Last month, Amazon announced it would begin collecting eCommerce sales tax for its third-party sellers in Pennsylvania in April. This follows a similar decision made last fall to collect third-party sellers sales tax in Washington, the eCommerce behemoth’s home state. This might seem like great news if you’re an Amazon seller and you sell into either of those states – after all, this means the burden of sales tax collection is officially off your hands, right?
Well…sort of. Here’s what you need to know:
Washington implemented a Business and Occupation tax. What’s that?
Washington does not have an income tax, so the state generates tax revenue in other areas, including a business and occupation (B&O) tax. The Washington B&O is measured on the value of products, gross proceeds of sale, or gross business income. The tax does not apply to operational expenses like labor, materials, or other costs of doing business.
The B&O tax applies to remote sellers who do not have nexus in Washington, but generate more than $285,000 in sales or over 25 percent of their total yearly gross receipts by selling into the state.
Will Amazon file B&O tax for me?
The short answer is, “no.” While Amazon will handle third-party sales tax collection and remittance, it has not decided to cover B&O tax, as well.
Businesses who file B&O tax and have their Amazon sales tax fulfilled by Amazon still need to fill out returns if they sell on other channels or if they pay B&O. These filings will indicate that the tax paid by Amazon on their behalf is a deduction from their overall tax statement. The good news is these businesses will not owe any payments; they just need to complete the filing to make everything work.
But filing can be a major hassle and can consume company resources and time. When handled internally and manually, it can leave businesses prone to unknowingly committing errors and placing themselves at risk of being audited or incurring sales tax penalties. This is particularly true of new or smaller eCommerce sellers.
What can your business do to simplify filing and reduce the risk?
Automate your sales tax filing and eliminate time consuming manual processes with Taxify by Sovos.
Sales tax filing can be tricky and complicated, especially if you sell into or have nexus in multiple states. Take the burden of compliance off your team with Taxify by Sovos.
Taxify automatically extracts data from all your transactions in the Amazon seller central platform. The AutoFile team then takes your data and plugs it into the correct forms with up-to-date rates, and submits your filings to the appropriate tax authorities.
Using Taxify to file your B&O tax returns in Washington will allow you to report your total revenue to the state, correspond with the numbers Amazon reports, and file and pay your B&O tax automatically.
Perhaps most importantly, Taxify helps you stay on top of any new regulatory updates or rate and form changes that states like Washington may impose in the coming months and years.
Sales tax regulations are constantly evolving and growing more complicated. Find out how Taxify takes the burden of tracking all these new developments off your plate.