Insights: Article

Sales Tax Reform: Amazon Fulfillment Services Creating Confusion

By Laura Robichaud, David Casper

February 20, 2019

Since the U.S. Supreme Court’s Wayfair decision, many states have made changes to existing nexus laws or created new laws to address the decision. These changes are having an impact on many businesses operating across state borders physically or online. We continue to hear stories about problems that have developed after the Wayfair decision and are expanding our work with clients related to their new sales tax filing obligations, as well as clarifying where nexus may have been established under the new sales tax reform rules.

Amazon Fulfillment Concerns
Some business owners use Amazon to fulfill orders. This could mean inventory is being stored and shipped from warehouses across the United States, creating the potential for nexus in multiple states. If you sell products online that are being fulfilled by Amazon, completing a Sales Tax Risk Assessment is a good way to determine your exposure. Where you’re storing inventory, and shipping from and to, could create nexus depending on state threshold laws for either volume of sales or number of transactions. It’s important to know where you currently have inventory being held or shipped to, especially when working with Amazon or similar outlets.

Online Sales Thresholds
For other companies that sell products both in stores and online, they must take a look at online sales and which states have a threshold requirement. Meeting a minimum threshold requirement will create nexus and add filing obligations.

Employees Creating Nexus
Another benefit of a Sales Tax Risk Assessment is to determine sales tax exposure if you use employees to make sales in different states. If you have employees in certain states going door to door and making sales, you create physical nexus through the presence and activities of those employees. But, understanding the rules of using sales-type employees will help you to understand the limitations, thereby allowing you to adjust your operations as needed.

There is no unification on the state sales tax laws, which can make sorting through them frustrating, confusing and time consuming. Contact your Eide Bailly professional or a member of the State and Local tax team to learn more and/or to request a Sales Tax Risk Assessment.

Latest Insights

January 8, 2019
Article
States are taking an aggressive approach to sales tax and remote sellers after last year’s Supreme Court decision. Are you in compliance?
January 8, 2019
Article
New Propositions C and D affect those doing business in San Francisco. Are you impacted?
January 7, 2019
Article
The Colorado Department of Revenue has radically changed the sourcing rules for sales tax purposes, and the collection requirements for retailers have been greatly expanded.
January 7, 2019
Article
The recent US Supreme Court decision that overturned Quill in the South Dakota v Wayfair case has many states making or considering law changes related to sales tax compliance for out-of-state sellers.
January 4, 2019
Article
Connecticut has passed a law taxing passthrough entities to help offset federal tax deduction limitations, but how will it work?
January 3, 2019
Tool
The 2018-2019 Pocket Tax Guide provides a quick view of tax updates, current rates and new tax law summaries for business, estate, general and individuals. It has been designed to be compact and folded into a pocket sized pamphlet.
Find A Location