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Physical nexus for Amazon sellers

By / In US SALES TAX / February 12, 2024

Storing goods across various states through FBA can complicate sales tax obligations for Amazon sellers. This article explores these complexities and offers guidance on determining sales tax nexus in different scenarios.

 

When you sell via Amazon FBA that means that your goods are stored in Amazon warehouses. Generally speaking, when a seller stores goods in the territory of a State that means this seller has physical nexus in this state and needs to register for sales tax. However, some states made exemptions for sellers who only sell via marketplaces. If Amazon or other Marketplace is responsible for the sales tax collection on merchant’s sales in a state physical nexus may not lead to an obligation to register for sales tax.

Further, you can see a table where storage in the FBA warehouse doesn’t lead to registration.

However, when you start selling in the US Amazon you don’t know where your goods will be stored by Amazon. Just place your first order and you will see the final destination of your goods in the FBA warehouse and you will have around 30 days to register for sales tax.

Table: Physical nexus for Amazon sellers

State Can Amazon sales only create Economic nexus? Amazon FC creates Physical Nexus?
Alabama  No No
Alaska  No No
Arizona  No No
Arkansas  No No
California  No No
Colorado  No No
Connecticut  Yes Yes
Delaware  No sales tax No sales tax
District of Columbia  Yes No
Florida  No No
Georgia  No No
Guam No sales tax No sales tax
Hawaii  Yes Yes
Idaho  No No
Illinois  No No
Indiana  No Yes
Iowa  No Yes
Kansas  No No
Kentucky  No Yes
Louisiana  No Yes
Maine  No Yes
Maryland  No No
Massachusetts  No No
Michigan  No No
Minnesota  No Yes
Mississippi  No No
Missouri  No No
Montana  No sales tax No sales tax
Nebraska  Yes Yes
Nevada  No Yes
New Hampshire  No sales tax No sales tax
New Jersey  Yes Yes
New Mexico  Yes Yes
New York  No No
North Carolina  No No
North Dakota  No Yes
Ohio  No No
Oklahoma  No No
Oregon  No sales tax No sales tax
Pennsylvania  No No
Puerto Rico  No sales tax No sales tax
Rhode Island  No Yes
South Carolina  No No
South Dakota  Yes Yes
Tennessee  No Yes
Texas  No No
US Virgin Islands No sales tax No sales tax
Utah  No Yes
Vermont  No No
Virginia  No No
Washington  Yes Yes
West Virginia  Yes Yes
Wisconsin  No No
Wyoming  No Yes

If you see that your goods are stored in a state where you need to register, you can order a sales tax registration. As soon as Amazon remits sales tax from your sales your sales tax returns will be with zero amount of sales tax due. With Lovat–Amazon integration you can set an auto-pilot regime when your sales tax return data will be auto-uploaded and submitted to a relevant tax authority.