I decided to get compliant in 2016 and collect sales tax not only from my home state of California, but from the fourteen other states where I have Nexus. That means the states where my inventory for Fulfilled By Amazon (FBA) sits waiting for Amazon sales. If you shop on Amazon you’ve seen “Sold by Amazon” or “Sold by AnneZ and Fulfilled by Amazon” and you will be offered FREE SHIPPING if you are a Prime Member. If you buy from a third party merchant a note will say “Not eligible for Amazon Prime” and you will have to pay for shipping.
Which ever way you buy, some merchants are now charging sales tax on purchases. It hasn’t happened across the board yet, but believe me, it’s coming. Who really knows when, since there are groups on both sides of the issue lobbying Congress as I write this.
Many online sellers collect sales tax from sales to people located in their own states. More and more sellers are becoming compliant with their Nexus states. The rules also state that if you have Nexus on one sales platform, one should charge sales tax across all your selling platforms. I sell on Amazon AND eBay, so now I’m collecting on both venues.
Here is my progress report. As of December, TaxJar (a wonderful tool that I highly recommend) told me that I had Nexus in fourteen states. I was set for California and since my volume is not that high, I file my sales tax in July, just once a year. Sounds easy, but without TaxJar gathering info from all my sales (link once and they do the rest), they give me a step by step list of actions as well as a list of all sales in all the counties where buyers are located. That alone is worth the “price of admission”! Another option is to have a TaxJar setup auto-file for many of the states. That does cost an additional fee, but so far my sales numbers are small and it’s not too hard to do it on my own.
I received Tax ID numbers from all the fourteen Nexus states, filled in the rates of each state on the eBay tax table, checked the box to collect from those buyers and eBay is running smoothly in the background. I had two buyers send me a message of why if they were in Florida or Texas, did I charge them sales tax? I returned a quick explanation and they were fine.
Setting up the tax table for Amazon is a little different. The seller fills in their Tax ID for whatever states you have Nexus in, and Amazon will collect the sales tax for you. No calculations necessary. TaxJar imports that info and breaks it down into your Nexus states along with the date due for each filing.
At this point I have four monthly states, four quarterly states and the rest are yearly.
I have a paper file for each state set up and when I registered wrote everything down that they asked me and printed out the forms before sending electronically for almost all the states. Some required money, some were free. All have returned a form in the mail or I have downloaded my business license and Tax ID.
I began my Nexus across the board as January 1, 2016 to keep bookkeeping easy (except my existing California account) and have to date filed in four states, two by mail and two online. My grand total due was about $11 dollars collected and passed on by me to the states. More money than they had before!
The more often one files each state necessary, the easier it is to do. TaxJar has helpful step by step instructions as well as lots of answers for questions that come up. I also called South Carolina and Texas and spoke with very helpful people in their tax and finance departments about issues I had with log-ins on their sites and updating the Nexus date on file.
The downside is that each state’s website is different from each other. Most feel backward and outdated, asking redundant sign-up info, but it is do-able. I have also found out that there are people in the various online sales tax Facebook groups that will get you registered and help you file for a fee. I am a do it yourself kind of person and learn by doing, so it’s possible to do it yourself if you are so inclined. The best part is that TaxJar has all the info you need!
Using the Dashboard in TaxJar gives you info on each upcoming state, info on gross sales, taxed sales and tax due. They have a column “taxes you’ve collected” and “taxes you should have collected” so you can see where there might areas to tweak on collection rates. Many counties and cities have their own sales tax rates different than their own states, so on eBay when you fill out the rate you can only put one number in. Many set the rate a bit higher so they don’t under collect.
To recap, I have registered in fourteen states, set up tax tables on eBay and Amazon to reflect those states. The sales I’ve had since January 1st of 2016 reflect sales tax collection and in the four states that I’ve been required to file, all went smoothly and I’ve sent the appropriate money to each of those states. After two more months of the same, I will add the quarterly based states in April and hopefully be a little more confident in the processes involved. All I can say, is that I wouldn’t be able to do any of this without TaxJar by my side. Thanks TaxJar. You can try them out for free by using the links here.