It's a clusterfuck of epic proportions.
Let's say you use Amazon Fulfilment (FBA):
1. Does just storing goods in a state establish tax nexus in that state? Most states claim it does, but it hasn't been tested in court.
2. Assuming it does, Amazon keeps moving your goods between warehouses - how do you keep track which states do you have nexus in and need to have a business license in?
3. Assuming you figured it out, in some places you need to register per county, not per state (I believe it was 10+ registrations in one state, can't remember which). With all the locations with Amazon warehouses you're looking at 25+ licences. Possibly 40+.
4. Let's say you're willing to handle the 40+ business licences you're supposedly required to hold, you have to file 40+ tax returns with different deadlines, make 40 payments and keep track of law changes. Also you have to pay to get a business license and often you have to pay to keep it active every year.
5. Add being a foreign seller (let's say Canadian):
- out of all the states with Amazon warehouses only 2 will accept a non-us business address when registering for a business license. The others either don't allow you to select a country, require you to select a US state or only accept The One True Zipcode Format.
- taxes you remit using ACH will also routinely explode due to a non-US address on your US bank account.
- sure, you can file a paper registration (usually at 3+ times the registration fee), unless the state only accepts a XFA PDF form that generates a scannable code. One DOR representative told me the only way I'm getting a licence in that case is if I show up in person.
- government issued photo id is sometimes required. Guess which government often is the only one that exists ;-)
By comparison in EU you collect VAT per destination country, remit it to your local tax office indicating where it should go and forget about the whole thing.
Let's say you use Amazon Fulfilment (FBA):
1. Does just storing goods in a state establish tax nexus in that state? Most states claim it does, but it hasn't been tested in court.
2. Assuming it does, Amazon keeps moving your goods between warehouses - how do you keep track which states do you have nexus in and need to have a business license in?
3. Assuming you figured it out, in some places you need to register per county, not per state (I believe it was 10+ registrations in one state, can't remember which). With all the locations with Amazon warehouses you're looking at 25+ licences. Possibly 40+.
4. Let's say you're willing to handle the 40+ business licences you're supposedly required to hold, you have to file 40+ tax returns with different deadlines, make 40 payments and keep track of law changes. Also you have to pay to get a business license and often you have to pay to keep it active every year.
5. Add being a foreign seller (let's say Canadian):
- out of all the states with Amazon warehouses only 2 will accept a non-us business address when registering for a business license. The others either don't allow you to select a country, require you to select a US state or only accept The One True Zipcode Format.
- taxes you remit using ACH will also routinely explode due to a non-US address on your US bank account.
- sure, you can file a paper registration (usually at 3+ times the registration fee), unless the state only accepts a XFA PDF form that generates a scannable code. One DOR representative told me the only way I'm getting a licence in that case is if I show up in person.
- government issued photo id is sometimes required. Guess which government often is the only one that exists ;-)
By comparison in EU you collect VAT per destination country, remit it to your local tax office indicating where it should go and forget about the whole thing.