Amazon Sellers Tensed About Tax Matters

Amazon.com (NASDAQ: AMZN), for many years, fought with various governments on tax matters. The e-commerce company did not levy sales tax on products sold to keep their prices low. Even when forced to do so, it added the tax only when the item in question was sold from its own warehouse or inventory. Taxes were not collected from the tens of thousands of independent merchants which sold product through the Amazon website. The company left the tax collection to the sellers themselves. However, as per the sellers, most of them have not collected taxes. Therein lies the problem. States now want all the money they can get from unpaid sales taxes.

Sellers in the cross-hairs

A number of states have gunned for Amazon sellers. A judge in Massachusetts ordered Amazon in September to provide the state all information regarding merchants who had and continuing to store goods inside the state. Tax investigators in California have also dispatched letters to sellers. Whatever happens, it is a surety that customers will be forced to absorb the increased expenses. Sales tax can be anywhere from 5 percent to 10 percent of any order cost.

For Amazon, taxes remain its Achilles heel. Even though it is one of the most successful companies in the world, the company remains an anathema for many politicians trying to milk it for tax. President Donald Trump even criticized the company, terming it as 'no-tax monopoly'. This continues even as Amazon pays millions in income taxes and charges a tax on goods sold in every state where sales tax is present. However, since not many marketplace sellers do not extract sales tax, the idea of Amazon not doing everything it could to get taxes has gained ground. The governments want their cut- and the company is legally needed to provide them.

Not so fulfilling

The Amazon marketplace sellers are caught in the middle. These range from small one-person operations to fully-fledged businesses. The marketplace has created an environment where sellers list products for sale at a price determined by them. A number of sellers partake Amazon's additional program, which the company named 'Fulfillment by Amazon'. Sellers subscribing to this program get the advantage of their inventory being stored in massive Amazon warehouses. The products sold gets shipped directly from the company. Sellers pay Amazon a fee for such services. The e-commerce company earns a massive amount from such fees.

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