Most online sellers in the US find it difficult to understand the laws of the US sales tax. And it doesn’t get any easier for international sellers, either.
But Infinity22 is here to explain the requirements for non-US residents to pay for Amazon FBA and US sales tax.
We are an experienced eCommerce business advisory agency, helping our clients by creating a healthy finance function, minimizing tax and compliance issues, and implementing the best business strategies.
Basics of US sales tax
The US doesn’t have any national sales tax. Instead, every individual state decides the percentage of sales tax that you need to pay.
Before you know the requirements to pay US sales tax for non-US residents, you need to understand the sales tax nexus.
A domestic company can establish a nexus in its state by providing a permanent address of its office or warehouse, details of customers who can vouch for the company, information of employees of the firm, dropshipping details, and inventory records.
Non-US sellers may establish a nexus in the respective state if they meet the categories below:
• If they live and run their business in the US but not a US citizen.
• If they live outside the US but have already established sales tax nexus in one of the states.
• If they live outside the US and don’t have any sales tax nexus.
How non-US residents can become sales tax compliant?
It is a challenging task to become compliant with the US sales task, especially if you are a non-US resident. But our experts at Infinity22 will talk you through the steps one by one so that you know what to do.
1. Determining your nexus
Our first step is to determine the states where you should have your nexus. If you belong to Amazon’s FBA program, we will check your Inventory Event Detail report to find out the states in which Amazon warehouses keep your inventory.
2. Registering for a sales tax permit
Every non-US seller needs to register for his/her company’s sales tax permit for the respective state. Most states would ask you to provide your Individual Taxpayer Identification Number to register for your permit. We can help obtain that number to streamline the registration process. This will allow us to fill out the sales tax forms and mail them to the nexus state.
3. Open a bank account
You need to open a US bank account to pay your sales tax every year. Most states accept Automated Clearing House transfers that require non-US residents to have a US bank account. You or your business representative must be present during the account opening.
Amazon FBA and US sales tax
The US sales tax considers e-commerce sellers as online retailers. It doesn’t matter whether you are a US resident or not. As long as you sell your products in the US, you must pay the state’s sales tax. For Amazon FBA sellers, there are two conditions to qualify for sales tax in a state:
• Sales tax nexus
• Product taxability
If you come within a state’s nexus, you will have to provide your Amazon FBA details, such as warehouse locations, seller origin, warehouse locations, and details of the business owner. Inventory nexus or product taxability, on the other hand, would require inventory details, information about roads for delivery, and public safety during the delivery of goods.
Now that you know all the requirements to pay US sales tax as a non-US resident, don’t hesitate to contact us to make this process easier. We will not only explain everything in detail but also help in filling out the documentation required to make you an authentic seller in the US.
Here at Infinity22, we are ecommerce and digital business focused accountants click here to book a free discovery session. BOOK HERE
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