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Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Consumer Protection Law
Satisfied Customers: 116736
Experience:  Attorney experienced in commercial litigation.
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Online Selling via Amazon & Ebay. Do you collect sales tax?

Customer Question

Online Selling via Amazon & Ebay. Do you collect sales tax? I use amazon Fulfilled which means I send the product to amazon warehouse located outside my state. They sell the product on my behalf. Many times amazon reshuffles the products to different warehouse
in different states without my knowledge. So are online sellers required to collect and pay sales taxes in every state my product sales? What is Nexus?
Submitted: 2 years ago.
Category: Consumer Protection Law
Expert:  Law Educator, Esq. replied 2 years ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
No, you as seller does not have to pay sales tax in every state you make sales. You have to collect and pay sales tax if you sell to anyone in a state where your business is actually located. However, the liability for sales tax in states other than where you are located is actually on the buyer to claim and pay (like that ever happens as it is impossible to track) and some states have forms for buyers to fill out and submit sales tax on their internet purchases.
Customer: replied 2 years ago.
What about this scenario. I send my good to amazon warehouses which are in different state. Now as per online argument on this, one philosophy says that because my goods are stored in a state, I am physically doing business in that state. Amazon is just doing shipping/handling on my behalf while the actual goods are still my ownership while it is stocked in the warehouse.Also this site like Taxjar.com claims they do taxes for amazon sellers etc.I got your point and i agree with you. But i would like to know your thoughts on such debate going on. Can you shed some more light on this. Any irs document or reference I can do some reading for my learning? Appreciate your response. thanks
Expert:  Law Educator, Esq. replied 2 years ago.
Thank you for your reply.
This has been a huge debate and it is typically the states who are greedy for tax money complaining about the taxes being due. However, it is impossible for a seller who is sending sales to all 50 states to file 50 sales tax returns. It is therefore held even by the courts that the payments are due from the buyer in those events.
You have no clue what warehouse your product is shipped to before it is shipped to a customer and you have no way of knowing the customer is in a state where the package will ship from, it is really an impossible feat for not only the states to keep track of, but for the seller to keep track of as well.

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