So….sales tax. I signed up for TaxJar and realized I owe close to $400 to California…Yikes! And that’s just one state. Will I get audited?
So let me get this straight:
1. Register your business in each state that you have nexus in (inventory in amazon warehouse in that state)
2. Receive your state tax id for each corresponding state, then use seller central sales tax collection and enter in tax id and criteria for each state
3. Collect sales tax, then file timely with each state and pay the tax
Has anyone been audited before with sales tax? I’m sure there’s tons of sellers who owe thousands of dollars in sales tax and probably don’t even know it (sorry, not trying to scare anyone). But if you are going to sell FBA and have an actual business, this is something you have to do. Don’t wait like I did.
I don’t know of nor have I read of anyone getting audited over Amazon FBA sales tax nexus. I’m not saying you shouldn’t do it, but I’m saying the odds don’t appear to be very high. If there legally isn’t a nexus, by chance, you create one by collecting their taxes for every platform you sell on like Ebay and a website unless these are separate corporations like LLC or Sub S. There’s a lot of questions over this and Amazon isn’t pushing the issue because they see it as nebulous money grabbing. You MUST have a sales tax license for your own state, but these other ones.,..maybe not.
Also, you will be at a sales disadvantage to MF people and California is as much as 10.5% sales tax as I recall. People DO see that sales tax charge and we’ve lost a lot of sales over it having to reduce our prices to compensate. Just sayin
There isn’t a Nexus created, even in the terms of these *warehousing* articles to their own sate revenue laws, untilsomething actually ships from say a California warehouse to a California customer. Just because its in that state in a warehouse means nothing until there is a sale.
The CA State Board of Equalization has the right to look back through seven years of your documents. Pay now to avoid their insane 6% monthly penalty plus 6% late fee. During an audit, errors of over 20% are considered criminal. How do I know? I own a retail store in LA for twelve years. I’ve been audited by the IRS and SBOE. I run a tight ship. I recommend paying the taxes due, it’s the people’s money, not yours. FYI simply saying you don’t pay taxes can spark an investigation. Start now.
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