Last week, headlines were made by a Supreme Court ruling that has freed state and local governments to collect sales tax on online purchases, even if that retailer does not have a physical presence in the corresponding state. This means that online retailers must now comply with state and local tax jurisdictions – of which there are many across the United States – and have a decent understanding of how each of these tax jurisdictions impacts the overall bottom line. For large online retailers like Amazon, this ruling will likely have a positive impact in the long-run, since their platforms are inherently built to comply with variational rulings such as this one. For smaller retailers and brands, however, it will be difficult to successfully adhere to these new tax regulations and still bring in a profit through online sales.
Looking at the Amazon e-commerce platform in particular, it’s important to understand that the retailer itself was not involved in the ruling, although it’s the third-party sellers and non-FBA merchants that will see the biggest impact of this case. More than 40% of all Amazon’s sales involve third-party merchants, which means that millions of online sellers will now have to have serious tax compliance workflows in place to ensure nothing slips through the cracks. For many of these third-party brands, entering into an FBA partnership isn’t fiscally responsible in the long-run, even with the new added benefit of Amazon-provided tax compliance. This is where our team at SupplyKick, a single-seller partner, can help brands understand and manage these state tax rules.
As the laws and regulations around online purchases and e-commerce continue to change, brands that are selling products on Amazon must be proactive and get out in front of the pack in terms of innovation and preparedness. While many third-party sellers are not working with state-specific sales tax in any way, as a large single-seller partner, SupplyKick is currently leveraging FBA arrangements to help partners successfully navigate online tax compliance guidelines and regulations. Currently, Amazon and sellers like SupplyKick who participate in the FBA network have been remitting sales taxes across 30+ states.
With years of state-level sales tax processing under our belt, our team at SupplyKick is now doubling-down on workflows to help our partners and clients thrive in this new age of internet tax regulations. From engaging directly with Amazon to working one-on-one with partners to build custom plans around tax regulations, SupplyKick is making it easy for brands to shape winning e-commerce strategies while still remaining compliant.
CEO of SupplyKick