First Massachusetts, now California…

Amazon indicating they are turning over FBA Seller information to California.

Fulfillment By Amazon(FBA) Vendors recently received an email notice from Amazon that their information will be turned over to the California Department of Tax and Fee Administration (CDTFA):

Amazon has received a valid and binding legal demand from the California Department of Tax and Fee Administration (CDTFA) requiring that Amazon disclose the following information about your business in 2017: 

• Contact information (name, address, and email) 
• US Taxpayer Identification Number

To comply with our obligations under the law, we plan to provide this information to the CDTFA by November 6, 2018. In many cases, sellers who register and file taxes in California already provide information on their Amazon business as part of their tax filings. Because each seller’s business and tax needs are unique, we encourage you to consult with a tax advisor to answer any questions you may have. 

About a year prior, the CDTFA send FBA Sellers a letter saying:

“We received information that indicates your business may use fulfillment by Amazon services for sales you make over the Internet. As such, if you have inventory that is stored in fulfillment warehouses in California for delivery to consumers in this state, you are required to register with the California Department of Tax and Fee Administration (CDTFA), file sales and use tax returns, and pay tax on sales to consumers in California (Revenue and Taxation Code 6203).”

Now what?

Having your inventory in Amazon warehouses in California and other states where Amazon has an FBA warehouse creates a physical presence nexus and thus an obligation to license, collect and remit sales tax for those states.

Determine: When did you first have inventory in CA? 

If CA contacts you for an audit, they can go back 8 years for an unlicensed vendor.

I believe Amazon had a warehouse in California starting in October 2012 so would limit and audit that started now to 6 years.

Voluntary Disclosure Agreement?

If a State hasn’t contacted you, you can often get the benefits of participating in a Voluntary Disclosure Agreement.  If they contact your first, you are subject to their standard lookback for an unlicensed vendor.  Some states can and do go back to day one of business in their state.

The longer the period of time you’ve had inventory in a state, the more a Voluntary Disclosure Agreement will be of benefit.  Under a VDA, California limits the look back to 3 years so that’s a reduction of half of the 6 year audit potential since the first warehouse in CA opened.  CA also agrees to waive the 10% penalty waiver.

Other states offer similar VDA programs.  A lookback of 3 – 4 year is common, but Nevada also goes back 8 years.

If you’ve started selling through Fulfillment By Amazon in California or other states recently, there are other options too.

Will more states press Amazon to provide FBA Seller information?  It seems likely.

If you’re ready to minimize the liability and resolve things, we can to help.