Amazon Collecting Sales Tax in WA Is Not So Great for FBA Sellers.
Following the introduction of the Marketplace Facilitator Tax, many sellers are under the impression that their sales tax problems are solved when it comes to transactions in Washington.
Sellers still need to register in Washington, and still need to file a sales tax return. The total sales will be reported, taxes paid by Amazon will be recorded as a credit, and any remaining tax (from sales through Shopify or Magento, for example) will need to be paid.
To make things even more complicated, Washington also has a Business and Occupation tax that applies to gross sales. This tax applies to every business with a physical presence or inventory stored in Washington State. It also applies to any business with sales in Washington State over $267,000 in 2017 (this changes to $285,000 this year).
The B&O tax is only 0.47% for most Amazon sellers, but it is not paid on your behalf by Amazon and needs to be paid with your annual tax bill.
The state is committed to tracking down sellers who fail to declare their gross sales and pay the B&O tax they owe. Whether you’re US-based or not, registered in Washington State or not, they are likely to find you and impose penalties. In fact, Amazon paying your Marketplace Facilitator Tax gives the state vital information about who is paying their taxes – and who is failing to do so.
Penalties for failing to pay can be up to 39%, and the state may even go back through transactions and apply penalties to all your Washington State sales for past years.