sales_tax_amazon_sellers

Many eCommerce sellers include Amazon as one of their mix of sales channels. That’s why when Amazon announced that they would begin collecting Washington sales tax for online sellers, a large swathe of the eCommerce world had questions.

We spoke with the Washington Department of Revenue and four eCommerce sales tax experts to determine what Amazon’s sales tax move means for Washington online sellers.

What happened in Washington?

The state of Washington passed a “marketplace facilitator law,” which went into effect on January 1, 2018. The law states that online marketplaces that meet certain criteria, such as Amazon, are required to collect and remit Washington sales tax on behalf of sellers who sell on their platform.

Amazon agreed to comply with this law, and starting January 1st, they began collecting sales tax from all Washington buyers who make a purchase from any seller on the platform.

What changes for Amazon sellers?

First off, Amazon sellers are no longer required to set up Washington sales tax collection in Amazon Seller Central.

The biggest change for Fulfillment by Amazon (FBA) and Merchant Fulfillment (MF) sellers, is in how you will be required to file your Washington sales tax return. While sellers who have nexus (an obligation to file sales tax) in Washington are still required to file a Washington sales tax return, you will now be required to include the sales tax that Amazon collects on your behalf on a different line item.

Instead of breaking down your sales tax collected by city, county and other special taxing district, you merely determine how much sales tax Amazon collected on your behalf and include that under deductions as “Other.” You’ll be asked to label the deduction, and the Washington Department of Revenue recommends labeling it “Sales tax collected by third party.” (If you use a sales tax automation service such as TaxJar to automatically file your sales tax returns, we take care of all this for you.)

What stays the same for Amazon sellers?

Aside from no longer having to set up Washington sales tax collection and a small change to how you file your Washington sales tax return, everything else remains business as usual.

Amazon sellers with sales tax nexus in Washington are still required to hold a valid Washington sales tax permit and file a Washington sales tax and Business & Occupation (B&O) tax by their assigned due date.

Amazon sellers with inventory stored in a warehouse in Washington are still considered to have Washington sales tax nexus. This means that if you sell on other channels, you are still required to collect sales tax from Washington buyers.

I hope this post has helped demystify Amazon’s decision to collect sales tax in Washington state. For more, check out our “Expert Panel: What Amazon FBA Sellers Need to Know about Amazon Collecting Washington Sales tax” video, or read our Amazon & Washington Sales Tax FAQ here.

TaxJar is a service that makes sales tax reporting and filing simple for more than 10,000 online sellers.  Try a 30-day-free trial of TaxJar today and eliminate sales tax compliance headaches from your life!