One of the more confusing parts of selling on Amazon.com is figuring out sales tax settings. This guide is meant to help you navigate the tax settings section, NOT to give you advice about how you should set up yours. Please consult with a professional if you don’t feel comfortable making the decisions we’ll talk about below.
To get to the tax settings area in Seller Central, go over to “Settings” in the top right corner and hover over it until a menu appears. Select “Tax Settings” from the list.
Here you will see three links under “Welcome to the Tax Manager” paragpraph.
The first is a thorough overview all of the technical information about Amazon’s tax methodology. I would recommend that you or your CPA review this information.
The second link is a list of all of the tax codes and the rules for each. We use the general tax code (A_GEN_TAX) and the general no tax code (A_GEN_NOTAX) for all of our products. If you are selling in multiple categories, you should probably read through the applicable tax codes to see if you need to use something else. Again, consult with a CPA if you have any concerns or questions.
The third link is where you set your sales tax collection settings. This tells Amazon which of your customers they should collect sales tax from.
There are two main modes of thought with sales tax collection, one asserting that you only need to collect sales tax for sales to customers in the state in which you operate, and the other asserting that you have NEXUS in every state where Amazon has a warehouse, and you need to collect taxes for sales to customers in each of those states. Consult with your CPA to see what you should do.
To set your sales tax settings, click on that third link titled “View/Edit your Tax Collection Obligations and Shipping & Handling and Gift Wrap Tax Settings.”
Here you have the option to set a default tax code if you’d like. We have ours set to A_GEN_TAX as most of our products are taxable. If we sell a non-taxable item, we include the A_GEN_NOTAX code for that item.
Below that you will see all of the states listed. Consult with your CPA about what you need to click and fill in here, but this is where you select which states, counties, cities, and districts you want Amazon to collect sales tax in.
You will need to have a state registration number for each state you select. On the right you will be asked to choose if you want tax to be collected on shipping and handling and gift wrap. Every state is different in their requirements, so be sure to check before selecting these options.
If you are looking for more great tips, tools, and resources to help you run your Amazon business more profitably and more efficiently, make sure you check out our Amazon Sellers Section.