Our Simple Sales Tax Calculator
Are you collecting and remitting sales tax as an e-commerce seller? If not, perhaps you are just started out and you have been told to focus on your sales first (makes sense) and get to sales tax later (which is OK as long as the numbers don’t get out of control).
Perhaps you are just not clear on how much it will cost to get your business into compliance with sales tax. You may realize that you are losing profits every day, but you still need a better handle on what it will cost to “ring the sales tax compliance bell”.
Cash flow is a common concern for any business owner. Figuring out where your cash comes in and where it goes out can become complicated. Add in sales tax, and you can quickly get lost in the haze. Our sales tax calculator can help clear things up.
We put together a simple formula to quickly give you an estimate of how much you might owe in a single state.
Sales tax rates may range from 5.4% up to 8.5%, penalties from 10% to 30%, and interest from 2% to 18%. Let’s take an average on each of your formulas.
Sales Tax: 7%
Simple Sales Tax Calculator (Sales Tax Owed Formula):
Your sales that will be subject to sales tax (per state) $_____
(The sales that will be subject to sales tax) x .07 (sales tax owed) $_____ = $_____
(sales tax owed) x .10% (Interest on sales taxed owed) $_____ = $_____
(sales tax owed) x .20% (penalties on sales taxed owed) $_____ = $_____
Owed in sales tax + interest + penalties in the one state $_____ =
$5,000 in sales subject to sales tax in one FBA state
$350 = $5,000 x .07 (sales tax owed)
$35 = $350 x .10% (interest on sales taxed owed)
$70 = $350 x .20% (penalties on sales taxed owed)
$455 = $350 + $35 + $70
Total sales tax, plus penalties and interest is $455. In our example, this is for only one state. As an Amazon FBA seller, you may have stock in 20 different states and if behind, that number could be 20 x $455 = $9,100 of which 20 x $70 = $1400 of potential penalties could be waived through filing a Voluntary Disclosure Agreement with the state.
Since June 21st, 2018, U.S. Supreme Court Case, South Dakota vs Wayfair, you now need to be concerned about the economic nexus and reporting states. Several were in play before this date, but this will trigger more and more states coming up with a sales level or unit of sales that will require you to collect and remit sales tax in all 45 states plus D.C. Now Amazon is collecting in 34 out of the 38 marketplace nexus states. This leaves only a few states where you may have FBA stock and need to collect and remit. Those include Florida, Georgia, Illinois, Kansas, Michigan, North Carolina, Tennessee, and Wisconsin. This will change over time as more states have marketplace nexus.
If you file a Voluntary Disclosure Agreement (VDA) you would be able to waive the $70 in penalties for this one state. It may not be worth the effort to file a Voluntary Disclosure Agreement in that one state. SALT (sales and local tax experts) charge up to $2,000 per state, to file a VDA.