Calculating sales tax for Amazon sales involves several key steps to ensure compliance. Here’s a detailed approach:
Determine Nexus: First, assess your nexus (physical presence) in states where you conduct Amazon sales. This determines your obligation to collect sales tax.
Product Taxability: Understand the taxability of your products in each state. Different items may be taxed differently or exempt.
Use Tax vs. Sales Tax: Differentiate between sales tax (collected from customers) and use tax (paid by the seller when sales tax wasn't collected).
Register for Sales Tax: Register for sales tax permits in states where you have nexus. This can often be done through the respective state’s Department of Revenue or Taxation website.
Tax Calculation Software: Utilize
Amazon sales tax calculation software like Avalara or TaxJar, which automate tax rate lookup and ensure accuracy across different jurisdictions.
Filing and Remittance: File sales tax returns regularly, typically monthly or quarterly, and remit collected taxes to the appropriate tax authorities.