Sales tax permit for FBA inventory: when states require one

It depends on the state. Washington counts inventory a marketplace facilitator holds in the state as physical presence. Marketplace sellers with that presence must register when it begins, and they need not meet the $100,000 threshold to have nexus (Washington DOR: Marketplace sellers). Arizona requires no transaction privilege tax (TPT) license if you sell only through marketplace facilitators (Arizona DOR: Out-of-state seller licensing).

How states treat stored inventory

Several states treat inventory stored within their borders as physical presence. Some say so even when another company owns the warehouse. Four state pages make that link:

• New Jersey counts “the storage of inventory at a location in the State” as physical presence, “regardless of ownership of the facility” (New Jersey Division of Taxation: Remote Sellers FAQ). In plain words, it does not matter who owns the warehouse.
• Washington counts keeping a stock of inventory in the state. That includes inventory held by a marketplace facilitator or another third party (Washington DOR: Marketplace sellers).
• New Mexico lists “having property stored in New Mexico” as enough to create physical nexus for its gross receipts tax (New Mexico TRD: Determining Nexus).
• California says a seller in one of its FAQ examples has “a physical presence in this state (inventory).” That seller has California inventory, including some in a third-party fulfillment center. It also makes retail sales that no marketplace facilitator handles (CDTFA: Marketplace Facilitator Act).

Physical presence is one route to nexus, the tax link between a seller and a state. A seller without physical presence can still reach nexus through sales above a threshold. Washington says that with physical presence, you do not need to meet its $100,000 threshold to have nexus (Washington DOR: Marketplace sellers).

Dollar thresholds are a separate test. Two examples from the state pages:

• New Mexico: beginning July 1, 2019, a person who lacks physical presence can have economic nexus. The threshold is at least $100,000 of taxable gross receipts in the previous calendar year. The receipts must come from specified New Mexico transactions (New Mexico TRD: Determining Nexus).
• New Jersey: a remote seller passes its threshold when gross revenue from sales delivered into New Jersey exceeds $100,000. The count covers the current or prior calendar year (New Jersey Division of Taxation: Remote Sellers FAQ).

What states say about marketplace-only sellers

Some states still require registration in certain cases, even when a marketplace handles all your sales. Others do not. This section covers registration only. For who collects and remits the tax, see the overview of who remits Amazon sales tax.

Four states require registration in the cases their pages describe:

• Washington: marketplace sellers with physical presence nexus must register. They register to report B&O tax, a separate tax from sales tax, and to collect and report sales tax. The duty starts on the date the physical presence begins (Washington DOR: Marketplace sellers).
• New Jersey: a remote seller over the economic threshold that sells solely through one or more marketplaces “must register” (New Jersey Division of Taxation: Remote Sellers FAQ).
• Texas: a “Texas seller” who sells through a marketplace is still responsible for having a Texas tax permit (Texas Comptroller: Marketplace Providers and Sellers). The Comptroller's FAQ for remote sellers covers stored inventory directly. It addresses a remote seller whose only physical presence in Texas is inventory temporarily stored in a marketplace provider's Texas warehouse. If its total Texas revenue is less than $500,000 in the previous 12 calendar months, it does not need to obtain a permit and does not have a collection obligation. That holds only if the marketplace provider has certified it will assume the duties of a seller. Above the $500,000 safe harbor threshold, you must obtain a tax permit and collect tax on your sales. The same FAQ says a remote seller that is a taxable entity with inventory temporarily stored in a marketplace provider's Texas facility has franchise tax responsibility (Texas Comptroller: Remote Sellers and Marketplace FAQ).
• New York: a home-based New York business that sells solely through a marketplace provider that collects tax still needs a Certificate of Authority. That is New York's registration as a sales tax vendor (New York Tax Department bulletin TB-ST-175).

Two states do not, while all your sales go through marketplace facilitators:

• Arizona: a marketplace seller needs no TPT license “if it only sells its products through marketplace facilitators.” This holds regardless of the seller's physical presence in Arizona. Outside that exception, retailers with a physical presence in Arizona must get a TPT license. Arizona says this applies regardless of any threshold (Arizona DOR: Out-of-state seller licensing).
• California: beginning October 1, 2019, a marketplace seller need not register with CDTFA if all its retail sales of merchandise are facilitated by a marketplace facilitator. That facilitator must be registered as a retailer with CDTFA (CDTFA: Marketplace Facilitator Act). The same page has a second rule. Every person “actively engaged as a seller” who keeps stocks of merchandise in California for sale must hold at least one permit. The page does not directly cover one case: stored inventory in California, with all sales through a marketplace. Ask CDTFA how the two rules fit your case.

New York's bulletin TB-ST-190 covers fulfillment services. Two rules in it matter here:

• A seller “is required to register” if it has a place of business or salespeople in New York. The same applies if it owns or leases tangible personal property (physical goods) there.
• A seller “not otherwise required to register” may buy fulfillment services from a New York fulfillment services provider that is not affiliated with it. It can do so without being required to register.

The bulletin was issued on August 5, 2014, and its page warns that later changes may affect it. A 2024 advisory opinion, TSB-A-24(45)S, applies these rules to a case close to FBA. An online retailer headquartered in Colorado hired a national provider of order fulfillment services. The two were not affiliated persons under Tax Law § 1101(b)(8)(v)(B). The retailer's only presence in New York was inventory stored at the provider's warehouses, and the provider also ran an internet platform on which the retailer's sales were made. The Department concluded that, “if Petitioner does not otherwise qualify as a vendor,” neither buying those services nor storing inventory on the provider's premises made the retailer a vendor with a duty to collect sales and use tax (New York Tax Department: TSB-A-24(45)S). An advisory opinion is limited to the facts set forth in it and is binding on the Department only with respect to the person or entity to whom it is issued.

What stays on you after registering

Filing returns stays on you, at least under the Texas and New York rules above. Texas says a Texas seller who sells through a marketplace must still file its sales and use tax returns on time (Texas Comptroller: Marketplace Providers and Sellers). New York says the home-based seller described above must “file periodic returns even if the tax was collected for you” (New York Tax Department bulletin TB-ST-175). These rules ask for both the registration and the returns.

Two states describe non-reporting options:

• New Jersey: a remote seller over the economic threshold that sells solely through marketplaces may ask to be placed on a non-reporting basis (New Jersey Division of Taxation: Remote Sellers FAQ).
• Washington: “active non-reporting” status means you are actively doing business in Washington but are not required to file tax returns. It applies only if your business meets Washington's criteria for it (Washington DOR, active non-reporting page).

Washington's B&O tax works differently. Marketplace sellers that meet Washington nexus criteria must report and pay B&O tax, even if they sell only through marketplace facilitators (Washington DOR: Marketplace sellers).

In California, stored inventory plus direct sales can keep an account open. In the FAQ example above, CDTFA answers “No” when asked if the seller can close its account. The reason given is its California inventory plus retail sales not facilitated by a marketplace facilitator (CDTFA: Marketplace Facilitator Act). The example concerns sales beginning October 1, 2019. If you also sell on your own website, read that example on the CDTFA page.

How to check the states not listed

Ask the revenue department of each state where your inventory sits, because this guide quotes only the states above. That includes Georgia and Florida, on which this guide takes no position. For New Mexico, this guide gives the nexus test but no registration rule for marketplace-only sellers.

Four steps for each state:

1. List the states that hold your inventory. The New Jersey, New Mexico and Washington rules above look at inventory stored in the state.
2. Read the state's own guidance for marketplace sellers. Arizona and Washington show how far apart the answers can be.
3. Note the date your presence began. In Washington, a marketplace seller's duty to register starts on the date its physical presence begins (Washington DOR: Marketplace sellers).
4. Take open points to a professional. In Texas, the answer turns on your Texas revenue for the previous 12 calendar months and on your marketplace's certification. New York's advisory opinion is binding only for its petitioner. California leaves a question for CDTFA. A qualified tax professional can check how these rules fit your business.

Sales tax may not be the only duty. Washington's B&O tax shows that stored inventory can lead to other state taxes. Texas franchise tax is covered in the Texas franchise tax guide.

Quick answers

Does Amazon FBA inventory create sales tax nexus?

It can, depending on the state. New Jersey counts inventory stored in the state as physical presence, whoever owns the facility (New Jersey Division of Taxation: Remote Sellers FAQ). Washington counts inventory a marketplace facilitator holds there toward physical presence (Washington DOR: Marketplace sellers). New Mexico lists property stored in the state as enough for physical nexus for its gross receipts tax (New Mexico TRD: Determining Nexus). For any other state, check with its revenue department.

Do I need a sales tax permit if Amazon already collects sales tax for me?

It depends on the state. Washington says marketplace sellers with physical presence nexus must register when that presence begins (Washington DOR: Marketplace sellers). Arizona says a marketplace seller needs no TPT license if it only sells through marketplace facilitators (Arizona DOR: Out-of-state seller licensing). For who remits the tax itself, see the who remits Amazon sales tax overview.

Where Taxller fits

Upload your Amazon settlement reports and Taxller turns them into double-entry books: sales, fees, refunds and payouts, split per payout. Our free tax calendar lists the federal deadlines for sellers and the state deadlines for 12 states, with weekend shifts applied and sources cited. Taxller never files or pays anything on your behalf: you or your accountant review and file.

Sources

• Washington DOR – Marketplace sellers
• NJ Division of Taxation – Remote Sellers FAQ
• New Mexico TRD – Determining Nexus
• Texas Comptroller – Marketplace Providers and Sellers
• Texas Comptroller – Remote Sellers and Marketplace FAQ
• CDTFA – Marketplace Facilitator Act
• Arizona DOR – Out-of-state sellers licensing and renewal
• NY TSB-A-24(45)S – Advisory opinion on fulfillment services