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Amazon discloses vendor information to Massachusetts Department of Revenue

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Based on the 1992 precedent of Quill Corp v. North Dakota, the U.S. Supreme Court requires that a taxpayer must have a physical presence within the state in order to have sales tax nexus and be liable to collect and remit sales taxes. In Massachusetts, owning or maintaining an inventory in the state creates sales tax nexus which means that vendors are subject to sales tax on all of its Massachusetts sales. 
Vendors using fulfillment by Amazon may have a sales tax liability risk
 
In the light of Massachusetts’ efforts to collect sales tax on internet sales, Amazon has been directed to hand over information regarding any third-party vendor who stores/had stored tangible personal property in Amazon’s Massachusetts fulfillment centers. The following information has been disclosed to the Massachusetts Department of Revenue (Amazon sent a memo to its sellers using fulfillment by Amazon wherein this was announced):
 
  •  Contact information (name, address federal tax ID number, phone number); 
  • Estimated value of the seller’s inventory in Amazon’s Massachusetts fulfillment centers, calculated based on the seller’s selling prices in late 2016 and 2017.

Amazon collects sales taxes in all states if the transaction is a direct Amazon sale, but will in most states not do this when it only facilitates the sale on behalf of third-party vendors. A sales tax liability risk may thus exist for vendors using fulfillment by Amazon as they are considered to own or maintain inventory in the state. 

The Massachusetts Department of Revenue may use the data provided by Amazon to ask sellers further details about their inventory and/or sales in the state, or even pursue uncollected taxes from them. Although it is currently only Massachusetts who has directed Amazon to provide marketplace seller data, other states may follow in the future.

 

This article only includes general information and IMS is not, by means of this article, rendering any tax, legal or other professional services. This communication should not be relied upon for any decision or action that may have an impact on your business. Prior to taking any action, you should be in contact with your advisor.

 

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