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