What is nexus Amazon? Learn why it's essential to learn about the tax nexus laws when you ship your Amazon items across different states.

How do we determine where a business has sales tax nexus?

What is “nexus”?

You have a sufficient presence in a state to have sales tax responsibility.

Sales Tax nexus results how?

* Physical presence

* Economic nexus

* Affiliates

* Employees, contractors, renting or leasing property

The most common one for online businesses is an economic and physical presence.

Physical  presence

If you’re based outside the USA, you may still have a physical presence if you have inventory stored there, including in FBA warehouses.

A number of FBA warehouses have been audited - eg: Wisconsin

Economic Nexus

Passing certain thresholds on Nexus Amazon.

Most common is $100K revenue, the other 200 transactions.

They vary a lot in how they define.

Example

If I ship in stuff to LA (CA), and it gets moved into 3 states… bear in mind that Amazon will redistribute the inventory across 40 states!

If the inventory were just in 3 warehouses (in 3 different states), that means you have nexus in those 3 states (ignoring Marketplace Facilitator Laws). You would need to get a sales tax permit, collect and remit sales tax on Nexus Amazon.

Marketplace Facilitator Laws states

Generally, you don’t have to get a permit.

However, in general, if you’re selling in a marketplace, you don’t have much.

How do we figure out which states have sales made?

DIY

Pull the transactions out and do some manual excel work with a pivot table.

Taxjar also has a tool that is helpful.

Getting help

There is a link on their website that has information which also provides services and analyses sales state by state. Analysis fee counts towards the first invoice if a client of TaxValet.

For nexus analysis, you look at many factors:

* Transactions

* Where inventory is being stored

* Other areas like affiliates, other businesses, contractors

 

* Affiliates

* Employees, contractors, renting or leasing property

Visiting trade shows can cause tax nexus!

Generally working with an affiliate doesn’t cause an issue but if affiliates are a substantial share of your revenue, it could create sales tax nexus.

Getting permits

Implications for International businesses

Does it make a difference where you’re based? (Which country)

It doesn’t make any difference in theory for Nexus Amazon.

There is a different process for international sellers.

What is the basic process of registration for sales tax for international sellers?

Getting permit

TIN  

* It can be difficult to submit the permit without a TIN people; you’d need an EIN (tax identity) for the company

EIN is simple - for companies - it’s also cheap to use an online service say $100 to get it for you.

TIN is much more challenging - it takes 3-4 months.

Alex has a partner who only does TINs for international businesses.

Online systems

These don’t work for international sellers eg: you can’t put in the address etc.

But many States have a paper application so use these if you’re outside the USA.

Other issues paying Sales Taxes

Paying sales tax

They often will only take a bank account and only a US bank account!

That means you can’t pay the tax!

Alex cleaned up for an Amazon seller based in Poland