*Editor’s Note: This blog post couldn’t come at a better time for anyone who files sales tax returns. TaxJar is one of the best knowledge bases around for Amazon sellers and they were nice enough to write us an awesome blog post. Enjoy.*
Whether your sales tax filing frequency is annually, quarterly, or monthly you will find that January is a time where nearly everyone files sales tax returns.
To get ready for your January filings, we’ve put together a brief guide on how to pull tax reports from Amazon and file your tax returns, how sales tax automation solutions can make the process easier, and a few other tips to help you save time and money as you work to achieve sales tax compliance.
If you’re still new to sales tax, check out our Sales Tax 101 Guide first.
Knowing Your Sales Tax Due Dates
There are 45 states that collect sales tax (plus the District of Columbia) and each of them have slightly different sales tax due dates. Most states will have January 20th as the due date, but a few will want you to file by the 15th, the 25th, or the first or last day of the month following the closing of your filing period. You’ll want to check your state’s sales tax due dates here so you can make sure you file on time.
Report your owed sales tax for each state where you have sales tax nexus
Nexus is defined as “significant presence” in a state, such as an office, a remote employee, or a warehouse stocking your goods. Having nexus in a state means that you’re required to collect and remit sales tax for that state. FBA sellers will need to check where your inventory is stored by Amazon to see how many states where you have nexus in addition to your home state. We have a guide to help you figure that out.
Manually Running Amazon Sales Tax Reports
When it comes to reporting, Amazon’s SellerCentral webapp does not have the easiest menu navigation, but if you’re willing to put in a few minutes of effort you can pull your sales tax reports without much difficulty.
In your preferred browser, navigate to SellerCentral and log into your Amazon seller account. After doing that you’ll click on the REPORTS tab and select Tax Document Library. This will create a page with all of your available tax forms and will include a 1099-K if applicable based on your business sales volume.
Once you’ve got this, you can create the the type of report that you need to file by clicking on Generate a Tax Report, choose between selecting a monthly report or entering the dates for a custom report (if you need to pull quarterly or annual sales numbers), and click Generate.
After you click Generate it’ll take a minute or two to process the request depending on the number of transactions. When the report is finished compiling, you can click on the Request Report button on the righthand side of the report or the gray Download tax report button, both of which will prompt you to download a CSV file that can be imported into Excel or another spreadsheet app.
From here you can make the report easier to read by formatting the columns and rows and filtering out everything but the transactions you need for your sales tax filing. That will give you everything you need to file at your state’s sales tax portal or by printing out a paper return. To see what options are available you should contact your state taxing authority.
Important Caveat! Keep in mind that you can’t just plug in the numbers in from here. The vast majority of states want you to break down how much sales tax you collected by county, city and other special taxing district, so your next step is to attempt to figure this out.
This involves figuring out in which county each customer lived, using a taxing table to figure out how much is city tax (usually ~0-1%), how much is county tax (usually ~2%) and if the buyer’s address falls into a special taxing district, such as a metro area where a special tax is levied for education or transportation. While this can be done, it’s incredibly time consuming! And if you sell on any other channels aside from Amazon, you’re also required to do the same with those sales.
How to Automate Sales Tax Reporting
As you can see, you can get everything you need from Amazon manually but unless you’re business is still fairly small, it requires quite an ordeal in time and effort. This means that it might be worth your while to consider a sales tax automation solution that can connect to your Amazon account, automatically generate the reports you need, and can even file your returns automatically on your behalf in most states.
Sales Tax Pro Tips
Now that you’ve gotten the basics on how to compile your reports and file your returns, here are a few tips that can help save you money and time in the long run.
- Most states will have your business file monthly for the first year after you register for a sales tax certificate and following the first year some states may change your filing frequency to quarterly or annually. This is usually linked to sales volume—the more sales you do, the more often most states want you to file. Many sellers find it advantageous to file as infrequently as possible to minimize the time investment, and some states will allow you to change your filing frequency if asked.
- You’ll want to make sure to file a return for every state where you’ve registered for a sales tax permit, even if you didn’t actually collect any sales taxes for the current filing period.
- Some states offer a discount for filing sales tax on time. You can apply this discount manually and some sales tax automation solutions are smart enough to apply the discount for you automatically.
We know, we know—sales tax compliance is never fun, but if you have a solid system in place you can automate away the pain and get back to running the rest of your business as quickly as possible.