Urgent! The United States will begin to collect taxes from Amazon sellers starting April 1!

The tax compliance process in Europe is now nearing completion, and during this period, countless sellers have had their stores closed or abandoned the European site due to unbearable taxes.

This is the case for smaller European sites. If the largest US site tightens its tax policy, almost all Amazon sellers will be affected.

However, because the laws of each state in the United States are very different, it is very difficult to collect taxes uniformly. Since they cannot rely on federal legislation and cannot let go of such a big piece of fat meat as online sales, each state has independently enacted laws to collect taxes from Amazon sellers.

▲List of sales tax rates in each U.S. state

Today, Amazon’s backend dropped another big bomb on us. Starting from April, the backend will automatically collect taxes from these two states in the United States!

This news is not like the much-talked-about California tax. That time, Amazon just needed to collect information from sellers who meet the tax conditions and issued a notice in advance (click here to view).

Amazon’s notice this time is to directly collect all the taxes payable and hand them over to the state government !

Although sales tax is borne by consumers, it increases the purchase cost for consumers, and consumers are likely to choose other products with lower costs.

Therefore, most sellers who need to pay sales tax will choose to lower their prices to cover this cost themselves, which means that the seller still has to bear all or part of the tax.

This time, Amazon is the one that collects the tax and hands it over to the government, so sellers can’t avoid it. However, whether or not you need to pay sales tax depends on the specific policies of these two places.

Generally, whether or not a product meets the sales tax requirements is based on whether there is a nexus between the remote seller and the state where the buyer is located. If the seller has inventory, employees, or physical facilities in the state, then the tax must be paid.

However, we Amazon sellers have almost nothing to do with these three, so in order to collect sales tax from sellers like us, each state has established new tax payment standards. Most of the new standards can be classified into the following three situations:

1. Click-through Nexus

For example, if I hired a website or agency in that state to help me with traffic and promotion, and sold to customers in that state, this would constitute a connection. All these sales orders need to pay taxes.

2.Virtual and Economic Nexus

This is known as remote sales connection. If sales to the state exceed the specified amount or unit volume threshold, sales tax must be paid.

3. Dropship Nexus

Purchasing goods from wholesalers in the state and having them ship on your behalf also constitutes a nexus and requires the payment of tax.

The second situation is the most likely to tax us. The two states that requested taxation this time, Nebraska and the District of Columbia, also have a remote sales mechanism.

▲District of Columbia

▲Nebraska

*Data from state government documents

Both states require sellers to pay sales tax if their cumulative sales in the state exceed $1 million or 200 orders in the previous calendar year or the current calendar year.

As for how to pay taxes, FBA sellers can only use Amazon's own tax payment service. The platform automatically calculates the amount of all taxable orders and pays it to the government on time. If you want to know how to set up automatic calculation in the background, please scan the QR code and chat with me for consultation~

PS. If you want to join the seller discussion group, you can also private message me to let me add you to the group

Source: Cross-border Business School

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