Amazon Sales Tax

As an Amazon seller, you generally won’t need to collect or remit sales tax yourself if you sell exclusively through this platform, as Amazon is now required to automatically handle this tax in all states that charge it thanks to Marketplace Facilitator Laws.

However, this doesn’t mean you can completely ignore your tax obligations, as there are a number of situations in which responsibility for it can actually shift back to you as the remote seller.

On top of this, you may also need a seller’s permit for reporting reasons in your home state (and possibly even others) — though this is highly dependent on each state’s specific regulations. 

In this comprehensive Amazon Sales Tax guide, we’ll examine when Amazon will handle this tax on your behalf — and when you may need to take action — to ensure you remain compliant as you run your business.

Does Amazon Collect Sales Tax For Sellers

The short answer to this question is yes, in almost all cases.

Thanks to Marketplace Facilitator Laws, the burden of handling sales tax is shifted to Amazon from third-party sellers using its platform in all states that impose sales tax. 

As such, this now means Amazon is responsible for:

• Calculating the correct sales tax for each of your transactions
• Collecting this tax from your customers
• Submitting the collected tax to state authorities

While these features were previously only limited to sellers with a Professional account with Amazon, the recent release of Marketplace Facilitator legislation made it available to all sellers on the platform as standard.

This allows you to just focus on pricing your products without worrying about sales tax calculations; Amazon simply adds the appropriate tax on top of your listed prices automatically, so it doesn’t even affect your profit margins.

You can find this information in your Amazon Seller Central account by navigating to the “Reports” section, then “Tax Document Library”, and then “Sales Tax Reports”.

Do You Need a Sales Tax Permit

While Amazon will likely be fully responsible for the collection and remittance of your sales tax, you may still be required to obtain a sales tax permit and potentially even submit a tax return.

If you’re selling on Amazon, you’ll could be required to obtain a sales tax permit in two key situations:

• Home State: It’s a common requirement for businesses to need to obtain a sales tax permit in their home state — regardless of your sales volume or whether Amazon handles tax collection — though this is highly dependent on your state’s specific regulations.
• Fulfillment by Amazon (FBA): If you use FBA, you might also need permits in the states where Amazon stores your inventory in their warehouses, as most states view this as sufficient for establishing the physical presence that triggers a sales tax “nexus”.

While Amazon will take care of sales tax collection for you, some states will also require you to file a tax return (typically on a quarterly basis) if you have a sales tax “nexus” in them, whether this is triggered by physical presence or economic activity. 

Be aware that you won’t owe anything if you need to submit these returns — you’ll just need to indicate your sales taxes are being collected by a Market Facilitator and the State Tax Department will treat the taxes that Amazon has collected as a deduction.

While not all states will aggressively enforce a requirement for seller’s permits — especially if your business isn’t sizable — by not following these rules, you’re running the risk of exposing yourself to audits, fines, and other penalties.

Note: Since the handling of sales tax can vary so greatly from state to state, we always recommend contacting your State Tax Department to determine your specific obligations.

When Do You Have to Collect Sales Tax

While Amazon will almost always handle your sales taxes for you, there are a number of key scenarios when it could become your responsibility.

We’ve explored each of these exceptions in more detail below.

Sales Made Through Other Channels

The main way in which you might be responsible for handling your own sales tax obligations is if you sell your products through multiple channels — such as your own website or other smaller marketplaces.

This is because Marketplace Facilitator Laws only cover transactions made through platforms considered to be “qualified marketplace facilitators” (e.g., Amazon, eBay, Etsy, etc).

As such, if you sell the same product on both Amazon and your own Shopify store, Amazon will handle sales tax for purchases made through their marketplace, but you would be responsible for calculating, collecting, and remitting sales tax for orders placed through your Shopify store.

In this scenario, it’s particularly important that you keep accurate records to distinguish between Amazon and non-Amazon sales, as you’ll need to demonstrate which transactions were handled by Amazon and which ones you’re responsible for when filing your tax returns.

Sales In Other States

Another important consideration to bear in mind is that Marketplace Facilitator laws are only applicable in states that charge a sales tax.

While Amazon handles sales tax collection in most states, there are five states — known as the NOMAD states — that don’t charge a standard sales tax:

• New Hampshire
• Oregon
• Montana
• Alaska
• Delaware

However, this doesn’t always simplify your tax obligations if you make sales in these states — it can actually do the opposite. In Alaska, for example, many localities still charge their own local-level sales taxes, each one with differing rates and specific requirements.

As such, you would need to painstakingly research and comply with each locality’s specific tax rules and maintain separate records for transactions in order to remain compliant in these jurisdictions, as Amazon won’t handle it for you.

Note: Given these highly specific local requirements, we always recommend consulting with a tax professional to ensure your business remains compliant in these jurisdictions.

Sales In Foreign Countries

As a piece of US legislation, Marketplace Facilitator Laws only apply to purchases made by customers within the US — meaning you could be responsible for equivalents of sales tax in foreign countries if you sell to international customers through Amazon.

While Amazon does offer automatic tax collection services, this is only available in the following regions:

• United States (sales tax)
• United Kingdom (VAT)
• European Union member states (VAT)

As such, for sales made in all other countries, it will be your responsibility to identify and calculate the applicable taxes, set tax-inclusive prices, and then remit these sums to the appropriate authorities.

Note: If you think you may be liable to collect and remit this tax, be sure to check out our detailed Sales Tax Guide to find out how to do this.

Amazon Sales Tax FAQs