The Great Sales Tax Debate (1 of 2)

Chris McCabe and Paul Rafelson talk sales tax

Question: If Amazon owns the customer (they are not your customers as a seller) then why do Sellers pay the sales tax?

  • Image you walk into Walmart and buy a laptop, at the checkout they don’t charge you sales tax and say that they are a marketplace and you’re just using their checkout platform – Dell is the retailer and so they are not collecting sales tax
  • Amazon are putting jobs and warehouses on the table and States are not pushing Amazon to collect sales tax
  • It’s an interesting and disturbing situation

How to protect Amazon Sellers

  • It’s bigger than sales tax
  • Sales Tax is one point
  • When you’re FBA then States see you as having an income tax liability as well
  • Income tax returns is way more expensive than sales tax
  • And multiply it across the States
  • Cost of compliance can be over $100k
  • The cost of administering this tax is a huge drain

States back-taxing

  • California is back taxing by upto 8 years and going aggressively after Sellers
  • Amazon has only been collecting for 6 years
  • So sellers could end up paying more than Amazon are liable for
  • There’s a lot of paralysis – conflicting information is causing anxiety

Head in Sand and Ignorant? – What baby steps can you take

  • If you are concerned then consider a lawyer or tax specialist
  • Make sure they understand this area
  • Sellers that don’t know what to do about sales tax
  • Arrange your affairs to protect yourself from liabilities

Amazon is Bullet Proof right now

  • A case in Tennessee where a hoverboard caught fire and burned down the customer’s house
  • Even-though Amazon knew of the fault
  • The judge said they were not liable
  • Liability issues on consumer goods – the plaintiffs lawyer will come after you as seller because you are the low-hanging fruit compared to going after Amazon

Can’t get your head around it

  • There’s a political element
  • There’s a tax element
  • A Financial element
  • You have to educate yourself on taxes
  • Have to know what other states are doing – all have different rates
  • You want to get a service provider to deal with it like TaxJar


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