Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Thu Sept 28 2017 11:47:44

State Orders Amazon to Reveal FBA Merchant Identities

By: Ina Steiner

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There has been some debate about whether online sellers must pay online sales taxes to states where they have no presence but where they do use Amazon's FBA fulfillment program and potentially store inventory at Amazon fulfillment centers in those states.

Now, Massachusetts is demanding Amazon hand over the names of vendors who store products at Amazon locations in the state, according to news sources, including Law360.

In an article on Wednesday, the publication reported that the Massachusetts Department of Revenue has asked Suffolk County Superior Court on Sept. 22 for an order to force Amazon to hand over the requested documents. "According to its petition, the Amazon affiliates have declined to release information that would help determine vendors' liability for sales and use tax in the state."

Bisnow notes the awkward timing of the action with its article titled, "Massachusetts Simultaneously Takes Amazon To Court And Looks To Land HQ2," a reference to the state's interest in playing host to Amazon's second North American headquarters.

Bisnow said Massachusetts asked the court to demand Amazon hand over the requested business records within 20 days. The court will have to decide if using Amazon FBA equates to having a physical nexus in states, though sellers may not have discretion over where Amazon sends their inventory once it's in their distribution network.

In related news, tax software company Avalara reports that a new Massachusetts law takes effect on October 1 requiring large internet vendors to collect Massachusetts sales and use tax despite the fact that "taxing businesses that lack a physical connection to a state is at odds with precedent upheld by the United States Supreme Court in Quill Corp. v. North Dakota."

Avalara wrote, "Massachusetts acknowledges Quill and the physical presence precedent. Yet the regulation maintains that internet vendors differ from mail-order vendors in key ways."

It said Massachusetts was the first state to posit that online vendors have a physical presence in a state through the software or internet cookies they place on computers and handheld devices. 

You can read more about it on Avalara's Taxrates.com blog.




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Readers Comments

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

This user has validated their user name. by: eXtinctBay

Thu Sep 28 12:33:04 2017

Who knows? Perhaps many other states may follow suit.

This should be looked at closely by eBay before they seriously consider beginning a fulfillment program. In my opinion, virtually no one will be willing to participate in FBE anyway.

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

This user has validated their user name. by: Rexford

Thu Sep 28 13:38:11 2017

I only trust myself to get packages out in a timely means.  I already have USPS as part of the equation which is why I detest the shipping DSR metric so I don't need anyone else who might drop the ball.  Of course if I did use this I would trust Amazon to fulfill the order in a timely means versus eBay who I would never trust to get it filled.    

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

by: Snapped This user has validated their user name.

Thu Sep 28 17:34:24 2017

If Amazon does not allow one of 'their vendors' to fulfill an order from the vendor's physical location, and instead controls fulfillment at and from locations at their own discretion, and states wish to base collections on physical location of 'the business' instead of the buyer (like B/M stores do - which is fine if they want to assess sales tax to online sellers), then it should be Amazon themselves who needs to collect, file, and remit.  The 'actual' seller has no physical presence in that state, and does not control, nor in most cases is even made aware of, how Amazon distributes product sent to them for fulfillment.  Assess at sale, and withold from payout appropriately.  

Makes the 'order' moot and protects 'data' Amazon is apparently reluctant to reveal.  

Of course, it's then REALLY understandable that any FB ENTITY would balk at the 'push' to tax online sales - that burden and cost of collecting and filing has been well defined, regardless of any loss of 'advantage' in price point achieved by 'tax free' sales online, when currently applicable, which is the only argument they (and eBay) REALLY care about to date, despite lip service to the burden element.

They can try, but they cant have it both ways.  If the tax sales based on business 'location', then where the item ship's from, IS the (virtual) business location.  

Alternately, give up FB, which they won't of course.  But other entities considering it need to consider this issue as part of any action being currently 'surveyed'.

You take 'control', YOU pay the costs of it.  

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

by: Stig of the Dump This user has validated their user name.

Thu Sep 28 19:51:49 2017

Clearly in the long term Amazon will be looking to own the government so that they can decide sales tax policy themselves.

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

by: Geetar This user has validated their user name.

Thu Sep 28 22:05:37 2017

Just end it all. Make a country wide sales tax. All states, same tax rate. Everybody pays. Where the purchase is made (state) is where the sales tax gets remitted. You buy from seller in FLA, seller remits to FLA.  Simple solution to a problem that every one is blowing way out of proportion. Sales tax has to be paid. States are loosing tons of revenue because of internet sales. Its way past the point of them loosing a little.

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

by: mcposty This user has validated their user name.

Fri Sep 29 10:42:43 2017

A warehouse is not a nexus.

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

This user has validated their user name. by: The End

Fri Sep 29 11:46:17 2017

AGAIN : It is UNCONSTITUTIONAL to charge sales tax on goods shipped out of state. Section 9.
This will NEVER change.
If you have charged out - of - staters sales tax, you have committed a criminal act.
Hold your comment.

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

This user has validated their user name. by: The End

Fri Sep 29 11:56:28 2017

Section 9  paragraph 5 :
https://www.archives.gov/founding-docs/constitution-transcript

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

by: Mongoose This user has validated their user name.

Fri Sep 29 17:10:01 2017

Geeter, states are not "loosing" any revenue due to online sales.  Is Texas losing revenue when a SC seller sells to a CA buyer? OF course not, they are not involved i any way with the transaction. But guess what, neither is SC, the buyers gets no benefit from SC in the transaction, and at the end of the day, CA doesn't deserve any tax either.  What if the CA was in SC and bought the item, does CA get to tax it when they bring it home? Of course not. So why should they get any tax when it is shipped to the customer. How did states exist before sales tax? Maybe states should look at spending less, not taxing more.

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

by: ignatz This user has validated their user name.

Sun Oct 1 05:38:02 2017

"Just end it all. Make a country wide sales tax."

Bad idea!  As if the states will stop collecting THEIR sales tax?  Not on your life!

Amazon now collects sale tax for its own sales, without the need for a national sales tax.  It could just do the same for 3P sellers.

This is a good discussion of what creates "nexus":

http://www.salestaxinstitute.com/Sales_Tax_FAQs/What_i
s_nexus

In
my non-legal opinion, it would seem that Amazon certainly has nexus in the states where it has warehouses.  I think the issue will come down to whether or not Amazon can convince the various state courts that **it's** not making the sale on FBA purchases - the 3P seller is making the sale.

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

by: Bidonmine This user has validated their user name.

Mon Oct 2 09:52:42 2017

In many sates, Amazon employs many thousands of people to run their warehouses. Amazon should just move out of MA.

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

This user has validated their user name. by: VV

Mon Oct 2 11:56:24 2017

How many times does the same item get to be taxed?

Perminate Link for State Orders Amazon to Reveal FBA Merchant Identities   State Orders Amazon to Reveal FBA Merchant Identities

by: epuise This user has validated their user name.

Mon Oct 2 15:44:05 2017

AMAZON should COLLECT the SALES TAX if the Order is shipped FROM Mass to a Mass Buyer, regardless of who owns the merch.



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