Set Up Amazon to Collect Sales Tax
Now that you’re registered to collect and remit sales tax in the appropriate states and received your sales tax permit number (this can take a few weeks), you’re ready to set-up Amazon to collect sales tax. (Whoot for compliance!) Amazon makes it easy to get your account set up and ready to go. Follow the steps below and if you have trouble, feel free to reach out!
STEP 1: Log-in to Your Amazon Seller Central Account
STEP 2: Navigate to the Tax Settings Page
Hover over “Settings” in the top right and click “Tax Settings” (Note: If you don’t see “Tax Settings” as an option, you’ll need to upgrade to an Amazon Pro-Seller (Professional) account)
STEP 3: After Reading Amazon’s Terms and Conditions Select ‘Continue’
STEP 4: Explore Tax Rate Codes
On this page, you won’t need to take any immediate action, but you should explore the different tax codes and begin taking note of what you think might be applicable for your products. If you have several products, organizing a spreadsheet with the tax-code of each item can help you stay organized. Select ‘continue’ (bottom of page) once you have a good idea of which tax codes your products might fit into. If you have questions about which tax codes to use for each of your products, we recommend that you reach out to a licensed professional, but most of the time it’s pretty straightforward.
STEP 5: Set-up Your Tax Collection Settings
This is the last leg of the heavy lifting for this phase. On this page, you’ll specify tax rates, tax collection preferences, and your state registration numbers (hopefully this is still handy from Step 2). To help you get through this beast of a page, we’ve created an Amazon Tax Settings handout to give you our recommendations. Download the guide to setting up your amazon tax collection settings here, but remember, these suggestions are general. Consult with a tax professional if you have specific questions.
Important: Make sure to only enable sales tax collection in states that you’re registered in. Collecting sales tax in states you don’t intend to remit to is considered tax fraud.
STEP 6: Specify Custom State Tax Rates (optional)
If you decide to collect a flat tax rate for all taxable products in a state instead of specific jurisdiction rates, you can do that by entering the value in “Custom Rate %” section. However, we don’t recommend you use a flat rate and just leave these boxes blank.
STEP 7: Celebrate!
You’re finished setting up your Amazon account. Not too bad, huh? You’re now ready for to fill-out a sales tax return.
After you’ve registered for sales tax permits in states where your business has sales tax obligations, it’s time to collect and remit sales tax. Read this blogpost to learn how.
Amazon gives you quite a bit of flexibility when it comes to tax settings which can be a bit overwhelming. We created this guide to help you fill out the Amazon tax settings page without spending too much time.