Do UK sellers need to pay US tax on FBA stored in the USA
A Tamebay reader emailed in a question asking “I was recently at an Amazon masterclass and the subject came up of paying US tax on FBA on Amazon.com. Do UK sellers need to pay US tax on Fulfilment by Amazon (FBA) stock stored in the USA?”
Dan and I are no tax experts so we turned to Chris O’Shea from Meridian Global Services and this is his answer:
Sales tax is imposed by state and local jurisdictions on retailers for the privilege of selling tangible personal property (TPP) and certain services in that jurisdiction. Forty five states and the District of Columbia impose a sales tax on retail sales of TPP and certain services. To complicate matters there are exemptions and non-taxable items. The burden of administering sales tax is the responsibility of the seller. If the seller has established nexus (usually a physical presence) within a jurisdiction the seller is required to collect and remit the tax.
For UK and European sellers, it is very important to firstly determine if your company has nexus in the US. One of the most common ways in which nexus is established is through storing TPP in a warehouse or fulfilment centre (inventory/stock) and making retail sales with that TPP. This is the situation with using FBA in the US. If this is the case, you will have to charge tax at the correct rate on these sales and remit this tax to each of the correct authorities. Unlike the Value Added Tax, Sales or Use Tax is imposed only at the retail level (to the end user).
Sales and use tax registrations are mandatory if the seller has nexus within a jurisdiction. Tax registrations are required in most states before you can even start conducting business. To meet registration requirements, a business may need to register with the city, the county, and the state. Often the registration requirements will vary from one jurisdiction to the next. Failure to register with the appropriate governmental agency could result in fines, notices, and the inability to conduct business.
A sales tax registration number is the first step in the sales tax collection and remittance process. A seller cannot charge or collect tax without this number. Sales Tax compliance is a time sensitive function with state and local mandated filing requirements and deadlines. The tax needs to be reported and remitted to the proper state or local jurisdiction at the right time.
Meridian assists sellers with their sales tax compliance obligations in the USA and Canada. They assist sellers in determining their registration liabilities and provide them with all the required compliance activities.
Many thanks to Chris O’Shea for the above answer. If you still have questions or want more information contact Meridian Global Services or download their US Sales and Use Tax Fact Sheet for eCommerce.
You can telephone Meridian on +44 (0)20 8601 4600 or via email at firstname.lastname@example.org
Lets say that my goods are stored in Amazon’s FBA warehouse in CA….now I make a sale via FBA where my item from CA is sold NY…Do I charge Sales tax at the CA or NY rate?…and then submit that tax to the NY tax authorities?
Does this mean that if I store goods in FBA warehouses in USA, in order to reach the whole US market I would need to register with each individual state (who have their own respective sales tax rate) and submit sales tax returns to each?
Do I just collect sales tax in the state where my good are being stored in regardless of which state the customer is based in?
Can Tamebay ask an independent tax adviser the same question? Because I have and I received a different answer.
With all respect to Meridian, they obviously have an interest in telling sellers they’re liable for Sales Tax.
Can we get real independent advice Tamebay?
Chris and Dan – I really want to hear from you on this one
I find Meridian quite expensive, try to sell you coal for the price of gold….when explaining things to you, make it sound complex and then relieve the complexity by saying…”well we can sort that out for you for this tidy fee”….(and the tidy fee is quite high compared to the competition