Amazon Sales Tax and How it Impacts Your Business

I just started selling on Amazon, why are taxes being collected? How does this work?

Woohoo! First, Congrats on starting to sell through a new channel. We hope we can clarify how tax collection works on Amazon so you can continue to be at ease about your sales tax compliance.

Amazon calculates, collects, and remits tax on sales made by merchants (you) shipped to customers located in states that have enacted Marketplace Facilitator, Marketplace Fairness, or similar laws. The laws shift responsibility from you, the merchant, to Amazon, the marketplace facilitator. Amazon is responsible for collecting remitting, and refunding sales tax for you. For a list of all states that have Marketplace Facilitator legislation, see the linked Amazon help article.

Nexus and Amazon

I don't have Nexus in the Washington state, but Amazon is collecting sales tax in Washington, why is that? As mentioned above, Amazon will collect and remit for all states that have Marketplace Facilitator legislation regardless of your Nexus status.

How does this impact my Nexus and should I also be remitting and collecting for that state in my Shopify/ WooCommerce store? In most states, Amazon orders will count towards reaching your Nexus thresholds. Please see your Nexus dashboard for your calculations for each state. If you have NOT hit the Nexus threshold in a state, you do NOT need to collect and remit. However, if you have hit the Nexus thresholds, you are liable for sales tax collection in your Shopify/WooCommerce store after the threshold has been passed (for example, in the state of CA the threshold is $500,000, you will be liable for tax collection in your store after you have surpassed $500,000 in sales). So yes, this is unnecessarily confusing, Amazon may be collecting in certain states, but you may not need to collect in your store depending on whether you have hit that Nexus threshold.

Because Amazon collects and remits, do I need to connect my store to the numeral dashboard?

Your Amazon orders will not be included in taxable sales when we file on your behalf, but we do recommend connecting your Amazon store so we can accurately monitor your Nexus for you.

We know that all of this is complicated, please reach out to us at help@numeralhq.com if you have any other Amazon related questions!