Four of those states, Delaware, Montana, New Hampshire, and Oregon have no general sales tax. This takes the burden off each individual seller to handle sales tax in many states.įive states currently have no marketplace facilitator laws. If you are a seller with Amazon FBA, you can set up sales tax collection in the “Seller Central” area of the website. Marketplace facilitator laws require the facilitator to collect and pay sales tax on behalf of the sellers that use its services.Īmazon has developed a sophisticated system for tracking, collecting, and paying sales tax on behalf of its FBA sellers. Amazon’s FBA service is one of the biggest examples of this. Īs the name suggests, a marketplace facilitator facilitates sales for other businesses. Most states have an exception for out-of-state businesses that use services like Amazon FBA, however, known as “marketplace facilitator” laws.
If they sell enough in a state with economic nexus laws, though, they might be responsible for sales tax.įailure to collect and pay sales tax when required can result in serious penalties, starting with civil fines that can be in the thousands of dollars. Some states set the minimum higher than that.Ī business that uses a service like Amazon FBA can sell their products to customers all over the country, and possibly internationally. While the minimum amount for economic nexus differs from state to state, it starts at $100,000 in sales or two hundred transactions in a year. They may have “economic nexus” once their sales hit a certain minimum amount. Out-of-state businesses could have physical nexus with a state where they store inventory. A business that provides taxable goods or services andĪ business automatically has “physical nexus” with the state where it is located.In the context of sales tax, it means a connection between:
The word “ nexus ” simply means a connection or link between two or more things.
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