the rising debt, the inequality.
It is Tax Law that benefits the top %, pure & simple.
As States are starved for revenue to support the working poor in their border, they look for ways to raise Revenue. The internet sales taxes & fees are a result of failed Federal Tax Policy.
It must be overhauled. People must get off their duffs & vote. Grill candidates about what they will do to not waste Tax dollars & make Corporations pay decent wages & the share of taxes equal to that paid by workers. If a worker pays 25%, so should a CEO.
Red hats will not do anything but put more money into the Chinese factory that made them. You need to READ. And not just 'promoted' news feeds that tell you what they want you to think. Google is your friend. Read all the results, not just the top one. Buy a newspaper that is not your 'local' one. Watch the BBC., Broaden your knowledge base.
This country will collapse if this goes on, unstopped.
We cannot run a country on the taxes of only the working poor & middle class.

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

This user has validated their user name. by: toolguy

Mon Apr 15 11:39:53 2019

There will be NO escaping all taxes once the US Government goes to digital cash.

They'll know about every single transaction anyone does and they'll want they're cut of your pie. . . .Little Johnny next door mows your lawn for $10, his Uncle Sam will want his share. . . .Digital cash will end most crime involving money. . .They will no longer have to deal with counterfeiting, printing or storing cash.

My guess is the US is all digital currency by 2025

Perminate Link for Amazon to Collect Tax on Seller Fees   Amazon to Collect Tax on Seller Fees

This user has validated their user name. by: iheartjacksparrow

Mon Apr 15 12:18:31 2019

toolguy writes: "There will be NO escaping all taxes...." This from the guy who refuses to collect and remit sales tax for the sales he makes in California, where he lives.  

Click to view more comments
1 2 3  [Next Page]


Login is required to post comments.
To sign in to leave a comment using your AB Verify User Name, fill in the form below. If you have not yet signed up for AB Verify, or if you'd like more information, go to the Registration Page
.

Login for AB Verify
Be sure and use your email address and password to log in.

 
Email:
Password:
 
 Forgot Your Password?
 Even though you are signed in with the AuctionBytes Blog, you will have to sign in to the EcommerceBytes blog. But you can sign in with your existing AB Verify info.