Staying on top of tax compliance and other parts of your Amazon business operations can be a tricky balancing act, especially with the complexity of changing state laws, evolving thresholds, and updated marketplace rules. The good news is that Amazon has a crucial report that can help you with all of that: the Amazon sales tax report.
But what exactly is in this report, and how do you use its details to stay tax-compliant? Let’s break down how to use this report correctly and what to watch out for so your filing is hassle-free.
What Is The Amazon Sales Tax Report?
The Amazon sales tax report is one of the most critical tools available to sellers for understanding their tax obligations. It’s a detailed, line-by-line export of all the tax-related data associated with your Amazon sales, detailing each transaction and relevant information for each one.
The tax report is designed to help you track the taxes collected by Amazon and determine what, if anything, you’re still responsible for reporting and remitting.
Where To Find Your Amazon Sales Tax Report
Finding the Amazon sales tax report is simple, but the navigation in Seller Central can be confusing if you haven’t accessed it before. Here’s a step-by-step breakdown of how to retrieve it, along with some helpful tips:
- Log Into Amazon Seller Central: Start by logging into your Seller Central account.
- Navigate to the Reports Section: Hover over the top navigation menu where it says “Reports.” A dropdown will appear. From that dropdown, select “Tax Document Library.” This is where Amazon stores tax-specific documents, including 1099s and sales tax reports.
- Choose “Sales Tax Reports”: Inside the Tax Document Library, you’ll see a few categories. Click on “Sales Tax Reports.” You’ll now be taken to a section where you can request reports for various date ranges.
- Select Your Date Range: Use the dropdown or calendar tool to choose the start and end dates for the report you want to download. It’s important to match the report period with your tax filing period (monthly, quarterly, etc.).
- For example, if you’re filing a Q2 return, select April 1 to June 30.
- If you’re looking for year-end totals, choose January 1 to December 31.
- Download the Report: Click “Generate Report” (if the report is not already available) or “Download” if it’s been previously created. The file is typically available in CSV (comma-separated values) or TXT format, which you can open in Excel, Google Sheets, or most accounting software.
Key Sections of the Amazon Sales Tax Report
To make the most of your Amazon sales tax report, it helps to understand what each column actually means. The report includes several key data points that can clarify where tax was collected, how much was charged, and who’s responsible for remitting it. Here’s a breakdown of the most important fields to know:
- Order ID: This is the unique identifier for each transaction. It helps you trace back a sale if you need to verify a specific order.
- Ship-To State: This shows the state where the product was delivered. This is key for determining tax jurisdiction and whether sales tax should have been collected.
- Product Sales and Shipping Charges: These columns reflect the price of the item and any associated shipping costs. Some states tax shipping; others don’t. The report distinguishes between these charges to help with accurate calculations.
- Sales Tax Collected: The amount of tax Amazon collected on your behalf for that order. This is critical for compliance and reporting purposes.
- Marketplace Facilitator Tax Flag: This tells you whether the tax was collected under Marketplace Facilitator laws. If it says “Yes,” then Amazon handled the collection and remittance. If “No,” it’s likely your responsibility.
What Are Marketplace Facilitator Laws?
Over the last few years, most U.S. states have adopted what’s called marketplace facilitator laws. These laws require Amazon (not individual sellers) to collect and remit sales tax on your behalf for orders shipped to customers in certain states.
This is great news for most sellers because it simplifies Amazon seller tax compliance, but you may still need to:
- File state sales tax returns (even if Amazon is collecting for you)
- Report exempt sales, such as those to resellers or nonprofit organizations
- Keep records for auditing purposes
- Collect sales tax on off-Amazon sales (e.g., through Shopify, eBay, or your own website)
Let’s use an example to illustrate it more clearly. Pretend you’re selling into California, a state where Amazon collects and remits tax under marketplace facilitator rules.
When you download your sales tax report for Q2, you’ll see all your California orders with tax collected, and a flag that Amazon handled the remittance. In this case, when you file your California return, you’ll typically:
- Report gross sales
- Subtract out Amazon-collected tax (you may still need to list it for informational purposes)
- File a zero-dollar return or indicate the taxes were already remitted by Amazon
Without this report, you might overreport, double-pay, or miss required documentation during an audit.
How To Use Your Amazon Sales Tax Report For Compliance
Downloading your Amazon sales tax report is just the first step. Learning how to use it is how you’ll meet your tax obligations efficiently and stay compliant. From aligning the data with your filing periods to understanding marketplace facilitator laws, here’s how to make the most of your sales tax report:
Match the Report to Your Tax Filing Periods
Whether you file monthly, quarterly, or annually, make sure you download the Amazon Sales Tax Report for the correct date range. If your filing period is Q1 (January to March), don’t accidentally download just March’s data.
Reconcile Totals with Your Accounting System
Use the sales totals from the report to cross-check your accounting software. This ensures your income records match and that all sales are being properly recorded.
Confirm Marketplace Facilitator Coverage
The report helps you identify which states Amazon is handling sales tax for. If you sell to states not covered by marketplace facilitator laws, you may still need to collect and remit the tax yourself. Check your nexus (a place where you have a tax connection to a state) and see if there are any gaps Amazon doesn’t cover.
Prepare for State Filings
Even when Amazon collects tax for you, many states still require you to file a “zero return” or include those sales in your filings. This report gives you the necessary figures to do that accurately.
Best Practices to Stay Tax Compliant
Even with Amazon handling much of the sales tax collection in many states, sellers still have important responsibilities when it comes to registration, reporting, and recordkeeping. Following a few key best practices like these can help you avoid penalties and keep your business running smoothly:
1. Know Where You Have Nexus
Nexus is a legal term that means you have a sufficient connection to a state that obligates you to collect and remit sales tax there. Nexus can be triggered by a few factors:
- Physical Presence: This includes having a home office, warehouse, or employees in the state.
- Inventory Storage: If Amazon stores your products in fulfillment centers located in a particular state, you may have nexus there even if you’ve never set foot in it.
- Economic Nexus: This is based on your sales volume or number of transactions in a state. Many states set thresholds like $100,000 in sales or 200 transactions per year.
To identify your nexus footprint:
- Check Amazon’s Inventory Event Detail Report to see where your inventory is stored.
- Use a nexus tool like Avalara or TaxJar’s Nexus Insights.
- Consult a tax professional.
2. Register Where Needed
If you have tax obligations in a state not covered by marketplace facilitator laws, you may need to register for a sales tax permit. For example, let’s say your nexus is Kansas. If Amazon’s report shows “No” in the facilitator column for those sales, you’ll need to:
- Ensure you’re registered for sales tax in Kansas
- Collect the correct tax rate from customers (if not already done)
- Use the report to identify how much tax you’ve collected
- File and remit the tax directly to the Kansas Department of Revenue
In this scenario, the report helps you track every taxable transaction and ensures you meet your own responsibilities, not just Amazon’s. But don’t forget that you can’t start collecting sales tax until you’re registered, as it’s illegal in many states.
3. File On Time
Even if Amazon collects and remits sales tax for you, many states still require you to file a return, often referred to as a “zero return,” simply to confirm that Amazon handled it.
Failing to file on time (yes, even when you owe nothing) can lead to late fees, interest charges, or account suspension or revocation of your sales tax permit.
4. Keep Clean Records
Thorough documentation will go a long way towards making your audits stress-free. States typically require businesses to retain tax-related records for three to four years, sometimes longer depending on the statute of limitations.
Here’s what you should keep on file:
- Your Amazon Sales Tax Reports for each filing period
- Exemption certificates from customers who claim tax-exempt status
- Sales tax registration documents and permit numbers
- Copies of filed returns and confirmation numbers
Make it a habit to store digital backups of everything in a secure, organized folder system, ideally with cloud-based storage in case of a hard drive failure.
Conclusion
Your Amazon sales tax report provides all the raw data you (or your accountant) need to stay compliant, accurate, and audit-ready. While the report won’t automatically make you tax-compliant, learning how to read it and use its details is crucial to getting there.
Managing your taxes efficiently is one way to simplify your business operations. Another good addition to your Amazon seller toolbox is review management, as your ratings can make or break your sales. If you’re struggling with negative fake reviews or 1-star reviews that have nothing to do with your product, TraceFuse can help. Schedule a demo with us today to see how we spot and report negative reviews that violate Amazon’s policies until they’re removed!
