The Battle for Sales Tax Nexus–Part 1

You may have found Amazon affliates billing sales tax on your purchases or you may be scratching your head at the many screens a vendor must fill in to use the Amazon affiliate program. What has changed? The dynamics of the markeplace has changed. Sales tax and use tax account for more than 30% of statewide gross revenues says one interstate sales tax reporting service. There have been recent landmark test cases, and the states are auditing more aggressively to further develop test legal precident since the Federal congress folks did not act on proposed standardization of sales tax.

I was taught that Colorado has already hired over 100 sales tax auditors and Wisconsin has budgeted 111 for 2016 sales tax auditing. Most states and localities have a handful of auditors and dream of change. It is lucrative to challenge end user interstate purchasers for use tax and then double collect from the out-of-state vendor who had incurred nexus, i.e. the responsibility to collect the tax originally. Business owners will not be challenged until 3 years of past liabilities, interest, and penalties can be accrued efficiently by auditors.

As an affiliate seller on Amazon, you may be billed by one or more of the 1300 sales tax districts where your inventory was temporarily stored and nexus sales tax reporting responsibilities assign the tax liability directly to you. As an informed seller or buyer, it is your responsibility to ask questions and to research nexus.

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