Amazon Sales Tax Matters
Amazon doesn’t report your Sales Tax collected to the State. If you do over $20K in sales and more than 200 transactions, Amazon will submit a 1099-K to the IRS.
Amazon doesn’t charge sales tax because only governments can levy taxes. Amazon has to comply with state tax jurisdictions.
Amazon Sales Tax Permit
You need an Amazon sales tax permit issued by states to legally collect sales tax on Amazon. Nearly every state with an Amazon warehouse now has a law that sellers who use Amazon and make over $20k sales must report Amazon sales on taxes.
The new laws forced Amazon to collect and remit sales tax for sellers on its marketplace. You can find sales reports with sales tax details in your seller account to report income.
Amazon Sales Tax Handling
Amazon collects sales tax on your Amazon sales and remits the tax to the state for you in all states that require sales tax. If you sell on other platforms that do not facilitate sales tax collection, you may have to collect sales tax, file sales tax returns, and pay sales tax liability on your own.
Sales Tax Nexus and Reporting
In addition to collecting sales tax from customers in states with a sales tax nexus, you must also report and remit sales tax to the appropriate tax authority. A sales tax nexus means that you have a significant presence in the state, and that you need to pay sales tax.
Understanding Amazon Sales Reporting
Amazon is required to disclose the entirety of its sales numbers to the IRS. If you meet certain criteria, Amazon will provide the necessary tax details to IRS and sellers. Keep in mind that Amazon charges 2.9% of each transaction in order to collect sales tax.
Amazon 1099-K Reporting
Amazon requires all professional sellers and all individual sellers with more than 50 transactions in a calendar year to submit their tax information. Based on the provided information, Amazon reports your account’s revenue each year to the IRS and to you.