Guide to Sales Tax Collection in Amazon
Chapter 1: Introduction
Amazon has changed the way we do business. It has also changed the way in which we think about sales tax. For years, consumers shopped online shielded form sales tax (but not consumer’s use tax, but that is another story). However, with increased online spending, local tax jurisdictions have taken notice of the millions of dollars in lost sales tax revenue.
Amazon has taken very deliberate steps to shield sellers utilizing Fulfillment by Amazon from the long arm of state Department of Revenue offices. However, with the ongoing growth of Amazon and the need to find further efficiencies to offset investments in the company, Amazon has set down roots in a collection of states by opening warehouses. The creation of warehouse locations exposes Amazon to state nexus – a critical criteria for the legal responsibility of the state DOR to require sales tax collection, filing, and remittance.