Amazon Sellers Face Huge Tax Liability
It has become common for people in United States to prefer online shopping over visiting brick and mortar shops due to their busy schedule and shortage of time. The US retail market has observed a prominent shift from the regular shopping methods and has estimated by research that from the total amount of 7 dollars spend by each customer; 1 dollar is spent on online sales market. Amazon, being one of the largest suppliers in the online market, has provided online retailers with the facility of storing, packaging and delivering the product safely to the customer. But the point to note here is that Supreme Court has exempted the online retailers from sales taxes in a state where they have no office. This has proven to be an advantage over the brick and mortar shops.
However, in the previous year, most of the states have appealed against this law. The states have claimed that all out-of-state business must collect sales taxes from the customers present within the state as the Government and other businesses relying on the tax revenue are suffering a loss due to reduction of sales tax money. Their strong appeal in South Dakota vs. Wayfair made the court to reconsider the law. In April 2019, the State of California passed the law AB 147 compelling the all the out-of-state online retailers to obtain sales tax and have ordered Amazon to collect sales tax from the customers for the third party online retailers.
This law is acceptable as every state has the right to take measures for its development. However the California Department of Tax and Fee Administration is wrongfully forcing all the small out-of-state businesses to pay for the sales tax that operated through Amazon's program "Fulfilled by Amazon" in California by applying huge penalties and interest. This is entirely unethical keeping in mind the fact that all online retailers were acting along the rule of that time period. It is impossible to even think of approaching all the old customers of California to now pay the sales tax on any product they purchased months ago through third party retailer on Amazon.
Amazon has been collecting taxes from the Californian customers ever since it has inaugurated its first fulfillment center in San Bernardino in 2012, however Amazon did not compel its third party retailers to collect taxes from California customers, it was solely the retailer's personal decision. The retailer also has no say in where Amazon stores their product for further transport, thus making the online retailer suffer the loss of sales tax if their product is stored in California, which is totally ridiculous. The Governor Gavin Newsom should listen to the State Treasurer Fiona Ma who said on her statement that out-of-state retailers must not be penalized for a facility they availed at the time it was available to them. The Governor must focus on the future enforcement of the law rather than unfairly charging the online businesses to pay sales tax on their products sold through Amazon's program in previous years.
Comments are closed.
Contact Us to learn more about The Starren Group and how we can help you leverage Amazon to grow your business.