In this post you’ll discover why and how we decided not to participate in the Amazon tax amnesty program. Below you’ll read in story form and my current comments are bolded.
If you want the short version here are steps to help you decide:
- Tax amnesty application deadline passed (it’s too late to apply). Check the Multistate Tax Commission website for updates on amnesty program.
- Pull sales reports and categorize by state.
- Analyze possible liability for each state. Here’s a list of states and their rates.
- Apply for sellers permits as an out of state business in each of the top earning (no locations within the state but have distribution center).
- Update Amazon seller central product tax information for the 5-10 states (to collect sales tax).
- File based on required frequency (to pay use tax).
- Look into services like tax jar which can help you document and file.
Story and correspondence starts here:
It was the 32nd email and approximately ten days into October. He’d been nagging me about this for months and always revert to the decision we made early on. “Let’s wait until states make laws we need to comply with.” I could feel his tensions growing stronger with each email communication. Tony, my business partner, reached out to groups of friends with Amazon businesses who gave him the same, “I don’t know what we’re going to do, here’s some resources we’re looking into” type response.
Tony was finding no comfort in these answers, if you can imagine. He’d forward them to me with a note, “Look, everyone’s freaking out, no one knows what to do.” All I could do was laugh, it didn’t seem like anyone but Tony was near mental meltdown about tax amnesty. Tony sent some emails to our CPA, who hadn’t responded to him in 72 hours, threatening our CPA be fired. Because Tony spent months frantically worrying about the issue that was closing in on decision time, 72 hours without a response seemed like a long time. I don’t take well to threats (to myself or anyone else) so I stepped in.
The Back and Forth
“I believe this whole tax amnesty is a fear marketing tactic to get amazon sellers to pay 23K (the amount Tony estimated to pay someone to handle this situation for us) or more for services they don’t necessarily need.
“LOLs”, was Tony’s response. This is why we’re such good partners. But I was on a roll and wasn’t finished yet.
“Typically fear = lack of knowledge/information. You think this whole tax amnesty is so difficult and complicated because you don’t understand it. I was unclear about tax amnesty and that it was different from use tax filing. I’ve been doing it (filing use tax) for many years and theres a system/process that makes it all really easy. I’m about to record and pay use tax owed for California within the next couple days. Where’s your consistency? How come you never freak out over California tax? California isn’t feeling the love. It feels left out.
“We don’t need our accountant, our CPA, our friends to make this decision for us. Let’s review our own sales information to make the decision.
- New Jersy
- North Carolina
- Rhode Island
- South Dakota
- Washington DC
- The application had an err of “After submitting you’re giving us consent to audit and collect for up to 7 years in the past.”
- Majority of sales were in only 4 of the states.