California Amazon Sellers Received Binding Legal Agreement
California Amazon Sellers have received very bad news this week. Amazon has received a valid and binding agreement from the California Department of Tax and Fee Administration (CDTFA) to turn over the seller’s business information. This is game over for Amazon FBA sellers.
Here is the full email sent by Amazon to sellers on October 23rd, 2018:
Amazon has received a valid and binding legal demand from the California Department of Tax and Fee Administration (CDTFA) requiring that Amazon disclose the following information about your business in 2017:
• Contact information (name, address, and email)
• US Taxpayer Identification Number
To comply with our obligations under the law, we plan to provide this information to the CDTFA by November 6, 2018. In many cases, sellers who register and file taxes in California already provide information on their Amazon business as part of their tax filings. Because each seller’s business and tax needs are unique, we encourage you to consult with a tax advisor to answer any questions you may have.
You also may refer to the following resources in Seller Central:
• Solution Provider Network, a directory with information about several tax advisors: https://sellercentral.amazon.com/gp/help/external/G201687890.
• Tax calculation services, optional services for calculating U.S. sales and use taxes: https://sellercentral.amazon.com/gp/help/G200787660.
Thank you for selling on Amazon,
This is a problem as we predicted.
The UK government took matters into their own hands with Amazon and now the states are doing the same. This has started with the biggest and most aggressive states, including California, and sellers can expect it to continue.
What does this mean to you, as a seller?
It means that first, you as a California Amazon Seller are not likely to take advantage of a Voluntary Disclosure Agreement (VDA). Learn more here. The VDA will help shorten the statute of limitations from 8 to 3 years. As well as this, it will waive potential penalties on past sales and late fees on returns. California will have your name and information by November 6th. However there may be an exception we are not aware of but currently, this looks to be a problem.
How to Move Forward:
California Amazon Sellers have two choices, either register for sales tax and get into compliance or wait to receive a letter and run the risk of additional penalties if you wait for the state to reach out to you. If you don’t receive a notice from California after November 6th, don’t assume you will not receive one. California may decide to sit on the list and decide what time is best for them to do a mass mailing to sellers. If you have not filed any sales tax returns, there is no statute of limitations.
Either way, at the end of the day, California Amazon Sellers must get into compliance with sales tax, or consequently, they will suffer repercussions with a trail of sales tax notices and demand letters. California will not likely be the last state to take this approach. It is time to get into compliance with sales tax.