Sales tax and nexus use to be a huge nightmare for FBA sellers. If you’re selling a product through your website and using separate fulfillment warehouses, then you may not need to pay sales tax in the states you would need to pay sales tax in on Amazon. Here’s an example:

Website sells a product using privately owned fulfillment warehouses in Texas, California, and Oregon. Website sends inventory into Amazon FBA who has warehouses in Texas, Nevada, and New York. 

If the company sells a product in New York and fulfills the order from a privately owned fulfillment warehouse and never sent inventory into Amazon FBA, the company, theoretically, would not need to pay sales tax on the sale in New York. South Dakota vs Wayfair may say different, but again this example is theoretical. 

If the company sells a product in New York and fulfills the order from a privately owned fulfillment warehouse and sent inventory into Amazon FBA, they would still need to pay sale tax on the sale. Nexus would’ve been declared in New York regardless if the inventory came from their private fulfillment warehouse or Amazon’s warehouse. 

Keep in mind Amazon has warehouses all across the country so this technicality gets scaled up quite a bit. If a company doesn’t have the resources to pay sales tax to each state and county that Amazon’s warehouses are located in and sells through a separate channel like their website, they might want to avoid using Amazon FBA due to an increase in paying taxes. 

Taxes are always a mess, but thankfully Amazon does make this super super easy and hands free if you only sell on Amazon. 

Here is the list of states that Amazon will collect and remit, pay on your behalf, sales tax for. Hallelujah! The list is always growing and thankfully the states have decided to go after Amazon for collecting sales tax and not the individual seller.