Sales Tax Issues for Amazon Sellers, 2017
The eBay & Amazon Seller's News ~ June 2017 ~ Volume 18, Issue No. 9
Tips, Tools, News and Resources for eBay, Amazon and Independent Online Sellers
We are in the regular summer slowdown -not only on eBay and Amazon, but with my book sales as well. So let's have a sale!
Starting today, and running through the last day of June 2017, All of my books and training courses sold on SkipMcGrath.com are 25% off.
Just use the code JUNE25 at checkout. Note: Paste this code into the coupon box on the last page of checkout - Do not forget to hit the APPLY button or the discount will not take.
Important - If you want to buy more than one book, my shopping cart cannot handle coupons on multiple purchases. So if you want to buy more than one product - you need to buy them one at a time. If you put multiple items in your cart, the coupon will only apply to the last item entered.
Please Note: This offer cannot be combined with any other coupon offers.
Be Careful Sourcing Name Brand Products.
I was going over my email today when I got an email from a liquidation company I work with. Part of the email said: "Brand-New, Brand-Name Products with Great Margins to Sell on Amazon, eBay, and More!"
Sounds pretty appealing, right? Don't forget the Restricted Brands list on Amazon. The problem dealing with liquidators is, you cannot always see the list of brands in a lot. What if you spend $500 on a lot and when you get it, the lot contains mostly shoes by Michael Kors and clothing items by Burberry (Both of those are on the Restricted list).
If you are thinking, "That is OK, I can sell them on eBay," think again. Most companies on Amazon's Restricted list, will also file VeRO (Intellectual property) Complaints if you list on eBay (See the 4th article in this issue for more on this subject).
Terapeak Research has introduced 3 new features.
Although Terapeak does have some Amazon features, it is mostly eBay centric. But it is easily the best research tool on the market.
Amazon now requires all Amazon-registered brands to be trademarked and registered with the USPTO (US Patent Trademark Office). If you recall, a while ago I wrote an article on Branding your private label products. At the time, I explained there were two types of brands; Formal and Informal.
A formal brand is one where you trademark™ your brand, and once you receive a trademark, you register the brand with the US Patent and Trademark office (USPTO.gov) and you can now us the ® symbol.
An informal brand is where you make up a brand name and apply it to your product. It might surprise you that this is entirely legal -it is done by hundreds of sellers on eBay and Amazon.
What is the difference? The main difference is intellectual property protection. If your brand name is trademarked and registered, you can sue someone for using it. If you take the next step and register your brand with the USPTO, anyone who abuses or infringes, could also be exposed to Criminal penalties.
In the past, Amazon would allow you to register either a formal or an informal brand as the brand holder on Amazon. However, that has changed.
One of my readers alerted me to this last week which was a good thing, as the new policy change was done with almost no publicity on Amazon.
The new policy states that a brand must be trademarked -and registered in order to become a registered brand on Amazon. Here is what the new policy says:
So if you want the seller protection that comes with registering your brand on Amazon, then you will need to invest about $1000 in fees to trademark and register the brand. You can still sell on eBay and Amazon using informal brands, but you can no longer register as the brand holder on Amazon.
Amazon has recently restricted the services of many refund companies (these are companies who monitor your Amazon account and make refund requests on your behalf that Amazon should have given you).
Amazon now prohibits FBA sellers from using third-party services to submit reimbursement requests on their behalf. The key words in that sentence are "on their behalf." One of the largest refund companies, Refunds Manager (the one I use), had this to say about the new policy.
This is from Nathan, their founder and owner:
We want to assure you that our service is fully in line with Amazon's TOS. Because we manually review all errors and manually submit all cases. Refunds Manager is not an automated service, but a business service that utilizes software in the initial stages of its process.
Here are all the key ways that Refunds Manager stays compliant with Amazon's TOS:
We comply with all TOS. This was a mass email from Amazon. None of our cases have been closed. Business has been going as usual. You can ignore this.
Apparently, Nate is correct because they just opened two cases for me earlier this week. They both went through and I received refunds.
Last Week Amazonís stock price hit $1,000 for the first time, closing the week at $1,006.00. Amazon has also announced a few new areas it will be selling in. Here is an article from Forbes Magazine that summarizes the changes and their impact on the platform.
Last month I updated my book about selling used items online. Yes, I said used items. Did you know that you can make more money selling used goods than selling new items? The Virtual Peddler shows you how to make a living buying, selling and trading used items online. If you've already bought this book, go to the download page and get the newest version.
Lets get started with this monthís articles:
I am sorry this article is so long and complex, but unfortunately, this is a complex subject -And, very important to your selling future, so I suggest you plow through it.
Starting last April (April 1, 2017), Amazon started collecting sales taxes from all 45 States that charge sales tax. Note - Amazon is adding sales tax to all sales in those 45 states, but is not filing and paying the sales tax to the states, except on their own sales of merchandise.
Amazon will only send the taxes it collects to you -it will not file them with the states for you. And, Amazon will only do this if you set up sales tax collection in Seller Central, agree to payment and tell them in which states, and what percentage to collect.
The key points to take away from this are:
Until recently, you only needed to collect and pay sales tax on sales made, and shipped to, someone in your own state. Over the past few years, almost every state that has a sales tax, has instituted a Nexus policy on online sales that are shipped to their state, no matter where the seller (you) lives.
Although Nexus rules have been around for years, it's only recently that States have been enforcing them on individual online sellers.
So, what is a Nexus?
For the purpose of sales tax, a nexus exists if a seller has a substantial presence in a state. This used to be enforced on companies that had a store, office or warehouse in a state.
But now, States have taken the position that Amazon FBA sellers have a substantial presence in their state (Nexus), if they send inventory to an Amazon Fulfillment Center (warehouse) in a state that claims this, which is virtually every state.
To make it even worse, some states take the position that you owe sales tax on all sales made from that state to anywhere in the country. A few states (Sorry - I do not have a breakdown on this but will give you a resource later) only demand that you collect and pay tax on sales made, and product shipped, in the state where you have goods in an Amazon warehouse.
The first question this brings up is; "How do I know where Amazon stores my goods?"
First log into Seller Central and then go to this link . This will give you a good overview of Amazon's current tax policy. Next, go to Reports>Fulfillment and select Daily Inventory History. When you get to that page, select Last 30 days and then hit Generate Report. That will look like this:
When you generate the report Ė you will see your SKU number and Product Descriptions. To the right of that (far right), you will see some columns that look like this:
The column marked "FC" is the Amazon code for the Fulfillment Center (warehouse) where that product is located. I suggest you copy these into an Excel Spread sheet so you can organize and sort.
I know those codes will not make sense to you, so I have provided a list of the various fulfillment centers and the states they are located in (copy/paste these into a document file, and then save and print out. Here is the list of states and FC's:
List of fulfillment centers by state. The first three digits of a fulfillment center's identification code are from the IATA airport code of the closest large airport:
For reference, please log into Seller Central and see the Help Page for Amazon Fulfillment Centers in the United States.
Not every state has made filing, collecting and payment necessary - but many have. Here is a booklet from the sales tax service company Avalara. If you need help with your sales taxes, you can check with them - or TaxJar (my preferred resource).
In case you haven't been paying attention, beginning June 30th, all Amazon sellers will be required to set up two-step verification whereby, when you log into Amazon, you will have to ask Amazon to send you a code via Text Message that you have to enter before you can log in to your account.. That's right - text message!
What happens is, when you first log in with your email address, within a minute or so, Amazon will text you a code that you must enter to complete the sign-on. Those are the "two-steps," Amazon is referring to
The adverse PR this move has cost Amazon appears to be of no consequence, because it only involves sellers, whom they don't seem to care that much about. If buyers were going crazy, they might do something. (Note: Buyers have been given the opportunity to set up two step verification, but so far, Amazon has not made it mandatory.
This means you must have a smart phone that is capable of receiving text messages. If you don't have one of these - Amazon doesn't care. In my correspondence with Amazon they told me I could disable 2-step verification after June 30th, but I would need a smart phone both to set it up and to disable it.
Amazon's suggestion for using 2-step verification was to "borrow" a smart phone from a friend. I have visions of friends of Amazon sellers getting phone calls at Two O'clock in the morning asking them to look at their phone and tell them the code. Also, what happens if you are in an area like I am. I have high-speed internet over cable, but cell phone service in our location is weak and spotty.
So, bottom line, unless Amazon changes their policy at the last minute (which I doubt), all sellers will have to buy or borrow a smart-phone before June 30th.
Of course we all know this new system will work flawlessly with no glitches - right? I have visions of hundreds of sellers not being able to access 2-step verification during the first week of the new system going into place.
Don't get me wrong -I do support Amazon's goal of increased security -and wished more online companies were more interested in keeping our information protected. But, this is one of those times where the doctor cured the disease, but the patient died anyway.
If you want information about two-step verification for sellers, first log into Seller Central and use this link.
If you want instructions on how to disable 2-step verification, then use this link.
Remember, you must wait until after June 30th to disable it.
About the only other suggestion I can give you if you don't like this policy, is open a support ticket with Seller Support Asking for clarification -and stating your concerns. If they get enough sellers complaining -there is always a slight chance they will listen -and try to come up with a better method.
eCommerce business venues such as eBay, Amazon, Etsy and others require sellers to weigh products for shipment to customers -and in the case of Amazon, for shipment to Amazon's Fulfillment Centers. Let's look at the requirements and important features you want to look for in a scale:
The extended cord with display on the end is important for when you place large boxes on the scale, you can pull the cord out so you can see the display.
How to get a free scale?
For a long time, I have been recommending the services of Stamps.com. If you click on this link, my readers can get a free 4-week trial. However, after giving the service a free trial, if you decide to sigh up for the monthly service, Stamps.com will give you a $100 worth of the following goodies:
Last piece of advice: A good scale will cost anywhere from $20 to $50. This is not a huge investment, but one that you will use for a long time -so take your time, look at all the features and shop carefully
Before we get started, let's define arbitrage for anyone who is unfamiliar with that term and the ensuing business practice on eBay and Amazon.
The formal definition of Arbitrage is "the practice of taking advantage of a price difference between two or more markets and capitalizing on the imbalance, the profit being the difference between the market prices."
Retail and Online arbitrage are essentially the same thing. You buy low in one market to sell higher in another market.
For our purposes, there are two kinds of Arbitrage used by eBay and Amazon sellers - Retail and Online. Let's look at both:
If you look at my article on Restricted Brands at Amazon, you will see many familiar brand names. This brings us to a few problems with Arbitrage:
If we go back to the original question: "Does Retail Arbitrage and Online Arbitrage Have a Future?" sadly, the answer may be no. eBay and Amazon are customer-driven companies, and customers have proven they want name brand products. This gives the brands the ultimate power. Essentially, eBay and Amazon will go along with anything the brands want as long as it's legal.
It's a fact that major name brand products control the distribution of their products very tightly. When you buy a product from a store for resale, you are not buying from an authorized distributor.
This means the brand owner has no control over how, and at what price, their products are being sold. So they register their brand with Amazon as a restricted brand and with eBay's VeRO program. Then when someone like you lists one of their brand name products online, they file a complaint if you are not one of their authorized resellers.
A lot of sellers think they can rely on the First Sale Doctrine. The First Sale Doctrine says that once you buy something, you have the rights to resell it in the secondary market
The problem is, Amazon and the brands are taking actions to block you from re-selling their goods as new on online selling sites. You could probably win a lawsuit if you fought the issue, but it would cost you upwards of $20,000 in legal and court fees just to file the suit -and then another $100,000 to $250,000 to pursue it.
Note: You can sell these brand name goods as used without any problems -in fact that is what a lot of sellers do.
Given all these issues it is my opinion that the future of retail and online arbitrage is limited. So, those of you who are practicing it may want to give some thought to finding a new business strategy.
Remember - not all of these companies have a wholesale website. When you run into that, just email them through the Contact Us form and request wholesale information.
Seven Wholesale carries a complete line of Hip Hop clothing, t-shirts and hats for men and women
Wholesale Clothing based in Los Angeles carries a complete line of lower cost women's fashions.
Sakaad, is a Fair Trade Importer of wholesale apparel, accessories, bed and bath, handbags and footwear
Master Cutlery carries a broad line of all type of knives from hunting knives, fighting knives to Kitchen Knives and sets including the Top Chef Brand..
Cosmetix Club has been selling wholesale brand name cosmetics for over 12 years. They are a wholesale supplier who is always seeking new customers
Annie International Inc . offers a full line of Personal and Beauty Care products. The company has been around since 1993 and carries a wide range of products for the beauty supply market.
C2F is a retailer's complete source for wholesale art supplies. They carry a large and growing selection of art materials, craft supplies and drafting implements.
Sock Wholesalers Inc. offers a full line of MADE IN THE USA socks including crew, tube, quarter, low-cut, dress, diabetic, designer and more! www.sockwholesalers.com
Lifeforce Glass sells Inexpensive Gifts with social and environmental meaning. All Made in the USA. They manufacturer imprinted glass stones, granite blocks, and seabeans. Custom work available.
Couver Corporation sells wholesale sports headbands, athletic wristbands (terry sweatbands) and socks.
Cheng's Enterprises , Inc. is an importer, exporter and wholesaler of Shoes and Oriental Gifts
New Wholesale DVDs is a DVD liquidator that specializes in selling below normal wholesale to resellers. Low Minimum quantity. Credit cards and PayPal accepted. Large selection of exercise and workout DVDs and videos. New items arriving weekly.
Kings Kids sells wholesale Christian items including: bible study cards, Christian gifts, school supplies, artwork, postcards, greeting cards, bible trivia - old and new testament, stickers, bookmarks, bibles and baby and maternity clothing
The Jerusalem Export House has been selling Holy Land Christian products since 1969. They will drop ship certain products direct from the Holy Land.
Thatís it for now - see you in about two weeks.
P.S. If you missed the last issue, click here to read it.
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